STRATEGIC EVALUATION AND CONTROL

STRATEGIC EVALUATION AND CONTROL

The traditional approach to control is to compare the actual performance with the standards established and to take corrective measures if there are deviations. This reactive measure is not sufficient to control a strategy that takes a long period for implementation and to produce results. The uncertain future environment makes continuous evaluation of the planning premise and strategy implementation necessary. Competition for future (with which corporate strategy is concerned) is different from the competition for the present in two ways: It often takes place in unstructured areas where the rules of the competition have yet to be written, and It is more like a triathlon than a 100-meter sprint. There are two broad types of control system: Strategic Control, and Operational Control Strategic Control augmented by operational control makes strategic implementation more effective.

STRATEGIC CONTROL

Pearce and Robinson point out that there are four basic types of Strategic Control namely: Premise Control Implementation Control Strategic surveillance Special Alert Control

PREMISE CONTROL

Strategies are often based on premises i.e. assumptions or predicted conditions. A strategy may be valid only as long as the planning premises remain valid. Hence the importance of the premise control which is designed to check systematically and continuously whether or not the premise set during the planning and implementation process are still valid.

IMPLEMENTATION CONTROL

In several cases, the implementation of a strategy may not progress as planned or the cost, the revenue etc. They may be at considerable variance with the planned ones. The lessons of the first phases of the implementation could be helpful in the implementation of the subsequent phases. In short implementation control is designed to assess whether the overall strategy should be changed in the light of unfolding events and results associated with the incremental steps and actions that implement the overall strategy.

STRATEGIC SURVEILLANCE

The Strategic surveillance is designed to monitor a broad range of events inside and outside the company that are likely to threaten the course of the firms strategy. The strategy of a company could be defeated by certain such events. It is therefore necessary that the company exercises surveillance for timely detection of such developments and corrective actions.

SPECIAL ALERT CONTROL

Sudden and unexpected developments like alliance between competitors, takeovers/ mergers, a political coup, a major competitive move by competitor could have serious impacts on a firms strategy. A special alert control is the need to thoroughly and often suddenly reconsider the firms basic strategy based on a sudden, unexpected event. In the wake of the consolidation of the market power by Hindustan Lever by taking over TOMCO and growing competition by the Global Majors, Godrej Soaps felt insecure and forged an alliance with Proctor and Gamble.

OPERATIONAL CONTROL

Strategic Controls by which the top management monitors and steers the basic direction of the company should be supplemented by a control system at the operational level of strategy implementation. Operational control systems guide, monitor and evaluate progress in meeting annual objectives. While strategic control systems attempt to steer the company over an extended time period (usually five years or more), operational controls provide post-action evaluation and control over a short time period (usually from one month to a year).

STEPS OF OPERATIONAL CONTROL

Establishing criteria and standards Measuring and comparing performance Performance Gap analysis Taking corrective measures

Deciding Criteria and Standards for evaluation

Measuring and comparing performance

Performance Gap Analysis

Taking corrective measures