Chapter 10

Strategy Evaluation
and Control

Chapter 10 – Strategy Evaluation and Control 1

Learning Objective
To understand the strategic control process
To understand the clear definition of what needs to
be controlled
To learn the process of setting strategic control
standards
To learn the process of choosing standards and
confirm performance to standards
To understand the process of measuring deviation
and take corrective actions
To understand the relevance of strategic control
audits and budgetary controls
To understand the contingency and crisis
management Chapter 10 – Strategy Evaluation and Control 2
Introduction to Strategy Evaluation and
Control
• There is a need for all stakeholders to know how well
organisation is performing

• Strategic controls brings in clear benchmarks for

measurement of performance

• Strategic control consists of evaluating the extent by

which the organisations strategies have been
successfully implemented

Chapter 10 – Strategy Evaluation and Control 3

Fundamentals to strategy evaluation and
control
• Review internal and external factors that are the
underlying base for current strategies

• Measure performance that conforms to the plans

• Do performance gap analysis

• Suggest and take corrective actions

Chapter 10 – Strategy Evaluation and Control 4

Strategic Control Process

• Determine and focus what to control

• Establish control standards

• Measure performance

• Compare performance to the established standards

• Determine the reasons for deviation

• Initiate corrective measures to set the course right

Chapter 10 – Strategy Evaluation and Control 5
Defining what to control

• Profitability Standards

• Market position standards

• Productivity standards

• Product leadership standards

• Personnel development standards

Chapter 10 – Strategy Evaluation and Control 6

Defining what to control

• Employee attitude standards

• Public responsibility standards

• Standards reflecting balance between short-range

and long-range goals

Chapter 10 – Strategy Evaluation and Control 7

Measuring performance

• Competitive benchmarking based on control

standards

• Control through performance

• Control through formal and informal organisation

Chapter 10 – Strategy Evaluation and Control 8

Determining reasons for deviation in
performance
• Understanding whether the standards are appropriate

• Evaluating objectives and corresponding measures

are still appropriate in light of changing environment

• Evaluate appropriateness of the strategies

• Evaluation of the structure of organisation and

suitability for achievement of strategic objectives

• Evaluation of execution of activities

Chapter 10 – Strategy Evaluation and Control 9
Taking corrective action

• Final step in the control process is taking action and

determining the need for corrections, The managers
can choose from the following three options –

• Can do nothing or maintain status quo

• Can correct the actual performance
• Can revise the standard

Chapter 10 – Strategy Evaluation and Control 10

Choices of corrective action

• Normal Mode – Follow the routine approach

• Ad hoc / Crash Mode – Saves time by speeding up

the response process

• Proactive crisis mode – specific actions can be

planned in advance

Chapter 10 – Strategy Evaluation and Control 11

Recommended corrective actions adopted
by Strategic Managers

• Revise the standards

• Revise the objective

• Revise the strategy

• Revise the structure

• Revise the Activity

Chapter 10 – Strategy Evaluation and Control 12

Effective evaluation and control system

• Objective based – purpose of evaluation must be

clear

• Objectivity – Standards and target must be realistic

• Economic – Evaluation system must be economical

• Pervasiveness – Evaluation system must be

appreciated through out the organisation

• Simplicity – the system should be simple to

implement
Chapter 10 – Strategy Evaluation and Control 13
Effective evaluation and control system

• Communication – It is necessary to take people into

confidence and communicate the strategy for
effective implementation

• Congruence – The scope, range, magnitude and

accuracy of measurement should be related to
objective and usefulness

• Operational – The controls must be focussed on

actions

Chapter 10 – Strategy Evaluation and Control 14

Other measures

• Budgetary Control
• Budgetary control refers to the management
measures taken to ensure that the standards and
norms laid down are maintained and the planned
results are achieved.

• Strategic evaluation and control becomes an

integral part of budgets to reflect the actions
required for achieving the objectives within the
specified timeframe

Chapter 10 – Strategy Evaluation and Control 15

Other measures

• Contingency planning
• A contingency plan is a plan to cope up with the
critical developments which trigger major
deviations in the strategy execution from the
original strategy planning done by the strategic
managers

• Crisis management is an important process which

organisation should formulate to deal with and plan
for worst case scenarios. Standard Operating
Procedures (SOPs) should be implemented prior
to any crisis event
Chapter 10 – Strategy Evaluation and Control 16
Disaster Recovery and BCP

• Disaster recovery and business continuity planning

are processes that help organisations to prepare for
disruptive events. Management’s involvement in this
process can range from overseeing the plan,
providing input and support and putting the plan into
action during emergency.

• The first step for development of DRP and BCP is

conducting Business Impact Analysis (BIA). BIA helps
the companies to identify the most crucial system and
processes and evaluate the impact of outage would
have on the business
Chapter 10 – Strategy Evaluation and Control 17
Summary
• Strategic evaluation and control process helps in
determining the extent to which the company’s
strategies are successful

• The management must measure and compare the

actual performance against the benchmark set

• Strategic evaluation, control, contingency planning

and crisis management are an ongoing process in
any organisation

Chapter 10 – Strategy Evaluation and Control 18