Strategic Evaluation

& Control
Presented By:
Malvi Sharma, Manav Jamwal,
Manik Kudyar & Pardeep Verma
Central University of Jammu

Strategic Management Process

Strategic Evaluation is defined as the process of determining the

effectiveness of a given strategy in achieving the organizational
objectives and taking corrective action wherever required.
Strategy evaluation is the final step of strategy management process.
The key strategy evaluation activities are: appraising internal and
external factors that are the root of present strategies, measuring
performance, and taking remedial / corrective actions. Evaluation
makes sure that the organizational strategy as well as its
implementation meets the organizational objectives.

Nature of Strategic Evaluation

Nature of the strategic evaluation and control process is to test the
effectiveness of strategy.
During the strategic management process, the strategists formulate the
strategy to achieve a set of objectives and then implement the
strategy.
There has to be a way of finding out whether the strategy being
implemented will guide the organisation towards its intended
objectives. Strategic evaluation and control, therefore, performs the
crucial task of keeping the organisation on the right track.
In the absence of such a mechanism, there would be no means for
strategists to find out whether or not the strategy is producing the
desired effect.

 Through the process of strategic evaluation and control,

the strategists attempt to answer set of questions, as
below.
Are the premises made during strategy formulation proving
to be correct?
Is the strategy guiding the organization towards its intended
objectives?
Are the organization and its managers doing things which
ought to be done?
Is there a need to change and reformulate the strategy?
How is the organization performing?
Are the time schedules being adhered to?
Are the resources being utilized properly?
What needs to be done to ensure that resources are utilized
properly and objectives met?

Importance of Strategic Evaluation

Strategic evaluation can help to assess whether the decisions

match the intended strategy requirements.
Strategic evaluation, through its process of control, feedback,
rewards, and review, helps in a successful culmination of the
strategic management process.
The process of strategic evaluation provides a considerable
amount of information and experience to strategists that can be
useful in new strategic planning.

Participants in Strategic Evaluation

Shareholders
Board of Directors
Chief executives
Profit-centre heads
Financial controllers
Company secretaries
External and Internal Auditors
Audit and Executive Committees
Corporate Planning Staff or Department
Middle-level managers

Process of Strategic Evaluation

1) Fixing benchmark of performance

While fixing the benchmark, strategists encounter questions

such as - what benchmarks to set, how to set them and how to
express them.
In order to determine the benchmark performance to be set, it
is essential to discover the special requirements for performing
the main task.
The organization can use both quantitative and qualitative
criteria for comprehensive assessment of performance.
Quantitative criteria includes determination of net profit, ROI,
earning per share, cost of production, rate of employee turnover
etc. Among the Qualitative factors are subjective evaluation of
factors such as - skills and competencies, risk taking potential,
flexibility etc.

2) Measurement of performance
The standard performance is a bench mark with which the actual performance is
to be compared.
The reporting and communication system help in measuring the performance.
For measuring the performance, financial statements like - balance sheet, profit
and loss account must be prepared on an annual basis.
3) Analyzing Variance
While measuring the actual performance and comparing it with standard
performance there may be variances which must be analyzed.
The strategists must mention the degree of tolerance limits between which the
variance between actual and standard performance may be accepted.
4)Taking Corrective Action
Once the deviation in performance is identified, it is essential to plan for a
corrective action.
If the performance is consistently less than the desired performance, the
strategists must carry a detailed analysis of the factors responsible for such
performance.

Techniques of Strategic Evaluation

1)Gap Analysis
The gap analysis is one strategic evaluation technique
used to measure the gap between the organizations
current position and its desired position.
The gap analysis is used to evaluate a variety of
aspects of business, from profit and production to
marketing,
research
and
development
and
management information systems.
Typically, a variety of financial data is analyzed and
compared to other businesses within the same
industry to evaluate the gap between the organization
and its strongest competitors.

2) SWOT Analysis
The SWOT analysis is another common strategic
evaluation technique used as a part of the strategic
management process. The SWOT analysis evaluates
the
organizations
strengths,
weaknesses,
opportunities and threats.
Strengths and weaknesses are internal factors, while
opportunities and threats are external factors.
This identification is essential in determining how best
to focus resources to take advantage of strengths and
opportunities and combat weaknesses and threats.

3) PEST Analysis
Another common strategic evaluation technique is
the PEST analysis, which identifies the political,
economic, social and technological factors that may
impact the organizations ability to achieve its
objectives.
Political factors might include such aspects as
impending legislation regarding wages and benefits,
financial regulations, etc
Economic factors include all shifts in the economy,
while social factors may include demographics and
changing attitudes. Technological pressures are also
inevitable as technology becomes more advanced
each day.
These are all external factors, which are outside of
the organizations control but which must be
considered throughout the decision making process.

4) Benchmarking
Benchmarking is a strategic evaluation technique
thats often used to evaluate how close the
organization has come to its final objectives, as well
as how far it has left to go.
Organizations may benchmark themselves against
other organizations within the same industry, or they
may benchmark themselves against their own prior
situation.
A variety of performance measures, as well as policies
and procedures, may be evaluated regularly to
identify where adjustments are necessary to maintain
the sustainable competitive advantage.

Strategic Control
Strategic controls take into account the changing
assumptions that determine a strategy, continually
evaluate the strategy as it is being implemented, and
take the necessary steps to adjust the strategy to the
new requirements.
Most commentators would agree with the definition of
strategic control offered by Schendel and Hofer:
"Strategic control focuses on the dual questions
of whether: (1) the strategy is being implemented
as planned; and (2) the results produced by the
strategy are those intended.

Types of Strategic Control

The types of strategic controls are:

Premise control
Implementation control
Strategic surveillance
Special alert control

1)Premise Control
) Every strategy is based on certain planning premises or
predictions.
) Premise control has been designed to check systematically and
continuously whether or not the premises set during the
planning and implementation process are still valid.
) It involves the checking of environmental conditions. Premises
are primarily concerned with two types of factors:
a. Environmental factors (for example, inflation, technology,
interest
rates, regulation, and demographic/social changes).
b. Industry factors (for example,
substitutes, and barriers to entry)

competitors,

suppliers,

2) Implementation Control

Implementing a strategy takes place as a series of steps, activities,

investments and acts that occur over a lengthy period.

The two basis types of implementation control are:

a. Monitoring strategic thrusts (new or key strategic programs): Two

approaches are useful in enacting implementation controls focused on
monitoring strategic thrusts: (1) one way is to agree early in the planning
process on which thrusts are critical factors in the success of the strategy or
of that thrust; (2) the second approach is to use stop/go assessments
linked to a series of meaningful thresholds (time, costs, research and
development, success, etc.) associated with particular thrusts.
b. Milestone Reviews: Milestones are significant points in the
development of a programme, such as points where large commitments of
resources must be made. A milestone review usually involves a full-scale
reassessment of the strategy and the advisability of continuing or
refocusing the direction of the company.

3) Strategic Surveillance
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 firm's strategy.
The basic idea behind strategic surveillance is that some form of
general monitoring of multiple information sources should be
encouraged, with the specific intent being the opportunity to
uncover important yet unanticipated information.
Strategic surveillance appears to be similar in some way to
"environmental scanning." Strategic surveillance is designed to
safeguard the established strategy on a continuous basis.

4) Special Alert Control

Another type of strategic control is a special alert control.
"A special alert control is the need to thoroughly, and often
rapidly, reconsider the firm's basis strategy based on a sudden,
unexpected event."
The analysts of recent corporate history are full of such
potentially high impact surprises (i.e., natural disasters,
chemical spills, plane crashes, product defects, hostile takeovers
etc.).
An example of such event is the acquisition of your competitor
by an outsider. Such an event will trigger an immediate and
intense reassessment of the firm's strategy. Form crisis teams to
handle your company's initial response to the unforeseen
events.

The fact that hot water freezes faster

than cold water still remains a mystery

Thank you