Chapter 10 Strategy Evaluation and Control

Transcription

1 Chapter 10 Strategy Evaluation and Control 1

2 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 2

3 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 3

4 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 4

5 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 5

6 Defining what to control Profitability Standards Market position standards Productivity standards Product leadership standards Personnel development standards 6

7 Defining what to control Employee attitude standards Public responsibility standards Standards reflecting balance between short-range and long-range goals 7

8 Measuring performance Competitive benchmarking based on control standards Control through performance Control through formal and informal organisation 8

9 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 9

10 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 10

11 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 11

12 Recommended corrective actions adopted by Strategic Managers Revise the standards Revise the objective Revise the strategy Revise the structure Revise the Activity 12

13 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 13

14 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 14

15 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 15

16 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 16

17 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 17

18 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 18