Evaluation and

control process
Strategic evaluation and control could be defined as the
process of determining the effectiveness of a given strategy
in achieving the organisational objectives and taking
corrective action wherever required.

Need
1. Need for feedback, appraisal and reward
2. Check on the validity of strategic choice
3. Congruence between decisions and intended strategy
4. Successful culmination of strategic management process
5. Creating inputs for new strategic management planning
 Strategy/ Setting Actual Management
plan/ standards of performance of
objectives performance performance

Reformul
ate Check
Check
performance
standards

Analyzing variance

Feedback
Types of control
Strategic controls are early warning systems and differ from post action
controls that evaluate only after the implementation has been completed.

1. Premise control
Premise control is to identify the key assumptions and keep track of any
change in them so as to assess their impact on strategy and its
implementation.
Eg. A company may base its strategy on assumptions like environmental
factors (favourable government policies), industrial factors (changing
nature of competition), and organisational factors (breakthrough in R &
D).premise control continually test the assumptions to find out whether
they are still valid or not. It helps strategists to take corrective actions at
right time rather than continuing with the strategy based on assumptions.

2. Implementation control
It is aimed at evaluating whether the plans, programmes and projects are
actually guiding the organisation towards its predetermined objectives or
not. If at any point any deviation is being detected then they have to be
revised. Implementation control may lead to strategic rethinking.
3. Strategic Surveillance
It is designed to monitor a broad range of events inside and outside
the company that are likely to threaten the course of a firm’s
strategy. It can be done through a broad based general monitoring to
uncover events that are likely to affect the course of the strategy of
an organisation.

4. Special Alert Control

It is based on trigger mechanism for rapid response and immediate
reassessment of strategy in the light of sudden and unexpected
events. It can be exercised through the formulation of contingency
strategies and assigning the responsibility of handling unforeseen
events to crisis management teams. Sudden fall of a government at
centre or state level, instant change in a competitior’s posture, an
unfortunate industrial disaster or a natural catastrophe.
Activity Based Costing
Activity based costing focuses on identifying activities or production processes that
are used to process a job. These individual activities are groupd together with
similar processes into a cost pool that relates to single activity cost driver. It is a
much more accurate way of assigning indirect costs.

Resources

Consume Traced by resource drivers

Activities What is actually

being done

Consume Traced by Activity drivers

Cost objectives
(products or services)
Eg. A company X ltd has a Rs. 50,000 per year electricity bill. No
of labour hours (cost driver) was 2500. cost driver rate would be
50,000/2,500= Rs. 20 for a product if the company is using
electricity for 10 hours, the overhead cost for the product are
20x10= Rs. 200.

Advantages
1. Manufacturing, overhead costs can be calculated accurately
2. Manufacturing overhead costs no longer correlate with the
productive machine or direct labour hours
3. Diversity of products and diversity in customers demands have
grown
4. Helpful in calculation of cost where production is done in
batches
Enterprise Risk Management
Enterprise risk management is the practice of planning, coordinating,
executing and handling the activities of an organisation in order to
minimize the impact of risk on investment and earnings. The
approach is extended to incorporate not only risks connected with
unexpected losses, but also strategic , financial and operational risks.
It allows enterprises to meet efficiency and productivity objectives
and avoid resource shortages. It also ensures beneficial reporting and
compliance with legal guidelines.

Advantages
1. More operational planning
2. Organised risk taking and proactive risk management
3. Better decision making and confidence in accomplishing goals
4. Improved stakeholder confidence
5. Better financing
6. Improved organizational strength
7. Better management during hindrances and failures
8. Provision for future planning to reduce and eliminate surprises
 Primary measures
Of
Corporate Performance
Corporate performance management refers to a tool used
by corporations to formulate organizational strategies
through prescribed methodologies, data analysis,
processing and reporting to monitor and manage the
performance of an enterprise according to key performance
indicators such as Revenue, Return on Investment (ROI),
Overhead and Operational costs.

Importance
1. Real time feedback
2. Data consolidation for easy management
3. Provide ease of risk management
4. Provide simple data feedback and access
5. Ease of collaboration
Balance Scorecard
Balance scorecard is a strategy execution tool that helps organizations to clarify
their strategy and communicate the strategic priorities and objectives.
It is a strategic framework divided into 4 areas that are critical to the business.
Following are the 4 perspective:
1. Financial perspective
Any key objective related to the company’s financial health and performance may
be included in this with revenue and profit being the obvious ones. Cost savings
and efficiencies and revenue sources are other objectives.
2. Customer perspective
Focuses on performance objectives that are related to customers and the market.
Also includes customer service and satisfaction, market share and brand awareness.
3. Internal process perspective
Focuses on any internal operational goals and objectives in order to drive
performance. Process improvement, quality optimization, capacity utilization
are its components.
4. Learning & Growth perspective
This considers the more intangible drivers of performance with components like
skills, talent and knowledge of human capital, information capital (safety systems,
data protection systems), organisational capital (staff engagement, corporate
culture).
Advantages
1.Better strategic planning
2.Improves communication and execution
3.Better alignment of projects and initiatives
4.Better management information
5.Improved performance reporting
6.Better organisational alignment
7.Better process alignment
Responsibility Centres
It involves accumulating and reporting costs on the basis of individual
manager who has authority to make day to day decisions. The evaluation
of manager’s performance is based only on matters directly under the
manager’s control. It is also termed as ‘profitability accounting’.

Advantages
1. Enables top management to delegate authority to responsibility centres
while retaining overall control with itself.
2. Decentralization of decision making.
3. Encourages budgeting for comparison of actual achievements with
budgeted figures.
4. Increases accountability of supervisory staff for deviations.
5. Simplifies structure of reports as those items are excluded which are
beyond the scope of individual responsibility.
6. Helpful in following management by exception as top management is
not burdened with all king of routine matters.
Types of responsibility centres

1. Cost Centre
A cost or expense centre is a segment of an organization in which the managers are
held responsible for the cost incurred in that segment but not for revenues.
Responsibility in cost centre is restricted to cost. Cost centre managers have control
over some or all of the costs in their segment of business, but not over revenues.
Widely used forms of responsibility centres.

2. Revenue centre
A revenue centre is a segment of an organization which is primarily responsible for
generating sales revenue. A revenue centre manager does not possess control over
cost, investment in assets. The performance of revenue centre is evaluated by
comparing the actual revenue with budgets revenue and actual marketing expenses
with budgeted marketing expenses.

3. Investment Centre
An investment centre is responsible for both profit and investments. The investment
centre manager has control over revenues, expenses and the amounts invested in the
centre’s assets. He also formulates the credit policy and the inventory policy which
determines investments in inventory.
4. Profit centre
A profit centre is a segment of an organization whose manager is responsible for
both revenues and costs. The manager has the responsibility and the authority to
make decision that affect both costs and revenues for the department or division.
Profit centre managers aim at both the production and marketing of a product.
Main purpose is to earn profit.
•Better planning and decision making
•Participation in organizational plans and policies
•Competitive environment
Benchmarking
Benchmarking is a way to go back and watch another company’s performance in
one or more aspects of their operations. It can happen internally within a
company, competitors and outside the country.

What is our What are others

performance level? performance levels?
How do we do it? How did they get there?

Creative
adaptation

Breakthrough
performance
 Process of
Benchmarking
What to benchmark

Understand current
performance

Plan

Study others

Learn from data

Use findings
Problems in measuring performance

1. Disregard for the system

Without a proper measurement of the system it can be impossible to tell how
much efficient is the employee and how much is the system as a employee may
exceed performance metrics because the system is extremely efficient.

2. Quality control
If no quality control is at place and performance is measured solely on achieving
performance measurement metrics then substitutions can be made to reach the
number that could be inferior.

3. Customer perspective
It tends to be one sided as focuses only on quantity and ignores quality. By the
time the drop in quality results in a drop in quantity, relationship with customer
might already be damaged.
Guidelines for proper control

1.Setting performance standards

2.Measuring actual performance
3.Compairing actual performance with
standards
4.Analysing deviations
5.Taking corrective actions
Strategic Audit of a corporation
A strategic audit is an in-depth review to determine
whether a company is meeting its organisational
objectives in an efficient way. It assesses various aspects
of a business and determines the most appropriate
direction for the company to move towards in achieving
its goals.

Following are some methods:

•SWOT analysis
•Performance analysis
•Value chain analysis
•Portfolio analysis
•Resource audit
•Core competence analysis