STRATEGY

EVALUATION AND
CONTROL

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 Strategic Management Model

Environmental Strategy Strategy Evaluation

Scanning Formulation Implementation and Control
Mission
External
Reason for
Societal
existence
Environment Objectives
General Forces
What results
to
Task Strategies
accomplish
Environment
by when Plan to
Industry Analysis
achieve the
Policies
mission &
Internal objectives Broad
guidelines for Programs
Structure decision Process
Chain of Command making Activities to monitor
needed to performance
Culture Budgets and take
accomplish
Beliefs, Expectations, a plan corrective
Cost of the
Values action
programs
Procedures
Resources
Sequence
Assets, Skills
of steps
Competencies,
needed to
Knowledge do the job Performance

Feedback/Learning
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Strategy Evaluation and Control

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Strategy Evaluation and Control

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 Operational Control Systems

Operational control systems monitor and evaluate progress in meeting annual

objectives.

To be effective, operational control must take four steps common to all post
action controls:

• Set standard of performance

• Measure actual performance

• Identify deviation from standard

• Initiate correction actions

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 Establishing Strategic Controls

 Four Basic Strategy Control

• Premises control
Four Types of Strategic Control

• Implementation control
1. Strategic surveillance

• Strategic surveillance 2. Premise control

3. Special alert control

4. Implementation control
• Special alert control
Strategy formation Strategy implementation
Time 1 Time 2 Time 3
© IRWIN, a Times Mirror Higher Education Group, Inc., Company 1997 Slide 1

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 Premises (Assumptions)Control

 Premises control is designed to check systematically and continuously

whether the premises on which the strategy is based are still valid.

 Key Premises
• Economic growth
• Cost and availability of inputs
• GNP
• Prime interest rate
• Net disposal income • Raw material price

•
• Regularity changes
Demand growth
• Environmental
• Domestic market
• Free trade policies
• Overseas market

• Competitive behavior
• Price reduction
• Foreign competition

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 Special Alert Control

• A special alert control is the thorough, and often rapid,

reconsideration of the firm’s strategy because of a sudden,
unexpected event.

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 Implementation Control

 Implementation control is designed to asses whether the

overall strategy should be changed in light of results.

• Monitoring strategic thrusts

• Milestone reviews

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 Strategic Surveillance
• Monitoring events inside or outside the firm that are likely to affect the
strategy outcome. Examples are:

• New process engineering techniques

• Success in hiring people

• Decline in moral

• Growth of service sector

• Economic development

• Ecology issues

• Material shortages
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 Three Tools of Control

 Budgets

Resource allocation plan that helps managers coordinate operation and

performance expectation

 Revenue budget
 Capital budget
 Expenditure budget

 Scheduling
scheduling is a planning tool to:
 Allocate time -constrained resources
 Sequence independent activities

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 Three Tools of Control
 Key Success Factors
Performance areas that are of greatest importance in implementing strategies.
Key internal success factors that require continuous monitoring involve:
Measurable Performance Indicator
Product quality 1. Performance data versus specification
2. Percentage of product returns
3. Number of customer complaints
Customer service 1. Delivery cycle in days
2. Percentage of orders shipped complete
3. Field service delay
Employee morale 1. Trends in employee attitude survey
2. Absenteeism versus plan
3. Employee turnover trends
Competition 1. Number of firms competing directly
2. Number of new product introduced
3. Percentage of bids awarded versus the standard

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 Guidelines for proper control
 Control should involve only the minimum amount of information needed to
give a reliable picture of events (80/20)

 Controls should monitor only meaningful activities and results, regardless

of measurement difficulty

 Controls should be timely so that corrective action can be taken before it is

too late

 Long-term and short-term controls should be used

 Controls should aim at pinpointing exceptions

 Emphasize the reward of meeting or exceeding standards rather than

punishment for failing to meet standards
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 Strategy Evaluation and Control

 70% of performance
management
implementations
fail: why ?

Hypothesis:
without changing the
behaviour of people in
the organisation,
performance
management is doomed ‘No, not me …him’
to fail ! 14
 Strategy Evaluation and Control

‘Uh ...
How does
that work,
a
scorecard

?’

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 FINANCIAL PERSPECTIVE

Target Results

ely
v
iti
How do we guarantee added
s
po
value for our shareholders ?
s
ce
en
flu
in

CUSTOMER PERSPECTIVE INTERNAL PERSPECTIVE

BALANCED
Target Results
Target Results SCORECARD
How do our clients Where must we
perceive us ? excel at ?
Influences positively

ly
ive
INNOVATIVE PERSPECTIVE

sit
po
(People perspective)

es
Target Results

nc
lue
inf
How can we
continously improve ? 16
 Balanced Scorecard
Financial perspective
Top line growth
0 NSV growth 
0 Sales volume growth 
Succesful new products
+ New product sales 

Customer perspective Internal perspective

Trade customer satisfaction Effective processes
+ Customer satisfaction  BALANCED + Process goal achievement 
- Days sales outstanding  SCORECARD “Quality” employees
Trade spend + Multiskilled employees 
0 Trade spend rate  Productivity
00 Qualified employees 

Innovative perspective
Quality brand portfolio
- Big brands 
0 Brand reduction 
Quality investments
+ Big brand investment 
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