STRATEGY REVIEW, EVALUATION AND CONTROL

10.2 INTRODUCTION

In this topic we are going to discuss the concept of strategic evaluation, nature and requirements for
effective of srategic evaluation. We will get a fair idea about strategic control, its implementation,
control and importance of srategic control. As there are various techniques of strategic evaluation we
will also discuss the techniques of strategic evaluation and control.

10.3 CONCEPT OF STRATEGIC EVALUATION

Strategic evaluation refers to the measurement and testing the efficiency of strategic decisions and the
effective implementation of business strategy to achieve desired business objectives. It is advisable to
identify the corrective steps and actions to achieve business efficiency. It is considered as the final step
of strategy management process.

Continous evaluation and monitoring is essential requirement of strategic management process. The
strategic evaluation and controlling process indicates the organization whether the organizational
objectives are achieved or not. The evaluation system concentrates on three main aspects of strategy
such as appropriate strategy, consistency and feasibility of strategy.

Strategy should be appropriate to achieve desired objectives of the organization and it should be
formulated as per the available resources and analyses of the internal and external business
environment. It should be feasible which implies easy implementation of the strategic decision with
available resources of the organization. The controlling process makes sure about corrective strategies
and actions are required to achieve organisational target.

Definition given by Stahl and Grigsley, “Strategic evaluation and control is the process of evaluating
strategic plans and monitoring organizational performance so that necessary corrective action can be
taken. Today, it also indicates process of improvement in order to preclude out of control situations
from occurring and to continually provide greater value to customers”.

10.4 NATURE OF STRATEGIC EVALUATION

Strategic evaluation is a complex system to undertake for the effective implementation of management
strategy and analyses for strategic decisions. There is need of evaluation for the smooth functioning of
strategic decisions and checking to achieve the set objectives of the organization.

The business environment is dynamic and complex in nature. The business environments are:

• Highly sensitive and complex in nature

• Unpredictable about the future and accuracy of business environment

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• Globalisation and other factors also increases the flexibility of business environment which
make difficult to implement business strategies.

10.5 IMPORTANCE OF STRATEGIC EVALUATION

1. The strategic evaluation identifies the corrective steps and actions to achieve business efficiency
and effectiveness.

2. The strategic evaluation is not only focused to measure the result but also provides the right
paths and directions to achieve desired organisational goals.

3. The output of strategic evaluation is feedback which provides essential inputs for the future
strategic decisions or plans and polices of the organization.

4 The strategic evaluation is also related with performance appraisal system for reward and recognitions
which leads the motivation of employees and boosts the morale of the employees in the organization.

5. Stratrgic evaluation process is beneficial for all organizations whether small, medium, or large.

10.6 PROCESS OF STRATEGIC EVALUATION

The process of strategic evaluation starts with formulation of strategic decisions and plans as per the
available resources and analysis of the business environment to achieve the desired organisational
objectives.

Next step is effective implementation of strategic plans within available resources to achieve desired
result within stipulated time. The process is shown below:

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Source: -The role of evaluation and control in strategic management HRC Group, Strategic management
briefing papers (1989).

Strategic evaluation process is to measure the efficiency and effectiveness of strategic decisions. It
identifies the desired results achieved by the strategic decisions.

The controlling process makes sure about corrective strategies and actions that are required to achieve
organisational goals.

10.7 STRATEGIC CONTROL

Strategic controlling is the process of monitoring and checking the performance of strategic decisions,
ensuring the effective implementation of strategic plans and polices, identifying the problems and to
take corrective actions whenever required for achieving the desired organizational objectives. In other
words it describes the controlling system for the effective implementation.

According to Robert J Mockler, “Management control implies systematic efforts to set standards to
compare actual performance with the pre- determined standards, to determine whether there are any
deviations and to measure their significance so as to take any action required to assure that all
corporate resources are being used in the most effective and efficient way”.

The above definition of Robert J Mockler has divided the controlling process in various steps as follows.

i. To establish performance standards

ii. To measure organizational performance

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iii. To measure the techniques

iv. To compare the performance with standards

v. To evaluate of deviations

vi. To take corrective actions

1. To establish performance standards:

This is the beginning steps of controlling process. The organization should develop the standards of
performances. While fixing the standards, precaution should be taken about their specificity.

Some standards may be difficult to quantify in explicit terms such as morale, discipline, creativity etc. In
such cases qualitative goals and design control mechanism are useful for measuring the performance.

2. To measure organizational performance:

After the finalized the goals or objectives of the organization, the next step is controlling process to
measure the actual achieved organizational performance as compared the fixed goals or objectives of
the organization.

3. To select the techniques:

It is one of the difficult tasks to measure the actual performance in the strategic decisions. There are
various techniques to measure the efficiency and effectiveness of strategic management.

5. To evaluate deviations:-

It is essential step before the deviation is corrected. The reasons should be investigated. The main idea is
to find the root cause for the deviations or problems therefore it would never arise in the future also.
The deviations may be positive or negatives.

6. To take corrective actions:-

After the analysis and investigation, the final steps are arrived to take corrective actions for remedy of
the problem. The corrective actions should be consistent to the internal and external environment of
business.

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10.7.1 Types of Strategic Control

Types of Strategic Control

Premise Strategic Implementation Strategic Alert

Control Surveillance control in Control in
in Strategic Strategic Strategic
In Strategic Control
Control

Fig: 10.2: Types of Strategic Control

Components/Types of the strategic control system

1. Strategic surveillance

This is designed to quickly detect environmental changes or shifts that are likely to impact the
company’s strategy.

2. Special alert control

This serves as an early warning system/ signal of pending crises and which may affect the company or
the implementation of its strategy.

3. Premise control

Strategy is based on certain planning premises/ assumptions. Premise control is designed to check
systematically and continuously whether the premises on which the strategy is based are still valid.
Planning premises are influenced heavily by industry and environmental factors which are often
changing. It requires monitoring the actions undertaken by management to implement strategy and
determine the effect of these actions.

4. Implementation control

Strategy implementation takes place as a series of steps, programs and investments that occur over an
extended time. It is designed to assess whether the overall strategy should be changed in light of the
results associated with the actions that implement the overall strategy.

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It is designed to review the progress being made in implementing strategy, highlighting deviations from
expectations and goals.

It is a post action control system using tools like budgets, schedules and programs. It provides evaluation
and control over

10.7.2 Importance of Strategic Control

• Control and quality: Quality of the products or Services indicates the success and progress path
of the organization in the competitive environment. The feedback mechanism under the evaluation
systems played crucial role for the improvement of quality of the product.

• Control and Efficiency: Efficiency indicates the output and input ratio of production which
includes all resources of the organization. It is involved the production and the efforts of human
resources. The controlling system makes sure about everything goes as per the strategy if not the
corrective actions should take for the efficiency under the production process.

• Control and innovations: Strategic control leads towards innovative and creativity through
continues monitoring and implementing the effective actions to acheve desired results.

• Control and customers satisfaction: The success of the strategic evaluation process is to
measure the satisfaction level of customers. An evaluation controlling system monitors and interacted
with employees through proper system and boosts the employees’ morale to provide better quality and
services to the customers.

Qualities of an effective (strategic) control system

1. It should be future oriented. It should help managers to visualize every aspect of the strategy
formulation and implementation and plan accordingly.

2. It should be closely linked to strategy evaluation requiring managers to examine the

appropriateness of their strategy.

3. It should emphasize both content and process issues. It should focus on the activities and
functions and the process of performing the activities.

4. It should balance short term and long term demands on the company i.e. should recognize that
short term successes do not always mean long term competitive superiority.

5. It should establish formality without undue bureaucracy i.e. should establish a structure that
creates legitimacy and instils a sense of accountability and help to accomplish goals efficiently and
economically.

6. Suitability; it must be tailored to suit the nature and requirements of the organization.
Techniques of control will vary according to the size and type of the organization.

7. Promptness; the system should be able to detect deviations and problems before they occur.

8. Objectivity; standards of measurements should be objective and specific i.e. based on facts so
that control is acceptable and useful.

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Reasons for failure of control systems

1. Poorly stated goals.

2. Obsession with procedures and systems-even if they make sense or not.

3. Insufficient information processing capabilities. This may be because of faulty design of the
system or failure of the company to upgrade the system as information needs change.

4. Mismatch between the capabilities of the system and managers’ abilities i.e. the system may
generate more information than managers can reasonably process. They are thus overwhelmed by
detailed data or sometimes the system may not generate the required data.

5. Breakdown in authority-responsibility centres; as the organization becomes bigger, people

responsible for control become far removed from the operating units. Additionally a long time may
elapse between data collecting and reporting making it to lose relevance and timeliness which may
cause the company to miss opportunities.

6. Dysfunctional organization politics;

Organizational political manoeuvring is involved in the entire control process i.e. the type of information
to be collected, who collects them, who has access to the data, who interprets it, etc. Managers have a
lot at stake when it comes to control systems

e.g. their reputations and those of their units are greatly affected by the system’s results. Resource
allocation and compensation decisions are affected by the results of strategic controls. In trying to gain
and maintain power, managers may render the control system ineffective by;

• Withholding information they consider damaging to their careers.

• Manipulating the data to make the results look more positive to their seniors.

• Offering multiple interpretations of the results to create uncertainty about the meaning of the
findings.

• Using the results to implicate other units or executives for their units’ poor results.

The role of senior executives in strategic control

To ensure effective strategic controls, senior executives should;

• Clarify and communicate the goals of the control system. They should outline expected results
and their potential uses.

• Establish information flow between different units of the control units.

• Clarify the responsibilities associated with different units of the control system. They should
decide who will carry out the

control system’s managerial responsibilities.

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• Provide political and financial support i.e. making available the right personnel and equipment
for the system.

10.8 TECHNIQUES OF STRATEGIC EVALUATION AND CONTROL

Strategic evaluation is referred to the process of the measurements and testing the efficiency and
effectiveness of strategic decisions to achieve business objectives and takingthe corrective steps and
actions if desired objectives not achieved.

Techniques of Strategic Evaluation are stated below:

1. Gap Analysis: This is one of the techniques which can identify the gap between the actual
achieved performance and expected performance of the organization as per the management strategy.
With the various business tools and ratio analysis, it can easily indentify the gap between actual and
expected performance. Under the Financial measures the gap identify with the help of various ratio,
relationship of business variables to each other’s such as Net Sales to Working Capital ,Current Ratio,
Net profit to net sales ratio, etc. Undermarketing measures, the gap identify with the analyses of Sales,
Market share, Competitors performance, etc.

2. SWOT Analysis: This is one techniques of strategic evaluation to actual monitor the performance
of strategic decisions. SWOT describes as organization’s strengths, weaknesses, opportunities and
threats.The business environment is complex and dynamic nature and consists of internal and external
environment. It is an Unpredictable about the future and accuracy of business environment. Internal
Environment consists of organization’s strengths, weaknesses and on other side external environment is
only being provided only opportunities and threats. The Evaluation system should analyse the internal
and external environment of business and plan organization’s strengths, weaknesses, opportunities and
threats for the effectively applicable business resources to achieve desired results.

3. PEST Analysis: This is one of the techniques used for the evaluation system of strategy.The
business atmosphere is highly sensitive and complex in nature. PEST denotes Political, Economical,
Social and Technological factors directly impact on the business. These are essential factors should be
considered while framing the strategy.

4. Benchmarking: It is technique of strategic evaluation to identify whether the organization is

achieved the expected results or not. If it is failed to achieve the expected result, then what is the
difference between actual result and expected result. The organization must set the Standard
performance is benchmark for the measuring actual performance.The regular monitoring and measuring
the performance of strategic plan and collection of data that indicates actual result of the given activity
and set the benchmark of activity.