Introduction

The final stage in strategic management is strategy evaluation and control. All strategies are subject to future modification because internal and external factors are constantly changing. In the strategy evaluation and control process managers determine whether the chosen strategy is achieving the organization's objectives. The fundamental strategy evaluation and control activities are: reviewing internal and external factors that are the bases for current strategies, measuring performance, and taking corrective actions.

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

Nature of Strategic Evaluation

Nature of the strategic evaluation and control process is to test the effectiveness of strategy. During the two proceedings phases of 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.

Strategic Evaluation and Control

Strategic evaluation operates at two levels:
Strategic level - wherein we are concerned more with the consistency of strategy with the environment. Operational level wherein the effort is directed at assessing how well the organisation is pursuing a given strategy.

Evaluation and Control in Strategic Management:

Evaluation & control information consists of performance data and activity reports (gather in step 3), operational Managers must know about any undesired performance caused by the inappropriate use of SMP in order to correct the employee activity. Top management need not be involved. It, however, the processes themselves cause the undesired performance, both top managers and operational managers must know about it so that they can develop new implementation programme or procedures.

 Evaluation and Control information must be relevant to what is being monitored. Evaluation and Control are not easy activities; one of the obstacles to effective control is the difficulty in developing appropriate measures of important activities and outputs . This process provides the feed back necessary for management to evaluate the results and take corrective action, as needed.

The process of strategic evaluation & Control

1. Determine what to measure: Top managers and operational managers must specify Implementation process and results to be monitored and evaluated. The processes and results must be measurable in a reasonably objective and consistent manner. The focus should be on the most significant elements in a process the ones that account for the highest proportion of exposure or the greatest no. of problems.

 2. Establish standards of Performance: Standards used to measure performance are detailed expressions of strategic objectives. They are measures of acceptable performance results. Each standard can be usually includes a tolerance range, which defines any acceptable deviations. Standards can be set not only for final output, but also for intermediate stages of production output.

 3. Measure actual performance Measurements must be made at predetermined times. 4. Compare actual performance with the standard If the actual performance results are within the desired tolerance range, the measurement process stops here.

 5. Take corrective action: If the actual results fall outside the desired tolerance range, action must be taken to correct the deviation. The action must not only correct the deviation but also prevent its recurrence. The following issues must be resolved: 1. Is the deviation only a chance fluctuation? 2. Are the processes being carried out in correctly? 3. Are the processes appropriate for achieving the desired standards?

Process diagram

4 Measure performance. Does perform- No ance match standards?

5 Take corrective action.

Determine what to measure.

Establish predetermined standards.

Yes

STOP

Objectives of Strategy Evaluation and Control

Organizations are most vulnerable when they are at the peak of their success . Erroneous strategic decisions can inflict severe penalties and can be exceedingly difficult, if not impossible, to reverse. Strategy evaluation is vital to an organizations well-being; timely evaluations can alert management to problems or potential problems before a situation becomes critical.

Importance of Strategic Evaluation

Strategic evaluation helps to keep a check on the validity of a strategic choice. An ongoing process of evaluation would, in fact, provide feedback on the continued relevance of the strategic choice made during the formulation phase. This is due to the efficacy of strategic evaluation to determine the effectiveness of strategy.

Importance of Strategic Evaluation

During the course of strategy implementation managers are required to take scores of decisions. Strategic evaluation can help to assess whether the decisions match the intended strategy requirements. In the absence of such evaluation, managers would not know explicitly how to exercise such discretion.

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.

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

Strategic Audit
Strategy audit is one of the methods for evaluating the performance of the chosen strategy. It provides a checklist of questions, by area or issue, which enables a systematic analysis of various organizational functions or activities. Audit is an extremely useful diagnostic tool to pinpoint the problems areas and highlights organizational strengths and weaknesses for corporate planning. However, the main objective of strategic audit is to develop benchmarks.

The process involves the following steps: Identification of functions or process, usually an activity which can give a business unit competitive advantage, that has to be audited. Determination of measures of performance of the function or process.

CONTROLLING
Controls can be established to focus either on actual performance results (OUT PUT), on the activities that generate the performance (BEHAVIOR) or resources that are used in performance (INPUT).

 The Primary Types of Organizational Control There are three primary types of organizational control: strategic control, management control, and operational control. Strategic control= the process of evaluating strategy, is practiced both after the strategy is formulated and after it is implemented. Management control= focuses on the accomplishment of the objectives of the various sub strategies comprising the master strategy and the accomplishment of the objectives of the intermediate plans (for example, "are quality control objectives being met?"). Operational control= is concerned individual and group performance as compared with the individual and group role prescriptions required by organizational plans (for example, "are individual sales quotes being met?").

Types of controlling

Guidelines for Proper Control

Measuring performance is a crucial part of Evaluation and Control. The lack of quantifiable objectives or performance standards and the inability of the information system to provide timely, valid information are two obvious control problems. In designing a control system, top management should remember that controls should follow strategy. Unless controls ensure the use of the proper strategy to achieve objectives, dysfunctional side effects may completely undermine the implementation of the objectives. The following guidelines are very important to develop the control system in any organization:

 1. Controls should involve only the minimum amount of information needed to give a reliable picture of events. Too many controls create confusion. Focus on the strategic factors by following the 80/20 rule: Monitor those 20% of the factors that determine 80% of the results. 2. Controls should monitor only meaningful activities and result. 3. Controls should be timely. 4. Controls should be long term and short term 5. Controls should pinpoint exceptions. 6. Controls should be used to reward meeting or exceeding standards rather than to punish failure to meet standards