The document provides information on strategic evaluation and control. It defines strategic evaluation and control as determining the effectiveness of a strategy in achieving organizational objectives and taking corrective actions. Key aspects covered include: 1. The nature of strategic evaluation involving assessing strategy premises and guidance towards objectives. 2. The importance of evaluation for coordination, feedback, validating choices and successful strategy implementation. 3. Participants, barriers, and requirements for effective evaluation. 4. The evaluation process involving setting standards, measuring performance, analyzing variances, and taking corrective actions. 5. Types of strategic controls like operational control, premise control, and implementation control. 6. Evaluation techniques like value chain analysis, benchmarking

1. MODULE 5
STRATEGY EVALUATION
• What is strategic evaluation (2 Marks) 2014
• What is strategic control (2 Marks) 2014
• Explain the nature and importance of strategic evaluation (8
Marks) 2017 and 2014
• What is strategy surveillance (2 Marks) 2015
• Why strategies need to be evaluated and controlled? Explain
(8 Marks) 2015
• Meaning of operation control (2 Marks) 2016
• Write a note on key result areas (8 Marks) 2016
• Discuss the various evaluation techniques of operation
control (15 Marks) 2016
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2. Nature of strategic evaluation and control
• Strategic evaluation and control is the process of determining the
effectiveness of a given strategy in achieving the organisational
objectives and taking corrective action wherever required.
• Two sets of questions are relevant in strategy evaluation and
control:
 Are the premises made during strategy formulation proving to be correct?
 Is the strategy guiding the organisation towards its intended objectives?
 Are the organisation and its managers doing things which ought to be done?
 Is there a need to change and reformulate the strategy?
 How is the organisation performing? Are the time schedules being adhered
to?
 Are the resources being utilised properly?
 What needs to be done to ensure that resources are utilised properly and
objectives are met?
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3. Importance of strategic evaluation
• Ability to coordinate the tasks performed by
individual managers
• Need for feedback, appraisal and reward
• Check on the validity of strategic choice
• Congruence between decisions and intended
strategy
• Successful culmination of the strategic management
process
• Creating inputs for new strategic planning
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4. Participants in strategic evaluation
• Shareholders
• Board of directors
• Chief executives
• SBU or profit centre heads
• Financial controllers, company secretaries, and
external and internal auditors
• Audit and executive committees
• Corporate planning staff or department
• Middle-level managers
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5. Barriers in evaluation
• Limits of control
• Difficulties in measurement
• Resistance to evaluation
• Relying on efficiency versus effectiveness
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6. Requirements for effective evaluation
• Control should involve only the minimum amount of
information
• Control should monitor only managerial activities
and results
• Controls should be timely
• Long-term and short-term controls should be used
• Controls should aim at pinpointing exceptions
• Reward of meeting or exceeding standards should be
emphasised
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7. Process of evaluation
• The process of evaluation basically deals with four steps:
 Setting standards of performance
 Measurement of performance
 Analysing variances
 Taking corrective action
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8. The evaluation process for operational control
Strategy / plan
/ objectives
Setting
standards of
performance
Actual
performance
Analysing
variance
Management
of
performance
Feedback
Reformulation
Check
standards
Check
performance
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9. Types of strategic controls
• Operational Control
• Premise control
• Implementation control
• Strategic surveillance
• Special alert control
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10. Operational Control
• Operational control is the authority to perform those
functions of command over subordinate forces involving
organizing and employing commands and forces, assigning
tasks, designating objectives, and giving authoritative
direction necessary to accomplish the mission.
Factors affecting operational control
• 1. Plant capacity
• 2. Working capital
• 3. Operational human competency
• 4. Productivity and production targets
• 5. Risk tendency
• 6. Operational efficiency
• 7. Market advantage
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11. Premise Control
• Your business strategy is based on an assumed premise of how
things will occur in the future. Premise controls allow you to
examine whether this assumption still holds true once you
actually put your ideas into action. Premises may be affected
by environmental factors such as inflation, interest rates and
social changes or by industry factors such as competitors,
suppliers and barriers to entry. These controls will help you
recognize changes in the premise so you can adapt your
strategy accordingly.
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12. 1)Premise Control
• -- Every strategy is based on certain planning premises or
predictions.
 -- Premise control has been designed to check
systematically and continuously whether or not the
premises set during the planning and implementation
process are still valid.
 -- It involves the checking of environmental conditions.
Premises are primarily concerned with two types of
factors:
a.Environmental factors (for example, inflation,
technology, interest rates, regulation, and
demographic/social changes).
b.Industry factors (for example, competitors,
suppliers, substitutes, and barriers to entry)
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13. Implementation Control
• Implementation strategy aims at determining whether the
strategy is properly implemented. Implementation of strategy
involves allocation of organizational resources to different
activities.
• Once you design a strategy for your business, you will need to
implement it. As you take the steps necessary to put your plan
into action, use implementation controls to ensure no
adjustments to your strategy are necessary. Two basic types of
implementation controls are monitoring strategic thrusts and
doing milestone reviews. The former means you analyze the
tactics you're using to gain market share. The latter allows you
to conduct a full-scale assessment of your business at
designated points in your strategy.
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14. Special Alert Control
• You will need mechanisms in place to assess the position of
your business in the case of sudden events, such as natural
disasters, product recalls or market spikes. Special alert
controls allow you to reconsider the relevancy of your strategy
in light of these new events. Prepare how you will handle
these special alerts with procedures to be followed, priorities
to keep and tools to be used.
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15. Strategic Surveillance Controls
• As a small-business owner, you need to protect your business
from external threats that may hinder the success of your
strategy. Strategic surveillance controls allow you to monitor
multiple sources for these threats. Continually safeguard your
strategy by following trade journals, attending conferences
and keeping awareness of industry trends to meet these risks
as they arise.
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16. How do strategic control and operational control
differ?
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Attribute Strategic control Operational control
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1. Basic question "Are we moving in the right direction"? "How are we performing?
2. Aim Proactive, continuous questioning Allocation and use of the
basic direction of strategy organisational resources
3. Main concern ‘Steering’ the organisation’s future direction Action control
4. Focus External environment Internal organisation
5. Time horizon Long-term Short-term
6. Exercise of control Exclusively by top management, Mainly by executive or middle
may be through lower-level support level management on the
direction of the top
management
7. Main techniques Environmental scanning, information Budgets, schedules and MBO
gathering, questioning and review
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Based on J. A. Pearce III and R. B. Robinson, Jr.: Strategic Management: Strategy Formulation and Implementation (3rd edn.),
(Homewood, Ill.: Richard D. Irwin, 1988), pp.404-419.
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17. Features of effective control
system
• Suitable
• Simple
• Selective
• Economical
• Flexible
• Reasonable
• Forward-looking
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18. EVALUATION TECHNIQUES
FOR OPERATION CONTROL
• Value Chain Analysis
• Bench-marking
• Balance Score-card
• Quantitative Performance Measures
• Qualitative Performance Measures
• Key Factor Rating
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19. Valuechainanalysis
value chain analysis is a strategy tool
used to analyze internal firm
activities. Its goal is to recognize,
which activities are the most
valuable (i.e. are the source of cost
or differentiation advantage) to the
firm and which ones could be
improved to provide competitive
advantage.
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20. Refer 2nd module Slides
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21. Bench Marking
 Benchmarking is a strategic evaluation technique that’s 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.
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22. Balanced Scorecard
• The Balanced Scorecard is a strategic planning and
management system used to align business activities to the
vision and strategy of the organization by monitoring
performance against strategic goals.
• Was first published in 1992 by Kaplan and Norton, a book
followed in 1996.
• Traditional performance measurement that only focus on
external accounting data are obsolete.
• The approach is to provide 'balance' to the financial
perspective.
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23. MANASA
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24. MANASA
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25. Business Perspectives
Questions
• Financial – What must we do to create sustainable economic
value?
• Internal Business Process – To satisfy our stakeholders, what
must be our levels of productivity, efficiency, and quality?
• Learning and Growth – How does our employee performance
management system, including feedback to employees,
support high performance?
• Customer – What do our customers require from us and how
are we doing according to those requirements?
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26. MANASA
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27. MANASA
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28. Quantitative and Qualitative
Performance Measures
• Quantitative Measurement – goal is measured by a metric or
statistic.
1. Ratio analysis
2. Return on Investment
3. Profit margin
4. Earnings per share
5. Sales growth and so on
• Qualitative Measurement – goal is measured by manager’s
observation without any statistics or metrics to pull from.
1. Internal consistency of the strategy
2. Degree of acceptability of strategy
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29. MANASA
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30. KeyFactorRating:
Organizational capability
Profile
Financial Capability Profile
a)Usage of Funds
b)Management of Funds
Marketing capability Profile
a)Product Related
b)Price related
c) Promotion related
d)Integrative and Systematic
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31. OperationcapabilityFactor
a)Production System
b)Operation and control system
Personal capability factor
a)Personal System & employee
characteristic
b)Industrial relations
General management
capability
a)General management system
b)External relations
c) Organization Climate
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32. Management control
• Control is an important function of management. Management is
ensuring accomplishment of work according to plans. It is a process
that guides activities towards predetermined goals.
• A management function aimed at achieving defined goals within an
established timetable, and usually understood to have three
components:
• (1) Setting standards,
• (2) Measuring actual performance, and
• (3) Taking corrective action.
A typical process for management control includes the following steps:
• (1) Actual performance is compared with planned performance,
• (2) The difference between the two is measured,
• (3) Causes contributing to the difference are identified, and
• (4) Corrective action is taken to eliminate or minimize the difference.
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33. SCOPE OR AREAS OF
MANAGERIAL CONTROL
• Managerial control over policies
• Control over organisation
• Control over personnel
• Control over costs
• Control over wages and salaries
• Control over capital expenditure
• Control over external relations
• Control over production
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34. WHAT ARE
''KRA'' AND ''KPA'' Key Process Area AND
''KPI''Key Perfomace Indicator
• Key Result Areas
“Key Result Areas” or KRAs refer
to general areas of outcomes or
outputs for which the
department's role is responsible.
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35. Value of KRAs
• Identifying KRAs helps individuals: ·
Clarify their roles · Align their roles to the
organisation‟s business or strategic plan ·
Focus on results rather than activities ·
Communicate their role‟spurposes to
others · Set goals and objectives ·
Prioritize their activities, and therefore
improve their time/work management ·
Make value-added decisions
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36. Description of KRAs
• Key result areas (KRAs) capture about
80% of the department's work role. The
remainder of the role is usually devoted to
areas of shared responsibility
(e.g., helping team members, participating
in activities for the good of the
organisation).
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37. Example
• KRA 1
-RECRUITMENT/ SELECTION
KPA 1 (objectives) --RECRUITMENT
KPI ----reduce average time taken to fill
marketing/sales vacancies by 15%
KPI ----reduce average cost per recruit
by 10%
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38. example
• CORPORATE OBJECTIVE / STRATEGY
-to gain world market share of 51%
DISTRIBUTION OBJECTIVE
-Improve / Increase the distribution coverage by 20%
KRA 1
-DISTRIBUTION
KPA 1 --CHANNEL EXPANSION BY 2 NEW
CHANNELS.
KPI ----INCREASE THE CHANNEL NETWORK BY 20%
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39. CORPORATE OBJECTIVE / STRATEGY
-to gain world market share of 51%
SALES DEPARTMENT'S OBJECTIVE
-INCREASE THE SALES COVERAGE BY 20%.
KRA 1
-SALES COVERAGE
KPA 1 --SALES COVERAGE
KPI ----INCLUDE 5 MORE COUNTRIES IN THE SALES EXPANSION.
KPI ----INCREASE THE GEOGRAPHICAL COVERAGE BY 15%.
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40. Purpose of KRAs.
• View a snapshot of performance at an individual, group,
department, hospital, or regional level
• Assess the current situation and determine root causes of
identified problem areas
• Set goals, expectations, and financial incentives for any
individual, group, or enterprise
• Trend the performance of the selected individual, group, or
enterprise over time
• To Increase management awareness
• Focuses attention on improvement opportunities
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