Strategic Evaluation & Control  How is the organization performing?

 Are the time schedules being adhered to?

Strategic Management Process  Are the resources being utilized properly?
 Strategic Evaluation is defined as the process  What needs to be done to ensure that resources
of determining the effectiveness of a given are utilized properly and objectives met?
strategy in achieving the organizational objectives
and taking corrective action wherever required. Participants in Strategic Evaluation
 Shareholders
 Strategy evaluation is the final step of strategy  Board of Directors
management process. The key strategy evaluation  Chief executives
activities are: appraising internal and external  Profit-centre heads
factors that are the root of present strategies,  Financial controllers
measuring performance, and taking remedial /  Company secretaries
corrective actions. Evaluation makes sure that the  External and Internal Auditors
organizational strategy as well as it’s  Audit and Executive Committees
implementation meets the organizational  Corporate Planning Staff or Department
objectives.  Middle-level managers

Nature of Strategic Evaluation Process of Strategic Evaluation

 Nature of the strategic evaluation and control
process is to test the effectiveness of strategy. 1) Fixing benchmark of performance
 While fixing the benchmark, strategists
 During the strategic management process, the encounter questions such as—what benchmarks to
strategists formulate the strategy to achieve a set set, how to set them and how to express them.
of objectives and then implement the strategy.  In order to determine the benchmark
performance to be set, it is essential to discover
 There has to be a way of finding out whether the special requirements for performing the main
the strategy being implemented will guide the task.
organization towards its intended objectives.  The organization can use both quantitative and
Strategic evaluation and control, therefore, qualitative criteria for comprehensive assessment
performs the crucial task of keeping the of performance.
organization on the right track.  Quantitative criteria includes determination of
net profit, ROI, earning per share, cost of
 In the absence of such a mechanism, there production, rate of employee turnover etc. Among
would be no means for strategists to find out the Qualitative factors are subjective evaluation of
whether or not the strategy is producing the factors such as – skills and competencies, risk
desired effect. taking potential, flexibility etc.

 Through the process of strategic evaluation 2) Measurement of performance

and control, the strategists attempt to answer set  The standard performance is a bench mark with
of questions, as below. which the actual performance is to be compared.
 Are the premises made during strategy  The reporting and communication system help
formulation proving to be correct? in measuring the performance.
 Is the strategy guiding the organization towards  For measuring the performance, financial
its intended objectives? statements like – balance sheet, profit and loss
 Are the organization and its managers doing account must be prepared on an annual basis.
things which ought to be done?
 Is there a need to change and reformulate the
strategy?
3) Analyzing Variance the premises set during the planning and
 While measuring the actual performance and implementation process are still valid.
comparing it with standard performance there  It involves the checking of environmental
may be variances which must be analyzed. conditions. Premises are primarily concerned with
 The strategists must mention the degree of two types of factors:
tolerance limits between which the variance a. Environmental factors (for example, inflation,
between actual and standard performance may be technology, interest rates, regulation, and
accepted. demographic/social changes).
b. Industry factors (for example, competitors,
4)Taking Corrective Action suppliers, substitutes, and barriers to entry)
 Once the deviation in performance is identified,
it is essential to plan for a corrective action. 2) Implementation Control
 If the performance is consistently less than the  Implementing a strategy takes place as a series
desired performance, the strategists must carry a of steps, activities, investments and acts that occur
detailed analysis of the factors responsible for over a lengthy period.
such performance.  The two basis types of implementation control
are:
Techniques of Strategic Evaluation
1. GAP Analysis a. Monitoring strategic thrusts (new or key
2. SWOT Analysis strategic programs): Two approaches are useful in
3. PEST Analysis enacting implementation controls focused on
4. Benchmarking monitoring strategic thrusts: (1) one way is to
agree early in the planning process on which
Types of Strategic Control thrusts are critical factors in the success of the
The types of strategic controls are: strategy or of that thrust; (2) the second approach
 Premise control is to use stop/go assessments linked to a series of
 Implementation control meaningful thresholds (time, costs, research and
 Strategic surveillance development, success, etc.) associated with
 Special alert control particular thrusts.

Strategic Control b. Milestone Reviews: Milestones are significant

Strategic controls take into account the changing points in the development of a programme, such
assumptions that determine a strategy, continually as points where large commitments of resources
evaluate the strategy as it is being implemented, must be made. A milestone review usually
and take the necessary steps to adjust the strategy involves a full-scale reassessment of the strategy
to the new requirements. and the advisability of continuing or refocusing
the direction of the company.
Most commentators would agree with the
definition of strategic control offered by Schendel 3) Strategic Surveillance
and Hofer: "Strategic control focuses on the dual  Strategic surveillance is designed to monitor a
questions of whether: (1) the strategy is being broad range of events inside and outside the
implemented as planned; and (2) the results company that are likely to threaten the course of
produced by the strategy are those intended. the firm's strategy.
 The basic idea behind strategic surveillance is
1) Premise Control that some form of general monitoring of multiple
 Every strategy is based on certain planning information sources should be encouraged, with
premises or predictions. the specific intent being the opportunity to
 Premise control has been designed to check uncover important yet unanticipated information.
systematically and continuously whether or not
 Strategic surveillance appears to be similar in Ask participants to answer these simple questions:
some way to "environmental scanning." Strategic what are the strengths and weaknesses of your
surveillance is designed to safeguard the group, community, or effort, and what are the
established strategy on a continuous basis. opportunities and threats facing it?

4) Special Alert Control

 Another type of strategic control is a special
alert control.
 "A special alert control is the need to
thoroughly, and often rapidly, reconsider the
firm's basis strategy based on a sudden,
unexpected event." If a looser structure helps you brainstorm, you can
 The analysts of recent corporate history are full group positives and negatives to think broadly
of such potentially high impact surprises (i.e., about your organization and its external
natural disasters, chemical spills, plane crashes, environment.
product defects, hostile takeovers etc.).
 An example of such event is the acquisition of
your competitor by an outsider. Such an event
will trigger an immediate and intense
reassessment of the firm's strategy. Form crisis
teams to handle your company's initial response
to the unforeseen events. Below is a third option for structuring your
SWOT analysis, which may be appropriate for a
SWOT Analysis: Strengths, Weaknesses, larger initiative that requires detailed planning.
Opportunities, and Threats This "TOWS Matrix" is adapted from Fred
David's Strategic Management text.
What is a SWOT analysis and why should you
use one?

A SWOT analysis guides you to identify the

positives and negatives inside your organization
(Strength & Weakness) and outside of it, in the
external environment (Opportunity & Threat).
Developing a full awareness of your situation can
help with both strategic planning and decision -
making.

When do you use SWOT?

You might use it to:
David gives an example for Campbell Soup
Explore possibilities to problems.
Company that stresses financial goals, but it also
Make decisions for your initiative.
illustrates how you can pair the items within a
Determine where change is possible.
SWOT grid to develop strategies. (This version of
Adjust and refine plans mid-course.
the chart is abbreviated.)
What are the elements of a SWOT analysis?
A SWOT analysis focuses on Strengths,
Weaknesses, Opportunities, and Threats.
 Steps for conducting a SWOT analysis:
Designate a leader or group facilitator.
Designate a recorder to back up the leader if your
group is large.
Introduce the SWOT method and its purpose in
your organization.
Let all participants introduce themselves.
Have each group designate a recorder; direct them
to create a SWOT analysis.
Reconvene the group at the agreed-upon time to
share results.
Listing Your Internal Factors:#Strengths and Discuss and record the results.
Weaknesses (S, W) Prepare a written summary of the SWOT analysis
to give to participants.
General areas to consider
Human resources – staff, volunteers, board How do you use your SWOT analysis?
members, target population Use it to:
Physical resources – your location, Identify the issues or problems you intend to
building, equipment change.
Financial – grants, funding agencies, other Set or reaffirm goals.
sources of income Create an action plan.
Activities and processes – programs you
run, systems you employ In Summary
Past experiences – building blocks for A realistic recognition of the weaknesses and
learning and success, your reputation in the threats that exist for your effort is the first step to
community countering them with a robust set of strategies
that build upon strengths and opportunities. A
Listing External Factors:#Opportunities and SWOT analysis identifies your strengths,
Threats (O, T) weaknesses, opportunities and threats to assist
Forces and facts that your group does not control you in making strategic plans and decisions
include
Future trends in your field or the culture
The economy - local, national, or international
Funding sources - foundations, donors,
legislatures
Demographics - changes in the age, race, gender,
culture of those you serve or in your area
The physical environment (Is your building in a
growing part of town? Is the bus company cutting
routes?)
Legislation (Do new federal requirements make
your job harder...or easier?)
Local, national or international events

How do you create a SWOT analysis?

Who develops the SWOT?
When and where do you develop a SWOT
analysis?
How do you develop a SWOT analysis?