Evaluation and control in strategic management

Presented by:-
Meenakshi Chhangani
MBA III Sem
JIET Group of Institutions

 Strategic evaluation is a way for businesses to evaluate the health
and productivity of their company and their future endeavours.
 It attempt to see past the obvious factors that influence short-term
plans, and seek a more-dynamic study of the trends that will dictate the
future success or failure of the company.

 Test effectiveness of strategy
 Future oriented
 Crucial task performer
 Sets objectives
 Helps in determining whether the organization is moving
in right direction.

 Shareholders
 Board of directors
 Chief executives
 Profit centred heads
 Financial controllers
 Company secretaries
 External and internal auditors
 Audit and executive committees
 Corporate planning staff or department
 Middle level managers

MERITS DEMERITS
 Keep check on validity of
strategic choices
 Provides feedback
 Helps in comparing and
assessing the required and
achieved strategies.
 Facilitates direction
 Limits of control
 Difficulty in measurement
 Resistance to evaluation
 Rely on short term
implications of activities

 Strategic control can be defined as process of monitoring
as to whether to various strategies adopted by the
organization are helping its internal environment to be
matched with the external environment.

 Premise
 Implementation
Strategic surveillance
Special alert control

 Premise control is designed to check systematically and
continuous whether or not the premises set during the planning
and implementation process are still valid.
 Implementation control is designed to assess whether the
overall strategy result associated with incremental steps and
actions that implement overall strategy.
 Strategic surveillance It is designed to monitor a broad range
of events inside and outside the company to threaten the course
of firm's strategy.
 Special alert control is the need to thoroughly and often rapidly
reconsider the firm's basic strategy based on a sudden
unexpected event.

1. Determine what to control. What are the objectives the organization
hopes to accomplish?
2. Set control standards. What are the targets and tolerances?
3. Measure performance. What are the actual standards?
4. Compare the performance the performance to the standards. How
well does the actual match the plan?
5. Determine the reasons for the deviations. Are the deviations due to
internal shortcomings or due to external changes beyond the control of
the organization?
6. Take corrective action. Are corrections needed in internal activities to
correct organizational shortcomings, or are changes needed in
objectives due to external events?

Activity Based Costing (ABC)
Allocating indirect and fixed costs to individual product
based on the value added activities going into that
product.
It is a costing methodology that identifies activities in
an organization and assigns the cost of each activity
with resources to all products and services according to
the actual consumption by each. This model assigns
more indirect costs (overhead) into direct
costs compared to conventional costing.

Implementation
Activity based costing must be implemented in the following ways:
 Identify and assess ABC needs
 Training requirements - Basic training for all employees
 Define the project scope - Evaluate mission and objectives for the project.
 Identify activities and drivers - Determine what drives what activity.
 Create a cost and operational flow diagram – How resources and activities are
related to products and services.
 Collect data – Collecting data where the diagram shows operational
relationship.
 Build a software model, validate and reconcile.
 Interpret results and prepare management reports.
 Integrate data collection and reporting.

 Tracing Costs
 Transition to automated Activity-based costing accounting
 Public sector usage

 Enterprise risk
management (ERM) is the
process of planning,
organizing, leading, and
controlling the activities of
an organization in order to
minimize the effects of
risk on an organization's
capital and earnings.

 Enterprise risk
management expands the
process to include not just
risks associated with
accidental losses, but also
financial, strategic,
operational, and other
risks.

 Companies believing that risks are monitored in other
ways besides through ERM.
 Too many other pressing needs.
 No requests to change our risk management approaches

BOD
Group risk
management
committee
Business
units
Disclosures
committee
Audit
committee

Risk
identification
Risk
assessment
&
management
Risk
response &
action
Monitoring
Reporting

Organisational performances can be
measured by two different criteria. They
are:-
Quantitative measures
Qualitative measures

QUANTITATIVE QUALITATIVE
 ROI
 ROE
 Profit Margin
 Debt-to-equity
 Market share
 Earning per share
 Consistency
 Consonance
 Advantage
 Feasibility

Problems in measuring strategic
performance are as follows:
1. Short-term orientation
2. Goal displacement

Evaluation and control in strategic management

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Evaluation and control in strategic management