Beruflich Dokumente
Kultur Dokumente
measured. For setting standards for control purpose it is necessary to identify clearly
and precisely the results which are to be attained. After setting the standards it is
also necessary to decide about the level of performance.
Standards are the levels of key variables that will be accepted as satisfactory.
These standards may be of three types: pre-determined standards, historical
standards, and external standards. Pre-determined standards are the goals set
during the goal formulation process of a strategic management program. Historical
standards are set by using past performance as a comparative base. Thus, current
performance is compared with past performance. Historical standards are often used
to evaluate performance. Use of historical standards is recommended only when it is
determined that conditions have not changed so as to invalidate the trend and when
prior performance is known to be acceptable. External standards refers to those
whose values are derived from sources outside the organization or strategic
business units. For example, management expectation, such as market share, return
on assets, earnings per share etc. The shortcoming of this type of standard is the
possible non-comparability of firms. Of these three types of standards, the one best
suited for strategic management control purposes is predetermined standards.
(ii) Measuring Actual Performance: The next stage in control process is the
measurement of actual performance against the standards already set. This involves
measuring the performance in respect of a work in terms of control standards. The
measurement of performance against its standards would be on a continuous basis
so that deviations may be ascertained in advance of their actual performance and
avoided by appropriate actions. Measurement of actual performance becomes an
easy task if the standards are properly determined and the methods of measuring
performance can be expressed explicitly.
(iii) Comparison of Actual Performance against Standards: This stage involves
measuring actual key variable performance, comparing results against standards,
and informing the appropriate people so that deviations can be detected and
corrections made or reinforcement given. Financial or management accounting
systems are usually relied on for measuring actual performance. However, many
other measurement methods are also available, including product sampling, various
predictions, observation by managers, meetings, and conferences. Whatever
STRATEGIC CONTROL TECHNIQUES
the basis of control criteria used and termed as revenue centers, expense
centers, profit centers and investment centers.
(b) Underlying Success Factors: The organization can achieve its objectives by
focusing continuously on the success factors.
(c) Generic Strategies: Generic strategic approach to strategic control is based
on the assumption that an organizations strategy should be comparable
with others in the same industry. Based on this, the organization can adjust
its strategy.
3. Strategic Leap Control: Strategic leap control enables the organizations
operating in a relatively unstable and turbulent environment in defining new strategic
requirements and to cope with environmental realities. The following techniques are
generally used for exercising strategic leap control.
(a) Strategic Issue Management: It involves identifying strategy issues and
assessing their impact on the organization. By managing strategic issues in
time, the organization can avoid the adverse impact on environmental
surprises.
(b) Strategic Filed Analysis: It involves examining the nature and extent of
synergies that can be developed in changing environment.
(c) Systems Modeling: It refers to simulated technique of decision making in
which various organizational features and environmental scenarios are
analyzed on simulated basis.
1. Consistency
A strategy should not present inconsistent goals and policies. Organizational
conflict and interdepartmental bickering are often symptoms of managerial
disorder, but these problems may also be a sign of strategic inconsistency.
There are three guidelines to help determine if organizational problems are due
to inconsistencies in strategy :
If managerial problems continue despite changes in personnel and if they
tend to be issue-based rather than people-based, then strategies may be
nconsistent.
If success for one organizational department means, or is interpreted to
mean, failure for another department, then strategies may be inconsistent.
If policy problems and issues continue to be brought to the top for
resolution, then strategies may be inconsistent.
2. Consonance
Consonance refers to the need for strategists to examine sets of trends as well
as individual trends in evaluating strategies. A strategy must represent an
adaptive response to the external environment and to the critical changes
occurring within it. One difficulty in matching a firms key internal and
external factors in the formulation of strategy is that most trends are the result
of interactions among other trends. For example, the daycare explosion came
about as a combined result of many trends that included a rise in the average
level of education, increased inflation, and an increase in women in the
workforce. Although single economic or demographic trends might appear steady for
many years, there are waves of change going on at the interaction
evel.
3. Feasibility
A strategy must neither overtax available resources not create unsolvable sub
problems. The final broad test of strategy is its feasibility ; that is , can the
strategy is attempted within the physical, human, and financial resources of the
VARIANCE ANALYSIS
Variance analysis refers to finding out deviations in respect of actual
performance as compared to the standards or set targets. It is one of the
important steps in the control process. The variances are the difference between
the standard performance and the actual performance. Where variances
recorded are unfavourable, the concerned head is held responsible for it, and he
ELECTRONIC COMMERCE
Electronic commerce refers to the use of the Internet to conduct business
transactions. A 1999 survey conducted by Booz-Allen & Hamilton and the Economist
Intelligence Unit of more than 525 top executives from a wide range
of industries revealed that the Internet is reshaping the global marketplace and
that it will continue to do so for many years. More than.90% of the executives
believed that the Internet would transform or have a major impact on their
corporate strategy within two years. According to Matthew Barrett, Chairman
and CEO of the Bank of Montreal, "We are only standing at the threshold of a
New World. It is as if we had just invented printing or the steam engine. Not
only is the Internet changing the way customers, suppliers, and companies
interact, it is changing the way companies work internally. In just the few years
since its introduction, it has profoundly affected the basis of competition in
many industries. Instead of the traditional focus on product features and costs,
the Internet is shifting the basis for competition to a more strategic level in
which the traditional value chain of an industry is drastically altered. A 1999
report by AMR Research indicated that industry leaders are in the process of
moving 60 to 100% of their business to business (B2B) transactions to the
Internet. The net B213 marketplace includes (a) Trading Exchange Platforms
like VerticalNet and i2 Technologies's TradeMatrix, which support trading
communities in multiple markets; (b) Industry Sponsored Exchanges, such as
the one being built by major automakers; and (c) Net Market Makers, like
e-Steel, NECX, and BuildPoint, which focus on a specific industry's value
chain or business processes to mediate multiple transactions among businesses.
The Garner Group predicts that the worldwide B2B market will grow from
$145 billion in 1999 to $7.29 trillion in 2004, at which time it will represent 7%
of the total global sales transactions.
The above mentioned survey of top executives identified the following seven
trends, due at least in part, to the rise of the Internet:
1. The Internet is forcing companies to transform themselves. The concept of
electronically networking customers, suppliers, and partners is now a
reality.
2. New channels are changing market access and branding, causing the
disintermediation (breaking down) of traditional distribution channels. By
working directly with the customers, companies are able to avoid the usual
distributors, thus forming closer relationships with the end users,
improving service, and reducing costs.
3. The balance of power is shifting to the consumer. Now having unlimited
access to information on the Internet, customers are much more
demanding than their "nonwired" predecessors.
4. Competition is changing. New technology- driven firms plus older
traditional competitors are exploiting the Internet to become more
innovative and efficient.
5. The pace of business is increasing drastically. Planning horizons,
information needs, and customer/supplier expectations are reflecting the
immediacy of the Internet. Because of this turbulent environment, time is
compressed into "dog years" in which one year feels like seven years.
6. The Internet is pushing corporations out of their traditional boundaries.
The traditional separation between suppliers, manufacturers, and
customers is becoming blurred with the development and expansion of
extranets, in which cooperating firms have access to each other's internal
operating plans and processes. For example, Bharat Petroleum
Corporation Limited (BPCL), the Indian PSU oil major has networked
with satellite unlinking through KU band. The technology can be further
used to network the retail outlets for better market response and
monitoring. Various interesting alternative uses of this technology are
feasible which are being studied and would be deployed suitably.