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PRESENTATION

ON
STRATEGIC CONTROL AND OPERATIONS CONTROL, MEASUREMENT OF PERFORMANCE, ANALYZING VARIANCES

STRATEGIC CONTROL
Strategic controls are early warning systems and differ from post-action controls which evaluate only after the implementation has been completed. Strategic controls take into account the changing assumptions that determine a strategy, continually evaluate the strategy as it is being implemented ,and take the necessary steps to adjust the strategy to new requirements.

STRATEGIC CONTROL
Is the strategy guiding the organization towards its intended objectives? Are the organization & the managers doing things which ought to be done? Is there a need to change & reformulate the strategy?

TYPES OF STRATEGIC CONTROL


Premise Control Implementation Control Strategic Surveillance Special alert control

PREMISE CONTROL
Necessary to identify the key assumptions (government policies, nature of competition, breakthrough in R&D) & keep track of any change in them so as to assess their impact on strategy & its implementation. Continually tests the assumptions Responsibility: Corporate Planning Staff

IMPLEMENTATION CONTROL
To evaluate whether the plans, programmes & projects, resulting from implementation of the strategy, are actually guiding the organization towards its predetermined objectives or not. May lead to Strategic rethinking Can be put into practice through Identification & monitoring of strategic thrusts Milestone review

STRATEGIC SURVEILLANCE
Designed to monitor a broad range of events inside & outside the company that are likely to threaten the course of a firms strategy Is a more general form of control Information for this can be obtained through formal yet simple strategic information scanning systems like Knowledge management systems Organizational learning

SPECIAL ALERT CONTROL


Based on a trigger mechanism for rapid response & immediate reassessment of strategy in light of sudden & unexpected events (eg: sudden fall of a govt., unfortunate industrial disaster etc.) Can be handled by formulation of contingency strategies & by assigning responsibility of unforeseen events to crisis management teams Organisations that Hope for the best and Prepare for the worst are in a vantage position to handle any crisis.

OPERATIONAL CONTROL
It is aimed at the allocation and use of organizational resources through an evaluation of the performance of organizational units, to assess their contribution to the achievement of organizational objectives.

DIFFERENCE B/W STRATEGIC AND OPERATIONAL CONTROL


Attribute Basic question Strategic control Operational control Are we moving in right How are we performing? direction? Proactive, continuous Allocation & use of questioning of the basic organization resources direction of strategy Steering the direction of organization. future Action control the

Aim

Main concern

Focus

External Environment

Internal organization

Time Horizon

Long-term

Short-term

Exercise control

Exclusively by top mgt, Mainly by executive or may be thru lower level middle mgt on the support. direction of top management.

Main techniques

Environmental scanning, Budgets and Schedules. information gathering, questioning & review.

EVALUATION PROCESS FOR OPERATIONAL CONTROL

SETTING OF STANDARDS
How to set these standards?
Key managerial tasks can be analyzed to find out key areas of performance. Standards can be set in these key areas.

What standards are to be set?


The special requirements for the performance of the key tasks help to determine the type of standards to set.

How do we express these standards?


Performance indicators that best express the special requirements could then be decided upon to be used for evaluation.

MEASUREMENT OF PERFORMANCE
Evaluation process operates at the performance level as action takes place. Standards of performance act as benchmarks against which actual performance is measured. Can be done through: accounting, reporting, communication systems etc. Problems faced during measurement:
Difficulties in measurement Timing of measurement Periodicity of measurement

ANALYSING VARIANCES
Comparison of actual performance (AP) with the standards (S) leads to Analyzing the variances. AP = S: Ideal but not realistic. Specify a range of tolerance limits. AP > S: Welcome situation. Also should be considered unusual, & a check needs to be made to test the validity of standards & the efficacy of the measurement system. AP < S: Alarming. Need to pin point areas where performance is below standard & go into the causes of the deviation.

Taking Corrective Action


Three courses of corrective action: Checking of Performance: If the evaluation process shows that performance is consistently lower than expected, in-depth analysis & diagnosis of the factors that might be responsible for bad performance.

Checking of Standards: It is less frequent, but done when it is found there is nothing wrong with the performance. May result in lowering or elevation of standards as required. Reformulation of Strategy: Most radical & in frequent. Strategic control will lead to conclusion that strategies need to reformulated. Takes the organization right to the beginning of the Strategic management process.

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