You are on page 1of 20

Strategic Evaluation and

Business Policy and
Strategic Management
Strategic Evaluation and Control
Strategic evaluation and control
constitutes the final phase of strategic

Strategic Evaluation and Control
Strategic evaluation operates at two
Strategic level - wherein we are concerned
more with the consistency of strategy with the

Operational level wherein the effort is
directed at assessing how well the
organisation is pursuing a given strategy.

Strategic evaluation and control could be
defined as the process of determining
the effectiveness of a given strategy in
achieving the organisational objectives
and taking corrective action wherever

Nature of Strategic Evaluation
to test the effectiveness of strategy.

There has to be a way of finding out whether the strategy being
implemented will guide the organisation towards its intended

performs the crucial task of keeping the organisation on the
right track.

In the absence of such a mechanism, there would be no means
for strategists to find out whether or not the strategy is
producing the desired effect.
Nature of Strategic Evaluation
Through the process of strategic evaluation and control,
the strategists attempt to answer set of questions, as
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 met?
Importance of Strategic
Strategic evaluation helps to keep a check on
the validity of a strategic choice.
An ongoing process of evaluation would, in
fact, provide feedback on the continued
relevance of the strategic choice made during
the formulation phase.
This is due to the efficacy of strategic
evaluation to determine the effectiveness of
Strategic evaluation, through its process
of control, feedback, rewards, and
review, helps in a successful culmination
of the strategic management process.
The process of strategic evaluation
provides a considerable amount of
information and experience to strategists
that can be useful in new strategic
Participants in Strategic
Board of Directors
Chief executives
Profit-centre heads
Financial controllers
Company secretaries
External and Internal Auditors
Audit and Executive Committees
Corporate Planning Staff or Department
Middle-level managers

Barriers in Evaluation
Limits of control
Difficulties in measurement
Resistance to evaluation
Rely on short-term implications of

Requirements for Effective
The effective control must be:
Control should involve only the minimum amount of
information as too much information tends to clutter up
the control system and creates confusion.
Control should monitor only managerial activities and
results even if the evaluation is difficult to perform.
Controls should be timely so that corrective action can
be taken quickly.
Long-term and short-term controls should be used so
that a balanced approach to evaluation can be
Requirements for Effective
Controls should aim at pinpointing exceptions as
nitpicking does not result in effective evaluation.
The 80:20 principle, where 20 per cent of the activities
result in 80 per cent of achievement, needs to be
Getting bogged down with the activities that do not really
count for achievement makes the evaluation ineffective.
Rewards for meeting or exceeding standards should be
emphasised so that managers are motivated to perform.
Unnecessary emphasis on penalties tend to pressurise
the managers to rely on efficiency rather than
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 the new
In this manner, strategic controls are early
warning systems and differ from post-action
controls which evaluate only after the
implementation has been completed.
The types of strategic controls are:
Premise control
Implementation control
Strategic surveillance
Special alert control
Premise Control
Premise control is necessary to identify the key
assumptions, and keep track of any change in them so as to
assess their impact on strategy and its implementation.
Premise control serves the purpose of continually testing
the assumptions to find out whether they are still valid or
This enables the strategists to take corrective action at the
right time rather than continuing with a strategy which is
based on erroneous assumptions.
The responsibility for premise control can be assigned to the
corporate planning staff who can identify key asumptions
and keep a regular check on their validity.
Implementation Control
Implementation control may be put into
practice through the identification and
monitoring of strategic thrusts such as an
assessment of the marketing success of
a new product after pre-testing, or
checking the feasibility of a diversification
programme after making initial attempts
at seeking technological collaboration.
Strategic Surveillance
Strategic surveillance can be done
through a broad-based, general
monitoring on the basis of selected
information sources to uncover events
that are likely to affect the strategy of an
Special Alert Control
Special alert control is based on trigger
mechanism for rapid response and
immediate reassessment of strategy in
the light of sudden and unexpected

Special Alert Control
Crises are critical situations that occur unexpectedly and
threaten the course of a strategy.
Organisations that hope for the best and prepare for the
worst are in a vantage position to handle any crisis.
Crisis management follows certain steps:
Signal detection
Damage limitation,
Recovery leading to organisational learning.
The first step of signal detection can be performed by the
special alert control systems.
Establishing criteria and standards
Measuring and comparing
Performance gap analysis
Taking corrective measures