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Strategic Management

Notes Introduction

Strategic evaluation and control is the final phase in the process of strategic management. Its
basic purpose is to ensure that the strategy is achieving the goals and objectives set for the
strategy. It compares performance with the desired results and provides the feedback necessary
for management to take corrective action.
According to Fred R. David, strategy evaluation includes three basic activities (1) examining the
underlying bases of a firm’s strategy, (2) comparing expected results with actual results, and
(3) taking corrective action to ensure that performance conforms to plans. Sometime, the best
formulated strategies become obsolete as a firm’s external and internal environments change.
Managers should, therefore, identify important milestones and set strategic thresholds to assist
them in knowing the changes in the underlying assumptions of a strategy and, if necessary alter
the basic strategic direction. The evaluation process thus works as an early warning system for
the organisation.
Strategic evaluation generally operates at two levels – strategic and operational level. At the
strategic level, managers try to examine the consistency of strategy with environment. At the
operational level, the focus is on finding how a given strategy is effectively pursued by the
organisation. For this purpose, different control systems are used both at strategic and operational
levels.

14.1 Nature of Strategic Evaluation and Control

Strategic evaluation and control is defined as the process of determining the effectiveness of a
given strategy in achieving the organisational objectives and taking corrective actions wherever
required. According to Pearce and Robinson, strategic control is concerned with tracking a strategy
as it is being implemented, detecting problems or changes in its underlying premises, and making necessary
adjustments. In contrast to post-action control, strategic control seeks to guide action on behalf of
the strategies,. as they are taking place and when the end result is still several years off .
Strategic control in an organisation is similar to what the “steering control” is in a ship. Steering
keeps a ship, for instance, stable on its course. Similarly, strategic control systems sense to what
extent the strategies are successful in attaining goals and objectives, and this information is fed
to the decision-makers for taking corrective action in time. Strategic managers can steer the
organisation by instituting minor modifications or resort to more drastic changes such as altering
the strategic direction altogether. Strategic control systems thus offer a framework for tracking,
evaluating or reorienting the functioning of the firm’s strategy.
14.1.1 Types of General Control Systems

Basically, there are three types of general control systems:
1. Output control (i.e. control on actual performance results)
2. Behaviour control (i.e. control on activities that generate the performance)
3. Input control (i.e. control on resources that are used in performance)

Output Control

Output controls specify what is to be accomplished by focusing on the end result. This control is
done through setting objectives, targets or milestones for each division, department, section
and executives, and measuring actual performance. These controls are appropriate when specific
output measures haven’t been agreed on. Often rewards and incentives are linked to performance
goals.

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