Page 259 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 14: Strategic Evaluation and Control

Notes
Example: Sales quotas, specific cost reduction or profit targets, milestones or deadlines
for completion of projects are examples of output controls.

Behaviour Control

Behaviour controls specify how something is to be done. This control is done through policies,
rules, standard operating practices and orders from superiors. These controls are the most
appropriate when performance results are hard to measure. Rules standardise the behaviour
and make outcomes predictable. If employees follow rules, then actions are performed and
decisions handled the same way time and again. The result is predictability and accuracy, which
is the aim of all control systems. The main mechanisms of behaviour control are:
1. Operating budgets

2. Standard operating practices
3. Rules and procedures

Example: One example of an increasingly popular behaviour control is the ISO 9000
Standards Series on quality management and assurance developed by the International Standards
Association of Geneva, Switzerland. The ISO 9000 series is a way of documenting a company’s
quality operations, and strictly complying with it. Many corporations worldwide view ISO 9000
certification as assurance that the firm sells quality products.

Input Control

Input controls specify the amount of resources, such as knowledge, skills, abilities, of employees
to be used in performance. These controls are most appropriate when output is difficult to
measures.

14.1.2 Basic Characteristics of Effective Evaluation and Control System

Effective strategy evaluation systems must meet several basic requirements. They must be:
1. Simple: Strategy evaluation must be simple, not too comprehensive and not too restrictive.
Complex systems often confuse people and accomplish little. The test of an effective
evaluation system is its simplicity not its complexity.
2. Economical: Strategy evaluation activities must be economical. Too many controls can do
more harm than good.
3. Meaningful: Strategy evaluation activities should be meaningful. They should specifically
relate to a firm’s objectives. They should provide managers with useful information about
tasks over which they have control and influence.
4. Timely: Strategy evaluation activities should provide timely information. For example,
when a firm has diversified into a new business by acquiring another firm, evaluative
information may be needed at frequent intervals. Time dimension of control must coincide
with the time span of the event being measured.

5. Truthful: Strategy evaluation should be designed to provide a true picture of what is
happening. Information should facilitate action and should be directed to those individuals
who need to take action based on it.
6. Selective: The control systems should focus on selective criteria like key important factors
which are critical to performance. Insignificant deviations need not be focused.

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