A thorough knowledge of techniques and tools of strategic evaluation and control is a must for strategic and operational managers. These techniques are both conventional and non-conventional. As strategic management is a growing science, is able to make available the improved and sophisticated tools and techniques to under-take strategic evaluation and control. For better understanding, the evaluation techniques and tools are discussed under two distinct captions namely, strategic and operational control.
The very heart of strategic control is to assess continuously the changing environment is order to trace those events and forces that influence the very course of an organisation and, therefore, its strategies. Experts have classified these techniques into two broad categories based on the type or nature of environment under which an organisation works.
Those organisations which are functioning under relatively stable environmental conditions are happy with “strategic momentum control.” On the other hand, those organisations which are functioning under constantly distnsed, or turbulent situations that create more ripples, reflections and challenges and threats, are to go in for “leap control” without any option.
Techniques of Strategic Evaluation and Control
Strategic Momentum Control
The evaluation techniques of strategic momentum control are those at aims at assuring the strategists that the strategies formulated and implemented are still acceptable as their assumptions or premises have not changed as they are valid to date. In other words, these techniques encourage maintaining the existing tempo of strategic momentum. It is a question of having a status-quo than changing it. These techniques are three which are given by Professor J.G. Thomas in his title “Strategic Management- – Concepts, Practice and Cases”-N.Y.-Published by Harper and Row-1988 on PP 343-345.
(1) Responsibility Control Centres – Responsibility control centre is a sub-unit of an organisation which is called as responsibility centre whose head is called responsibility centre manager and is held responsible for all the activities and events that come under his purview. These responsibility centres are built around revenue, expense, profit and investment. The RCs form the very core of management control system. Each of these centres is designed on the basis of measurement of inputs and outputs. A definite expectation is there as-the relation and extent between inputs and outputs.
(2) Underlying Success Factors – We have already studied about key success factors earlier. It suffices to say here that these underlying success factors are those that help the organisation to focus only on key success factors which are most important and unavoidable to achieve the goals behind the chosen strategy. In other words, these are traced and taken care of that contribute to the greatest success of a strategy. The strategists are able to keep track of these key success factors as to whether they are really contributing to the victory of a chosen strategy implemented. This is a continuous monitoring by closeup method.
(3) Generic Strategies Approach – Strategic control works on the postulation that the strategies followed by similar organisations are comparable as these firms are competitive. It is a logic of “general to particular’ and “particular to general”. If company X is spending 5 percent of its Sales revenue on advertising, Y company should, being competitive or comparable also achieve more or less results in increasing sales. Based on such comparison, an organisation can examine as to why ? and how ? other firms are implementing the strategies and measures to see whether its own strategy is following the beaten path of progress.
Strategic Leap Control
In case of those organisations which are working under turbulent water or rough whether, there is no option than to take leap or skip with a view to bring in change in organisational strategy to match the organisation to the environment which is unstable. Therefore, strategic leap control helps such firms to get out of such whirlpool successfully. That is, it is an attempt to adjust to the vibrant and perturbing situations of challenges and threats. Again, Professor, J.G. Thomas has suggested four such techniques. These are –
(1) Strategic Issue Management – SIM is to identify one or more strategic issue and implications on the organisation. According to Professor H.I. Ansoff, a strategic issue is “a forthcoming development either inside or outside the organisation, which is likely to have an important impact on the ability of the enterprise to meet its objectives”. Through SIM the strategists can avoid the possible aburrupt change giving a serious jolt to the organisation. They can prepare contingency plans to shift stetegies to get away with the possible bolt from the blue.
(2) Strategic Field Analysis – This is that kind of examination or scrutiny which examines the nature and extent of synergies that exist or are lacking between the components of an organisation. The strategists can assess the ability of the firm to take full advantage of the synergies that exist wherever and whenever. In other words, the strategists evaluate the organisation’s capability to generate synergies where they do not exist. Thus, SFA is another very useful technique.
(3) Systems Modelling – Systems modelling is founded on computer based models that simulate the essential features of the organisation and its environment. Organisations are able to exercise preaction control by assessing the impact of the environment on the firm by following a particular strategy through systems modelling. This computer aided model is more accurate as it is an attempt to simulate the ground realities.
(4) Writing of Scenarios – Scenario writing we have referred as a part of environmental analysis. Scenario is a perception of the likely environment a form is likely to face in future. There will set of scenarios which written with- various permutations and combinations of environmental forcers. This scenario writing as a tool of analysing the environment, helps in creating the possible environments-as an artist uses hues and shades to give different perceptives for an on looker. Thus, strategies, contingent, can be prepared like a flexible budgeting that fits most to the likely situation.
Operational Control Techniques of Evaluation
Operational control is to do with allocation and use of organisational resources in the most optimum manner. Hence, the operational control techniques are based on internal analysis as against external environmental scanning or monitoring which is under the jurisdiction of strategic control. These are quite usual or normal techniques are they are having to do with internal analysis. These are –
(1) Financial Techniques – These financial techniques are mainly relate to financial analysis of an organisation. Here, only a passing reference is given as they have been discussed earlier in this book. The different financial techniques are –
- Budgetary Control
- Zero Based Budgeting
- Financial Analysis
- Parta System
(2) Net Work Techniques – The net work techniques are part of operations research and the most common versions are PERT, CPM and networks. These are used extensively in allocation of resources to different projects where scheduling and its control is a must. The experts have been able to combine these network techniques with those of cost accounting to have effective operational control over projects-namely their costs and performance.
(3) Management by Objectives – The basic idea of MBO is utterly simple; yet more and more managers and academicians have misunderstood it than grasped it in its right perspective. In very simple terms MBO is an approach to planning that helps to overcome some of the barriers. It was in 1954, for the first line, Management Guru Dr. P.F. Drucker used it in his book “The Practice of Management.” Managing by objectives is a strategy of planning and getting results in the direction that management wishes and needs to take while meeting the goals and satisfaction of its participants.
Thus, it is “management by results”. As Dr. P.F. Drucker said that MBO is based on regular evaluation of performance against objectives that are decided mutually by juniors and seniors. By the process of consultation, objective setting leads to the establishment of a control system that operates on the basis of commitment and self-control.
(4) Memorandum of Understanding – MOU like MBO is based on the novel idea of commitment. MOU is an agreement between the enterprise and the controlling authority where the parties to MOU express their commitments and responsibilities. Though this concept is generally used in PSUS, it can be very effectively used in private sector too.
For instance a MNC can have its own MOU with its sub-sidiary. MOU is becoming very popular in publishing line instead of royalty agreement. MOU, in this context makes commitment to pay one time royalty payment, the moment the publisher gets the manuscript from the auther or authors and promises to pay again one time payment for reprints and subsequent new editions. The author also commits to get the best of his contribution with definite time dimensions. The actual performance is evaluated in terms of the commitments and responsibilities set in MOU.