2. Strategic Management Process
Strategic Evaluation is defined as the process of determining the
effectiveness of a given strategy in achieving the organizational
objectives and taking corrective action wherever required.
Strategy evaluation is the final step of strategy management process.
The key strategy evaluation activities are: appraising internal and
external factors that are the root of present strategies, measuring
performance, and taking remedial / corrective actions. Evaluation
makes sure that the organizational strategy as well as it’s
implementation meets the organizational objectives.
3. Nature of Strategic Evaluation
Nature of the strategic evaluation and control process is to test the
effectiveness of strategy.
During the strategic management process, the strategists formulate the
strategy to achieve a set of objectives and then implement the
There has to be a way of finding out whether the strategy being
implemented will guide the organisation towards its intended
objectives. Strategic evaluation and control, therefore, 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
4. 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 organization towards its intended
Are the organization and its managers doing things which
ought to be done?
Is there a need to change and reformulate the strategy?
How is the organization performing?
Are the time schedules being adhered to?
Are the resources being utilized properly?
What needs to be done to ensure that resources are utilized
properly and objectives met?
5. Importance of Strategic Evaluation
Strategic evaluation can help to assess whether the decisions
match the intended strategy requirements.
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 planning.
6. Participants in Strategic Evaluation
Board of Directors
External and Internal Auditors
Audit and Executive Committees
Corporate Planning Staff or Department
7. Process of Strategic Evaluation
1) Fixing benchmark of performance
While fixing the benchmark, strategists encounter questions
such as - what benchmarks to set, how to set them and how to
In order to determine the benchmark performance to be set, it
is essential to discover the special requirements for performing
the main task.
The organization can use both quantitative and qualitative
criteria for comprehensive assessment of performance.
Quantitative criteria includes determination of net profit, ROI,
earning per share, cost of production, rate of employee turnover
etc. Among the Qualitative factors are subjective evaluation of
factors such as - skills and competencies, risk taking potential,
8. 2) Measurement of performance
The standard performance is a bench mark with which the actual performance is to be
The reporting and communication system help in measuring the performance.
For measuring the performance, financial statements like - balance sheet, profit and loss
account must be prepared on an annual basis.
3) Analyzing Variance
While measuring the actual performance and comparing it with standard performance
there may be variances which must be analyzed.
The strategists must mention the degree of tolerance limits between which the variance
between actual and standard performance may be accepted.
4)Taking Corrective Action
Once the deviation in performance is identified, it is essential to plan for a corrective
If the performance is consistently less than the desired performance, the strategists must
carry a detailed analysis of the factors responsible for such performance.
10. Types of Strategic Control
The types of strategic controls are:
Special alert control
11. Strategic Control
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
Most commentators would agree with the definition of
strategic control offered by Schendel and Hofer:
"Strategic control focuses on the dual questions
of whether: (1) the strategy is being implemented
as planned; and (2) the results produced by the
strategy are those intended.“
12. 1)Premise Control
Every strategy is based on certain planning premises or
Premise control has been designed to check systematically and
continuously whether or not the premises set during the
planning and implementation process are still valid.
It involves the checking of environmental conditions. Premises
are primarily concerned with two types of factors:
a. Environmental factors (for example, inflation, technology,
interest rates, regulation, and demographic/social changes).
b. Industry factors (for example, competitors, suppliers,
substitutes, and barriers to entry)
13. 2) Implementation Control
Implementing a strategy takes place as a series of steps, activities,
investments and acts that occur over a lengthy period.
The two basis types of implementation control are:
a. Monitoring strategic thrusts (new or key strategic programs): Two
approaches are useful in enacting implementation controls focused on
monitoring strategic thrusts: (1) one way is to agree early in the planning
process on which thrusts are critical factors in the success of the strategy or
of that thrust; (2) the second approach is to use stop/go assessments
linked to a series of meaningful thresholds (time, costs, research and
development, success, etc.) associated with particular thrusts.
b. Milestone Reviews: Milestones are significant points in the
development of a programme, such as points where large commitments of
resources must be made. A milestone review usually involves a full-scale
reassessment of the strategy and the advisability of continuing or
refocusing the direction of the company.
14. 3) Strategic Surveillance
Strategic surveillance is designed to monitor a broad range of
events inside and outside the company that are likely to
threaten the course of the firm's strategy.
The basic idea behind strategic surveillance is that some form of
general monitoring of multiple information sources should be
encouraged, with the specific intent being the opportunity to
uncover important yet unanticipated information.
Strategic surveillance appears to be similar in some way to
"environmental scanning." Strategic surveillance is designed to
safeguard the established strategy on a continuous basis.
15. 4) Special Alert Control
Another type of strategic control is a special alert control.
"A special alert control is the need to thoroughly, and often
rapidly, reconsider the firm's basis strategy based on a sudden,
The analysts of recent corporate history are full of such
potentially high impact surprises (i.e., natural disasters,
chemical spills, plane crashes, product defects, hostile takeovers
An example of such event is the acquisition of your competitor
by an outsider. Such an event will trigger an immediate and
intense reassessment of the firm's strategy. Form crisis teams to
handle your company's initial response to the unforeseen
16. The fact that hot water freezes faster than cold water
still remains a mystery…