Strategy control Strategy formulated is based on certain assumptions relating to environment and organization.

And there is also a gap between strategy formulation and implementation So there is a possibility that assumption made at formulation may not be valid Strategic control takes into account the changing assumptions and adjust strategy to the new requirement Early warning system and pre action control

Types of control There are two broad types of control namely: 1. Strategic Control and 2. Operational Control 1 Strategic Control: There are four basic types of strategic control: A) Premise Control: Premise control is designed to check systematically and continuously whether or not the premises set during the planning and implementation process are still valid. A strategy may be based or certain premises related to industry like the industry structure and competition and other environmental factors like government policies and regulations, socio-demographic factors, economic conditions etc. changes in the vital premises may necessitate changes in strategy. B) Implementation Control: Implementation control is designed to assess whether the overall strategy should be changed in the light of unfolding events and results associated with incremental steps and actions that implement the overall strategy. C) 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 firms strategy. The strategy of a company could be defeated by certain such events. It is, therefore, necessary that the company exercise surveillance for timely detection of such developments and corrective action. D) Special Alert Control:A special alert control is the need to thoroughly and often suddenly, reconsider the firms basic strategy based on a sudden, unexpected event. Sudden and unexpected developments like alliance between competitors, takeover/mergers, a political coup, a major competitive move by competitor etc. could have serious impact on a firms strategy.

2 Operational Control: Operational control systems guides monitor and evaluate progress in meeting annual objectives. Which strategic controls attempt to steer the company over an extended time period (usually five years or more), operational controls provide post-action evaluation and control over short time periods (usually from one month to one year). Steps of the Operational Control System: The operational control system involves the following steps: A) Establishing Criteria and Standards: Criteria and standards provide the basis for evaluation. Selection of the criteria for evaluation depends on a number of factors such as the purpose of evaluation, the accuracy required, the critical importance of the variable evaluated, the strategy, internal and external environment etc. There are broadly two types of criteria: i) Quantitative factors: Are those results which can be measured in precise quantitative terms such as profitability, market share, growth rate etc. ii) Qualitative factors: Qualitative criteria are rather subjective and are not amenable to precise quantitative measurement. Such factors includes company image, employee motivation, customer satisfaction etc. Having decided the criteria for evaluation, the next step is to establish standards. It should be ensured that the standards set are realistic. B) Measuring and Comparing Performance: The actual performance is measured and is compared with the standards to identify the short falls, if any. C) Performance Gap Analysis: Performance gap is the difference between the actual performance of a given organisational unit and the planned performance of that unit. If there is any performance gap, it is necessary to identify the reasons for the gap to determine the appropriate corrective measure. D) Corrective Measures: Corrective measures will depend on the reasons for the gap, the extent of the gap and, in some cases, a reassessment of the SWOT. Continuous monitoring of the environment and implementation of the strategy is essential. Types of Operational Control: There are three important types of operational control systems: A) Budgeting: A Budget is a statement of planned or estimated expenditure or receipts in respect of a specific purpose or function over a specific period of time. Budgets themselves do not control anything but they set standards against which performance can be compared. Budgets may be in financial or physical terms or both. Production budgets are often in physical terms. Sales budgets may have both physical and revenue estimates. Budgeting is done in respect of all important activities. For eg.: there may be a sales budget estimating sales for a future period. Similarly, there could be corresponding sales expenditure budgets. Resource allocation for fixed assets is done by capital budgeting.

B) Scheduling: Scheduling helps optimum utilisation of facilities. It also helps operation with minimum inventory and to adhere to delivery schedules. Scheduling is a very important planning tool for allocating the use of time constrained resource or arranging the sequence of interdependent activities. C) Key Success Factors: Another important way to effect operational control is to focus on critical factors which contribute to success such as productivity, employee morale etc. Preventive Control: According to Weihrich and Koontz, the desirability of preventive control rests on the following three assumptions: i) Qualified managers make a minimum of errors. ii) Managerial performance can be measured, and management concepts, principles and techniques are useful diagnostic standards in measuring managerial performance. iii) The application of management fundamentals can be evaluated. The advantage of preventive control is that it is preventive in nature. According to Weihrich and Koontz, the preventive control has the following advantages: i) Greater accuracy is achieved in assigning personal responsibility. ii) Preventive control should hasten corrective action and make it more effective. iii) Preventive control may lighten the managerial burden now caused by direct controls.