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STRATEGIC CONTROL AND OPERATIONS CONTROL, MEASUREMENT OF PERFORMANCE, ANALYZING VARIANCES
STRATEGIC CONTROL
Strategic controls are early warning systems and differ from post-action controls which evaluate only after the implementation has been completed. 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 new requirements.
STRATEGIC CONTROL
Is the strategy guiding the organization towards its intended objectives? Are the organization & the managers doing things which ought to be done? Is there a need to change & reformulate the strategy?
PREMISE CONTROL
Necessary to identify the key assumptions (government policies, nature of competition, breakthrough in R&D) & keep track of any change in them so as to assess their impact on strategy & its implementation. Continually tests the assumptions Responsibility: Corporate Planning Staff
IMPLEMENTATION CONTROL
To evaluate whether the plans, programmes & projects, resulting from implementation of the strategy, are actually guiding the organization towards its predetermined objectives or not. May lead to Strategic rethinking Can be put into practice through Identification & monitoring of strategic thrusts Milestone review
STRATEGIC SURVEILLANCE
Designed to monitor a broad range of events inside & outside the company that are likely to threaten the course of a firms strategy Is a more general form of control Information for this can be obtained through formal yet simple strategic information scanning systems like Knowledge management systems Organizational learning
OPERATIONAL CONTROL
It is aimed at the allocation and use of organizational resources through an evaluation of the performance of organizational units, to assess their contribution to the achievement of organizational objectives.
Aim
Main concern
Focus
External Environment
Internal organization
Time Horizon
Long-term
Short-term
Exercise control
Exclusively by top mgt, Mainly by executive or may be thru lower level middle mgt on the support. direction of top management.
Main techniques
Environmental scanning, Budgets and Schedules. information gathering, questioning & review.
SETTING OF STANDARDS
How to set these standards?
Key managerial tasks can be analyzed to find out key areas of performance. Standards can be set in these key areas.
MEASUREMENT OF PERFORMANCE
Evaluation process operates at the performance level as action takes place. Standards of performance act as benchmarks against which actual performance is measured. Can be done through: accounting, reporting, communication systems etc. Problems faced during measurement:
Difficulties in measurement Timing of measurement Periodicity of measurement
ANALYSING VARIANCES
Comparison of actual performance (AP) with the standards (S) leads to Analyzing the variances. AP = S: Ideal but not realistic. Specify a range of tolerance limits. AP > S: Welcome situation. Also should be considered unusual, & a check needs to be made to test the validity of standards & the efficacy of the measurement system. AP < S: Alarming. Need to pin point areas where performance is below standard & go into the causes of the deviation.
Checking of Standards: It is less frequent, but done when it is found there is nothing wrong with the performance. May result in lowering or elevation of standards as required. Reformulation of Strategy: Most radical & in frequent. Strategic control will lead to conclusion that strategies need to reformulated. Takes the organization right to the beginning of the Strategic management process.
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