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MBA_612_Strategic Management

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various parts of the organization. . All these systems play their respective roles in the strategic control process. While some of them are closely and directly related to the control process, others maybe indirectly related to the control process. Like, information system is closely linked to evaluation as it provides clues on how the organization is progressing. A development system, on the other hand, is not closely linked to the evaluation system but is undertaken as a post-control action. Against this background, described below is how the various organizational systems play their role in strategic control:  Information System Adequate information is important for the control action process from the start to the finish. Since Management information and management control systems are closely interrelated, the information system should be designed on the basis of control system. Every manager must have adequate information about his/her performance, standards, and how he/she is contributing to the achievement of organizational objectives. There must be an information system that is tailored to the specific management needs at every level, both in terms of adequacy and timeliness. A robust Information system ensures that every manager gets adequate information. The criterion for adequacy of information to a manager is his/her responsibility and authority. In the context of his/her responsibility and authority, it should be predetermined as to what type of information the manager needs. This can be found out through careful analysis of the manager’s functions. If the manager is not using any information for taking a certain course of action, it means either the information is meant for informing him/her only or not falling within his/her information requirement. An effective control system ensures that the flow of the information be such that is required by an executive, nothing more nor less. Another aspect of information for control and other functions is the timeliness of information. Ideally, a manager should be supplied with the information when he/she needs it for acting. Timely action is required by the manager concerned for correcting the deviation Thus, he/she must have the information at proper time and covering the functioning of a period which is subject to control. The control system functions effectively on the basis of the information which is supplied in the organization. However, the information is a guide, and a manager identifies what action can be taken on its basis.  Planning System Planning system is the basis for control. It provides the entire spectrum on which control function is based. In fact, these two terms are often used together in the designation of the department which carries out production planning, scheduling, and routing. It stresses on the fact that there is a plan which directs the behaviour and activities in an 251 CU IDOL SELF LEARNING MATERIAL (SLM)

organization. Control system measures these behaviour and activities and suggests procedures to remove deviation, if any. Control system further implies the existence of certain goals and standards that are provided by the planning process. Control system is the result of particular plans, goals, or policies. Thus, planning offers and affects control. Not only that, but the planning is also affected by control in a sense that many of the information provided by control is used for planning and re-planning. There is a reciprocal relationship between planning and control. Since planning and control systems are closely interlinked, there should be a proper integration between the two. This integration can be achieved by developing consistency in strategic objectives and performance measures. Prescribing performance measures which are strategically important is quite significant because often it is said “what you measure is what you get.” While developing performance measures, two considerations must be thought of. First, the performance measures should focus on short-term profitability, or logistic efficiency, or growth and technological ascendancy, , or some other objectives as the primary concern. Second, the measures should relate to the domain of each of the managers since each of them is responsible to exercise control in his/her own domain.  Development System Development system is concerned with developing personnel who can perform better not only in their present positions but also in future positions that they are expected to occupy. Thus, development systems aim at increasing the organizational capability through its people. . These results, then, become the basis for control.  Appraisal System Appraisal or performance appraisal system involves a systematic evaluation of the individual with regard to his/her performance on the job and his/her potential for development. While evaluating an individual, not only their performance is taken into consideration but also their abilities and potential for better performance. Appraisal system provides feedback for control system on how individual employees are performing.  Motivation System Motivation system is not only related to control system but to the entire organizational processes. A managers’ lack of motivation acts a significant barrier in the control process. Since the basic objective of control is to ensure that organizational objectives are achieved, motivation plays a crucial role in this process. It energizes managers and other employees in the organization to perform better which is the key for organizational success. 252 CU IDOL SELF LEARNING MATERIAL (SLM)

Strategic Control – Criteria: Casual Factors, Intervening and End-Result Criteria While putting the control process in operation, two basic questions have to be dealt with- what to control and how to control. The first question is related to identification of those factors which determine the business success. The second question involves using various control techniques. While the first question is taken here in this unit, the second question will be dealt with in later units. The success of any organization, whether business or non-business, is measured in terms of its achievement of its objectives. It is possible that an organization may pursue several objectives simultaneously, and these may be expressed in different forms. Subsequently there are a number of criteria which are used for control. These criteria can be grouped into three categories:  Causal Factors Causal factors are those factors that influence the course of development in an organization. Although these are independent variables, they affect intervening criteria and through these, end-result criteria. Like, strategy formulation and its implementation affect various product, personnel and customer related criteria. These, in turn, affect different end-result criteria which are measure business performance.  Intervening Criteria Intervening criteria are those factors which reflect in the internal state of the organization. These are caused by causal factors and, therefore, cannot be changed independently except by changing causal factors, in this case, type of strategy and its implementation. Like, personnel attitudes and morale which is an intervening criterion, cannot be changed unless there is a suitable change in the organizational design, systems, and leadership— all of which are elements of strategy implementation. Intervening criteria are, generally, grouped into three categories- product, customer, and personnel related. An illustrative list of intervening criteria is below: i. Product-Related Criteria a. Product quality and performance. b. Product cost and price. c. New products introduced. ii. Customer-Related Criteria a. Customer service. 253 b. Customer satisfaction. CU IDOL SELF LEARNING MATERIAL (SLM)

c. Customer loyalty. iii. Personnel-Related Criteria a. Attracting and retaining human talent. b. Personnel ability and skills. c. Personnel motivation and attitudes to work.  End-Result Criteria End-result criteria are those factors through which organizational success is measured. These are caused by causal and intervening factors. . As these factors are highly dependent, they, cannot be changed except by changing the factors responsible for these. End-result criteria can be grouped into two broad categories- financial performance and social performance. Given Below Is the Illustrative List of These Criteria i. Financial Performance a. Rate of growth a) Sales growth b) Asset growth c) Market share b. Profitability (a) Profit-sales relationship (b) Return on investment c. Shareholder value ii. Social Performance It is the degree of satisfaction of different stakeholders of the organization. 11.7 SUMMARY  During strategy implementation process managers need to take scores of decisions. Strategic evaluation can help them to assess if the decisions match with the intended strategy requirements.  Within an organization, there is a requirement to obtain feedback on the current performance, in order to reward good performance, and correct poor performance.  Strategic evaluation process is to measure the effectiveness and efficiency of strategic decisions. It identifies whether the results desired have been achieved by the strategies decisions are not. 254 CU IDOL SELF LEARNING MATERIAL (SLM)

 The right paths and directions to achieve desired organisational goals is provided by this process. A strategic evaluation and controlling process indicates whether the organization has achieved its organizational objectives or not.  An evaluation system has three main aspects of strategy such as appropriateness, consistency and feasibility.  Strategy should be appropriate to achieve the desired objectives of an organization and should be framed and formulated as per the available resources and through analysis of the internal and external business environment.  The controlling process makes sure about corrective strategies and the required to achieve organisational target. The process is related two concepts; one is Strategic management set desired organisational goals and the other is controlling process for the accomplishment of management goals.  Operational control is a part of the management control system. It is so designed to monitor and regularly check the day-to-day business operation to guarantee the consistency and quality in production in terms of the established organizational objectives.  It mainly focuses on latest occurrences or events in an organization for the efficient functioning of business activities. If the desired standard or quality of business is not matched as per the standards, then corrective action should be taken. 11.8 KEYWORDS  Socio-economic: The social science that studies how economic activities affect and is shaped by social processes. Generally, it analyses how modern societies progress, stagnate, or regress due to their local or regional economy, or the global economy.  Performance Measurement: It is the process of collecting, analysing and/or reporting information with respect to the performance of an individual, group, organization, system or a component. The definitions of performance measurement tend to be based upon an assumption about why the performance is being measured.  Strategy Evaluation: It is an internal analysis tool and should be used as part of a broader strategic analysis for the organization when making decisions about the strategy.  Contingency Plans: It is a plan that is devised for an outcome other than the usual and expected plan. It is often used in risk management for an exceptional risk that, though unlikely, would have catastrophic consequences for the organization. They are often devised by governments or businesses.  Strategic Risks: The risks that arise from the fundamental decisions that directors take regarding an organization’s objectives. Simply stated, strategic risks are the risks of failing to achieve business objectives. 255 CU IDOL SELF LEARNING MATERIAL (SLM)

11.9 LEARNING ACTIVITY 1. Discuss and identify key points of Strategy evaluation in different organizations. ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------. 11.10 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1 What is Strategy Evaluation? 2 How do organisations go about strategic evaluation? Why is strategic control important? 3 Explain process of evaluating strategies. 4 Write a short note on evaluating the worth of a business. 5 What are the various roles in organizational systems that come under strategic control? explain. Long Questions 1 Explain contingency planning. 2 Explain the nature of strategy evaluation. 3 Explain the process involved in evaluating strategies. 4 What are the 3 steps involved in strategy evaluation framework? Explain. 5 Discuss the characteristics of effective evaluation system. B. Multiple Choice Questions 256 1. What can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives? a. Strategy formulation b. Strategy evaluation c. Strategy implementation d. Strategic management 2. What is the main purpose of strategic evaluation? a. Evaluate effectiveness of strategy to achieve organisational objectives b. Evaluate effectiveness of control system to measure achievements c. Evaluate effectiveness of strategies to be implemented efficiently d. Evaluate effectiveness of the strategy implementation process CU IDOL SELF LEARNING MATERIAL (SLM)

3. Strategy evaluation at the_____________ level involves using specific performance measures-qualitative and quantitative-for each of the functional areas. a. Organizational b. Operational. c. Functional d. Production 4. Which of the following is not a stage in strategy formulation techniques? a. Formulation framework b. Matching stage c. External factor evaluation d. Decision stage 5. Organizing means an identifiable people group contributing their efforts towards the attainment of same goal. It is more important at the time of: a. Environmental scanning b. Strategy formulation c. Strategy Implementation d. Strategy evaluation Answers: 1 a, 2 d, 3 c, 4 b, 5 c 11.11 REFERENCES Textbooks  Carter, , 2013 , “The age of strategy: strategy, organizations and society,” Business History, vol. 55, no. 7, pp. 1047–1057.  Mackay and M. Zundel, , 2016 , “Recovering the divide: a review of strategy and tactics in business and management,” International Journal of Management Reviews, vol. 19, no. 2, pp. 175–194.  M. Porter, 2008, Competitive Advantage: Creating and Sustaining Superior Performance, Simon and Schuster, New York, NY, USA.  D. Chandler, 1962, Strategy and Structure: Chapters in the History of the American Industrial Enterprise, Beard Books, New York, NY, USA.  K. R. Andrews, 1971, The Concept of Corporate Strategy, Irwin, Homewood, IL, USA. 257 CU IDOL SELF LEARNING MATERIAL (SLM)

 M. Farjoun, 2002, “Towards an organic perspective on strategy,” Strategic Management Journal, vol. 23, no. 7, pp. 561–594. References Books  Peteraf, M.A., 1993. The cornerstone of competitive advantage: a resource-based view. Strategic Management Journal, 14(3): 179-181.  Conde, G., L. Valeiras and G. Sanches, 2014. Sistema de control de gestion, rudiment’s de la capacidad innovadora y certificaciones ISO: modelando sus efecos sobre el rendimiento organizational. Revitas Galega de Economía, 23(1): 245-270.  Frezatti, F., D. Bido, A. Cruz and M. Machado, 2015. The Structure of artifacts of management control in the innovation process.  Bisbe, J., D. Otley, 2004. The Effects of the Interactive Use of Management Control Systems on Product Innovation. Accounting, Organizations and Society, 29: 709-737. Websites  https://www.bms.co.in/  http://researchleap.com/  https://www.managementpedia.com/ 258 CU IDOL SELF LEARNING MATERIAL (SLM)


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