Strategy Evaluation and Control

Strategic Control Process Quantitative Qualitative In both cases process consists of three phases – 1. Evaluation Criteria . 2. Performance Evaluation 3. Feedback

Quantitative To compare the performance of the organization over different time periods To compare the performance with it’s competitors in the industry To compare the performance against industry averages

Financial Ratios ROI Return on Equity Profit Margin Market Share Debt to Equity EPS Sales Growth Asset Growth

Methods of Control DuPont Chart Budgets Audits

Time Related Control Critical Path Method PERT MBO

Problems of Control System Reporting data validity Criteria for measurement in question Performance standards may be set with inherent contradictions Over emphasis on short term measures

Evaluation of Strategy Strategy Formulation Strategy Implementation Strategy Evaluation

Business Portfolio Analysis BCG Matrix McKinsey Matrix Strategic Planning Institute’s Matrix Arthur D’Little Company’s Matrix Hofer’s Product / Evolution Matrix

Qualitative Factors Balanced Score Card by Norton and Kaplan

The Basic Performance Pyramid What are we in business for? Mission Where are we going? Vision What do we want to achieve? Goals/Objectives How will you achieve your goals/objectives? Strategies What do you need to do well? Success Drivers How will you measure how well you are doing? Performance Measures

Balanced Scorecard Approach The Balanced Scorecard translates an organization’s mission and strategy into goals and measures, organized into four different perspectives customer financial internal business process innovation and learning In ADMat’s view the balanced scorecard should achieve a “balance” between/across the organization’s strategic objectives. In other words, they should speak to the most important aspects of the organization and its mission (e.g. satisfied service recipients, the team, efficient service delivery, rewarding relationships with stakeholders etc.)

Balanced Scorecard Approach (Cont’d) The Balanced Scorecard helps an organization to: determine progress towards its goals/objectives communicate strategic direction determine success or failure of its strategies/initiatives define future strategies establish benchmarks demonstrate value-added

Balanced Scorecard Approach (Cont’d) The best Balanced Scorecards will tell the story of the organization’s strategy and cause the overall performance to be managed such that the stated mission is accomplished.