1. Chapter 12 Designing Strategic Control Systems
Strategic Charles W. L. Hill Management Gareth R. Jones
Fifth Edition
PowerPoint Presentation by Charlie Cook
An Integrated Approach
Copyright © 2001 Houghton Mifflin Company. All rights reserved.

2. What Is Strategic Control ?
The selection of an organizational strategy and matching structure for the organization.
Creation of control systems to monitor and evaluate strategic performance of the organization.
The importance of strategic control
Achieving operational efficiency
Maintaining focus on quality
Fostering innovation
Insuring responsiveness to customers
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3. A Balanced Scorecard Approach
FIGURE 12.1
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4. Strategic Control Systems
Steps in designing an effective control system
FIGURE 12.2
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5. Strategic Control Systems
Levels of organizational control
FIGURE 12.3
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6. Strategic Control Systems
Types of control systems
Financial Controls
Output Controls
Behavior Controls
Organizational Culture
Stock price
Divisional goals
Budgets
Values
ROI
Functional goals
Standardization
Norms
Individual goals
Rules and procedures
Socialization
TABLE 12.1
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7. Management by Objectives (MBO)
Establish specific goals and objectives at each level in the organization.
Make goal setting a participatory process.
Conduct a periodic review of progress toward meeting goals.
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8. Behavior Controls Operating Budgets Standardization
A blueprint for the use of organizational resources.
Standardization
Standardization of inputs
Standardization of conversion activities
Standardization of outputs
Rules and procedures
Positive effect: Help control, guide, and limit behaviors.
Negative effect: Rules lead to bureaucratic behaviors.
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9. What Is Organizational Culture?
The collection of values and norms shared by people and groups in an organization.
Shared values and a common culture increase integration and improve coordination.
Values
Beliefs and ideas about common goals and proper behaviors.
Norms
Act as guidelines or expectations that prescribe acceptable behavior by organizational members.
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10. Organizational Culture
Ways of transmitting organizational culture:
FIGURE 12.4
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11. Culture and Strategic Leadership
The influence of the founder
Initial cultural values and management style is imprinted on the organization by its founder.
Organizational structure
Structure follows strategy. Strategic leadership affects the cultural norms and values that develop in the organization.
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12. Adaptive and Inert Cultures
Adaptive cultures
Are innovative and encourage and reward initiative by middle and lower-level managers.
Inert cultures
Are cautious and conservative; do not value and may discourage by initiative by middle and lower-level managers.
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13. The Composition of the Top-Management Team
Determines the strategic direction of the company.
Establishes organizational values and norms.
Diversity in top management
Reduces the threat of organizational inertia.
Improves decision making.
Helps the culture become adaptive.
Guards against inbreeding and homogeneity.
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14. Traits of Strong and Adaptive Cultures
A bias for action
Have values that promote autonomy and entrepreneurship.
Nature of the organization’s mission
“Sticks to its knitting”
How to operate the organization
Create an organizational design that motivates employees to do their best.
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15. Strategic Reward Systems
Individual reward systems
Piecework plans
Commission systems
Bonus plans
Promotion
Group and organizational reward systems
Group-based bonus systems
Profit sharing systems
Employee stock option systems
Organization bonus systems
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