Introduction to Strategic
Evaluation & Control
By- Vishal Singh
• Strategic Evaluation and Control is a crucial phase of
the strategic management process that ensures a
company’s strategies are implemented effectively and
aligned with organizational goals.
• It involves assessing whether the chosen strategy is
yielding desired results and making necessary
adjustments to improve performance.
• This function is vital in today’s dynamic environment
characterized by socio-economic, political, and
technological changes.
Significance of Strategic
Evaluation
• Strategy Evaluation is as important as strategy formulation because it highlights the
efficiency and effectiveness of strategic plans in achieving desired results. It enables
managers to assess the appropriateness of the current strategy in light of changing
market conditions and external influences. As the final phase of strategic
management, Strategy Evaluation ensures coordination across different levels of the
organization, leading to improved performance and adaptability.
• The importance of Strategy Evaluation is highlighted by the following factors:
• Developing Inputs for New Strategic Planning – Insights from evaluation help
refine future strategies.
• Feedback, Appraisal, and Reward System – It enables performance assessment
and recognition.
• Improvement of the Strategic Management Process – Helps in refining
decision-making processes.
• Judging the Validity of Strategic Choices – Determines whether a strategy
remains relevant and effective.
The Role of Strategic Control in Strategy
Execution
• Strategic control plays a pivotal role in ensuring that the
organization stays on track to achieve its objectives. It is a
mechanism for monitoring progress, identifying deviations, and
making corrections. Key aspects include:
1.Performance Measurement – Tracking key performance
indicators (KPIs) and financial metrics.
2.Gap Analysis – Identifying variances between planned and
actual outcomes.
3.Corrective Actions – Implementing necessary modifications to
enhance effectiveness.
4.Adaptability – Making adjustments in response to market,
technological, or operational changes.
The Process of Strategy
Evaluation
• Strategy Evaluation consists of the following essential steps:
• 1. Fixing Benchmark of Performance
• Strategists must determine what benchmarks to set, how to set
them, and how to express them.
• Performance benchmarks should reflect the key requirements for
achieving strategic objectives.
• Organizations can use
both quantitative and qualitative criteria:
• Quantitative Criteria: Net profit, Return on Investment (ROI), Earnings
per Share (EPS), cost of production, employee turnover rate, etc.
• Qualitative Criteria: Skills and competencies, risk-taking ability,
flexibility, and innovation.
• 2. Measurement of Performance
• The actual performance of the organization is compared with the established
benchmarks.
• Effective reporting and communication systems are necessary for measuring
performance accurately.
• Performance measurement should be done at the right time using appropriate tools
such as financial statements (Balance Sheet, Profit & Loss Account, etc.).
• Measuring performance at different levels (individual, departmental, and
organizational) ensures comprehensive evaluation.
• 3. Analyzing Variance
• Variance analysis involves comparing actual performance with standard
performance.
• Strategists must define tolerance limits for deviations:
• Positive Deviation: Indicates better-than-expected performance, but exceeding targets
consistently may require revisiting benchmarks.
• Negative Deviation: Indicates performance shortfall and requires identifying underlying
causes.
• Identifying the root causes of deviation allows managers to make informed
corrective decisions.
• 4. Taking Corrective Action
• Once performance deviations are identified, corrective
measures must be taken.
• If performance is consistently below expectations, strategists
should analyze key factors causing underperformance.
• Possible corrective actions include:
• Adjusting Performance Standards – If current organizational
capabilities do not align with set benchmarks, lowering
expectations might be necessary.
• Reformulating the Strategy – A more drastic measure that
involves revisiting the entire strategic management process and
reallocating resources accordingly.
• Operational Adjustments – Making necessary changes in
processes, human resources, and technology to align with strategic
goals.
