STRATEGIC EVALUATION

 The process of strategic evaluation and control operates on the basis of the different organizational systems used for implementation of a strategy. The organizational systems play a significant role in strategy implementation and evaluation. The role of organizational systems in strategic evaluation and control is as follows:

1. Planning system: The role of the planning system is basically confined to the strategic formulation process. However, as forward linkages between formulation and implementation of strategy, planning manager assist in the implementation process. In some firms strategic planning is a centralized function performed by staff specialists only.  The packaged plans are passed on to the line managers for implementation. In others the overall corporate strategy is formulated to the top whilst responsibility for SBU level strategy formulation and implementation is decentralized and vested with the respective SBU heads. The centralized system is considered suitable for the entrepreneurial business whilst the decentralized system is better suited for the divisional form of organization. The latter planning system fosters greater responsibility on SBU heads and assures their commitment to the strategic plans.

2. Development system: The development system comprises various stages covering recruitment of personnel, education and training of managers to impact required knowledge, skills and attitudes, career planning and grooming of managers for top positions and the development of the organization through planned interventions to make it more responsive and adaptive.

3. Motivation system: This system aims to stimulate positive behavior so that firm’s employees will be encouraged to achieve its strategic objectives. Firms introduce a system of incentives, both financial and non-financial. The nature and scale of incentives will depend on the firm’s capability to pay, its culture, industry practices, statutory obligations etc.

4. Appraisal system: The appraisal system makes use of quantitative and subjective factors to assess performance of units as well as their managers. The methods used to appraise will depend on the nature of the strategy chosen. Expansion strategies aim at long- term improvements whilst a stability strategy will focus on efficiencies in current operations. The common performance appraisal methods used are rating scale and ranking method.

5. Control System: The control system plays a significant role in enforcing strategic behavior so that the firm moves towards achieving its declared objectives. The strategists try to ensure integration of both the formal and informal controls both are considered necessary to make the strategy work. If expansion strategy is adopted, informal control may be preferred for speedy implementation. Use of formal control may become necessary if stability is the chosen strategy.

6. Information system: The performance of employees at different level is measured on the basis of reports generated through the information system.  It’s purpose to enable managers to keep trace of performance through control reports. All the techniques used for strategic evaluation and controls are based on the use of an information system. They provide relevant and timely data to managers to enable them to evaluate performance and strategy, and take corrective action. The increasing sophistication of the information management systems and the use of information technology has made it possible to develop elaborate methods for evaluation.