SIGNIFICANCE OF STRATEGIC EVALUATION

The process of strategic management requires that strategists establish organizational objectives and then formulate strategies to achieve them. The process of strategy implementation begins with the identification of the key managerial tasks that form the basis for the creation of organizational structure and design.
The distribution of key managerial tasks leads to a situation where individual managers perform a small portion each of the overall tasks to implement a strategy.  A manager individually performs a set of functions that are interrelated to the tasks other managers in the organization are performing. This significance of strategic evaluation rests upon its ability to coordinate the tasks managers groups divisions or SBUs perform. If the coordination and control mechanisms do not exist, managers may pursue goals that are inconsistent with the objectives of the organization.

The strategic evaluation is also significant for various other reasons such as necessity for feedback, appraisal and reward; examine the validity of strategic choice; congruence between decisions and intended strategy; successful culmination of the strategic management process; and creating inputs for new strategic planning. The strategic evaluation and control systems also intend to overcome resistance, communicating the new strategic agenda, ensuring continuing attention to new strategic initiatives, formalizing beliefs, setting boundaries on acceptable strategic behavior, and motivating discussion and debate about strategic uncertainties.

The strategic evaluation and control also helps managers to create four basic building blocks of competitive advantage- efficiency, quality, innovation, and responsiveness of the customer.

1. Efficiency: To determine how efficiently they are using organizational resources, managers must be able to measure accurately how many units of inputs are being used to produce a unit of output. They must also be in a position to measure the number of units of outputs (goods and services) they produce. A control system provides the measures that allow managers to assess how efficiently they are producing goods and services. Moreover, if managers experiment with changing the way they produce goods and services to find a more efficient way of producing them, these measures tell managers how successful they have been.


Thus, for example, when managers at Chrysler decided to change to a product- team structure to design, engineer, and manufacture their new cars, they used such measures as time taken to design a new car and cost savings per car produced to evaluate how well this new structure worked. When they used these measures to compare the performance of the new structure with that of the old structure, they found that the new structure performed better. Without a control system in place, managers have no idea how well their organizations are performing and how they can make it perform better.

2. Quality: 

• Today, much of the competition between organizations revolves around increasing the quality of goods and services. For example, in the car industry, in each price range, cars compete against one another in terms of their features, design, and reliability over time. So, whether a customer buys a Ford Taurus, a GM Cavalier, a Chrysler Intrepid, a Toyota Camry, or a Honda Accord depends significantly on the quality of each company's product. 
• Organizational control is important in determining the quality of goods and services because it gives managers feedback on product quality. 
• If managers of an organization such as Chrysler consistently measure the number of customers' complaints and the amount of new cars returned for repairs, they have a good indication of how much quality they have built into their product. That is, do they have a car that does not break down?  Strategic managers create a control system that consistently monitors the quality of goods and services so that they can make continuous improvements to quality over time, which gives them a competitive advantage.

3. Innovation: 

• Strategic control can help to raise the level of innovation in an organization. Successful innovation occurs when managers create an organizational setting in which employees feel empowered to be creative and in which authority is decentralized to employees so that they feel free to experiment and take risks. 
• Deciding on the appropriate control systems to encourage risk taking is an important management challenge, an organization's culture becomes significant in this regard. At Chrysler, for example, to encourage each product team to perform, top managers monitored the performance of each team separately (by examining how each team reduced costs or increased quality, for example) and then paid each team on a bonus system related to its performance. The product-team manager then evaluated each team member's individual performance, and the most innovative employees received promotions and rewards based on that performance level. 

4. Customers Responsiveness:

• Finally, strategic managers can help make their organizations more responsive to customers if they develop a control system that allows them to evaluate how well employees with customer contact are performing their jobs. 
• Monitoring employees' behavior can help managers find ways to help increase employees' performance level, perhaps by revealing areas in which skill training can help employees or by finding new procedures that allow employees to perform their jobs better. When employees know their behaviors are being monitored, they may have more incentive to be Chrysler helpful and consistent in the way they act toward customers. 
• To help improve customer service, for example, Chrysler regularly surveys customers about their experiences with particular Chrysler dealers. If a dealership receives too many complaints from customers, Chrysler managers investigate the dealership to uncover the sources of the problems and suggest solutions. If necessary, they can threaten to reduce the number of cars a dealership receives to force it to improve the quality of customer service.