Strategic control systems are the conventional target-fixing, measurement, and feed- back systems that enable strategic managers to evaluate whether a company is achieving superior efficiency, quality, innovation, and customer responsiveness and implementing its strategy successfully.
Four fundamental types of strategic controls are: 1. Premise control, 2. Implementation control, 3. Strategic surveillance and 4. Special alert control.
1. Premise Control: Strategies are often based on premises. Assumptions or predictions are planning premises around which a firm’s strategy is designed. A strategy may be valid only as long as the planning premises remain valid. The premise control is designed to check systematically and continuously whether or not the premises set during the planning and implementation process are still valid.
A strategy may be based on certain premises related to environmental and industry factors. The environmental factors are beyond the control of a company and they exercise considerable influence over the success of the strategy. Inflation, technology, rates of interest, regulations, and changes in demographic/social characteristics are environmental factors that serve as key premises on which strategies are usually based. Industry factors affect the performance of companies in a given industry. These factors differ among industries. A company should be aware of the factors that influence success in its particular industry. Competitors, suppliers, substitutes, and barriers to entry are industry related factor about which strategic assumptions are made. Managers must choose those premises and variables that are likely to change and would have a major impact on the company and its strategy.
In the case of many companies who were industry leaders, the bases of past success were shaken when the industrial terrain changed shape faster than top management could refashion its basic beliefs and assumptions relating to markets and customers to be served, technologies to be mastered, which and how to get the best out of the employees. The premise control enables the strategists to take corrective action at the right time rather than continuing with a strategy based on invalid assumptions. The responsibility for premise control can be assigned to the corporate planning staff that can identify key assumptions and keep a regular check on their validity.
2. Implementation Control: The implementation of a strategy results in a series of steps, plans, programs, projects, investments and moves undertaken over a period of time and the resources are allocated for implementing these. Managers convert broad strategic plans into concrete actions and results for specific units and individuals. Implementation control aims to ensure that action takes place as planned and is designed to assess whether the overall strategy should be changed in the light of unfolding events and results associated with incremental steps and actions that implement the overall strategy. Two basic kinds of implementation control include:
(1) Identification and monitoring of strategic thrusts, and
(2) Milestone reviews
In the first case, implementation control may be exercised through identification and monitoring and strategic thrusts such as an assessment of the marketing success of a new product after test- marketing. The company may evaluate the real benefit from the product launch or would it be beneficial to select another program.
Milestone reviews identify critical points in strategy implementation in terms of events, major resources, or time. A milestone review involves a full-scale reassessment of the strategy and the advisability of continuing or refocusing the direction of the company. After identification of significant points, a comprehensive evaluation of implementation is carried out to assess its continued relevance to achievement of objectives of the firm’s strategy so as to control the company’s future.
3. Strategic Surveillance: Premise and implementation controls are focused in nature. Strategic surveillance aims at a more generalized and overarching control. It is designed to monitor a broad range of events inside and outside the company that are likely to threaten the course of the company’s strategy. Strategic surveillance can be exercised through a broad-based vigilance to uncover events that may affect a firm’s strategy.
4. Special Alert Control: The special alert control is based on a trigger mechanism for quick response and urgent reassessment of the strategy in the light of sudden and unexpected events. SAC can be exercised through the formulation of contingency plans and assigning the responsibility of handling unforeseen events to teams constituted for the purposes of crisis management. A political coup, an outside firm suddenly acquiring a leading competitor position, an unexpected product launch, an unfortunate industrial disaster or a natural catastrophe are the examples of such unforeseen events.
Though each type of strategic control is different, they share a common purpose to assess the need of alterations in strategic direction in the light of occurring events. Strategic controls continuously and proactively determine the basic direction of the strategy. While operational controls provide action controls, strategic control steer the company’s future direction. Both are needed to manage the strategic process effectively. In the next section se discuss the operation control systems.
Four fundamental types of strategic controls are: 1. Premise control, 2. Implementation control, 3. Strategic surveillance and 4. Special alert control.
1. Premise Control: Strategies are often based on premises. Assumptions or predictions are planning premises around which a firm’s strategy is designed. A strategy may be valid only as long as the planning premises remain valid. The premise control is designed to check systematically and continuously whether or not the premises set during the planning and implementation process are still valid.
A strategy may be based on certain premises related to environmental and industry factors. The environmental factors are beyond the control of a company and they exercise considerable influence over the success of the strategy. Inflation, technology, rates of interest, regulations, and changes in demographic/social characteristics are environmental factors that serve as key premises on which strategies are usually based. Industry factors affect the performance of companies in a given industry. These factors differ among industries. A company should be aware of the factors that influence success in its particular industry. Competitors, suppliers, substitutes, and barriers to entry are industry related factor about which strategic assumptions are made. Managers must choose those premises and variables that are likely to change and would have a major impact on the company and its strategy.
In the case of many companies who were industry leaders, the bases of past success were shaken when the industrial terrain changed shape faster than top management could refashion its basic beliefs and assumptions relating to markets and customers to be served, technologies to be mastered, which and how to get the best out of the employees. The premise control enables the strategists to take corrective action at the right time rather than continuing with a strategy based on invalid assumptions. The responsibility for premise control can be assigned to the corporate planning staff that can identify key assumptions and keep a regular check on their validity.
2. Implementation Control: The implementation of a strategy results in a series of steps, plans, programs, projects, investments and moves undertaken over a period of time and the resources are allocated for implementing these. Managers convert broad strategic plans into concrete actions and results for specific units and individuals. Implementation control aims to ensure that action takes place as planned and is designed to assess whether the overall strategy should be changed in the light of unfolding events and results associated with incremental steps and actions that implement the overall strategy. Two basic kinds of implementation control include:
(1) Identification and monitoring of strategic thrusts, and
(2) Milestone reviews
In the first case, implementation control may be exercised through identification and monitoring and strategic thrusts such as an assessment of the marketing success of a new product after test- marketing. The company may evaluate the real benefit from the product launch or would it be beneficial to select another program.
Milestone reviews identify critical points in strategy implementation in terms of events, major resources, or time. A milestone review involves a full-scale reassessment of the strategy and the advisability of continuing or refocusing the direction of the company. After identification of significant points, a comprehensive evaluation of implementation is carried out to assess its continued relevance to achievement of objectives of the firm’s strategy so as to control the company’s future.
3. Strategic Surveillance: Premise and implementation controls are focused in nature. Strategic surveillance aims at a more generalized and overarching control. It is designed to monitor a broad range of events inside and outside the company that are likely to threaten the course of the company’s strategy. Strategic surveillance can be exercised through a broad-based vigilance to uncover events that may affect a firm’s strategy.
For example, the
success of Arvind Mill’s Ruf and Tuf brand encouraged
rampant sale of spurious products under the same brand name forcing the company
to constitute vigilance squads to crack down on the unscrupulous businessmen
4. Special Alert Control: The special alert control is based on a trigger mechanism for quick response and urgent reassessment of the strategy in the light of sudden and unexpected events. SAC can be exercised through the formulation of contingency plans and assigning the responsibility of handling unforeseen events to teams constituted for the purposes of crisis management. A political coup, an outside firm suddenly acquiring a leading competitor position, an unexpected product launch, an unfortunate industrial disaster or a natural catastrophe are the examples of such unforeseen events.
Though each type of strategic control is different, they share a common purpose to assess the need of alterations in strategic direction in the light of occurring events. Strategic controls continuously and proactively determine the basic direction of the strategy. While operational controls provide action controls, strategic control steer the company’s future direction. Both are needed to manage the strategic process effectively. In the next section se discuss the operation control systems.
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