What is strategic control? Explain its importance and the methods used to evaluate strategy.

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Strategic Control: Definition and Importance

Strategic control is the process by which an organization monitors and evaluates its strategies to ensure that they are being implemented effectively and achieving the desired outcomes. It involves assessing whether the organization's strategic goals and objectives are being met, identifying deviations from the plan, and making necessary adjustments to stay on track. Strategic control is essential for maintaining the alignment between the organization's strategy and its external and internal environment, ensuring long-term success and sustainability.

The importance of strategic control lies in its ability to help organizations adapt to changing conditions, assess performance, and continuously improve their strategies. In a dynamic business environment, strategies must evolve to stay competitive. Strategic control helps in identifying potential issues early on and allows managers to take corrective actions before problems escalate. It also ensures that resources are being utilized effectively and that strategic objectives are being achieved in a timely manner.

Methods Used to Evaluate Strategy

There are several methods organizations use to evaluate the effectiveness of their strategies. Each method focuses on different aspects of performance and provides valuable insights into how well a strategy is working. Some of the key methods used to evaluate strategy include:

1. Feedback Control System: This method involves setting clear performance standards for strategic goals and continuously monitoring progress against those standards. Regular feedback is collected, and if there are deviations from the set targets, corrective actions are taken to realign activities with the intended strategy. This system helps managers track the effectiveness of strategic initiatives in real time and make adjustments as necessary.

• Example: A company may set a sales target for a new product launch and monitor the actual sales against the target. If the sales are lower than expected, the company may adjust marketing efforts or modify the product features to boost performance.

2. Balanced Scorecard:

The balanced scorecard is a comprehensive framework used to evaluate strategy by assessing performance across four key perspectives: financial, customer, internal processes, and learning and growth. This method provides a balanced view of the organization’s performance and ensures that all aspects of the business are aligned with its strategic objectives.

• Financial Perspective: Assesses the financial outcomes of the strategy, such as profitability, revenue growth, and return on investment.
• Customer Perspective: Evaluates customer satisfaction, loyalty, and market share.
• Internal Processes Perspective: Examines the efficiency and effectiveness of internal operations, including production processes, supply chain, and quality control.
• Learning and Growth Perspective: Focuses on the development of the organization's capabilities, including employee training, innovation, and technological advancements.

By using the balanced scorecard, organizations can track performance from multiple angles, ensuring that the strategy is not only achieving financial goals but also fostering customer satisfaction, operational efficiency, and long-term growth.

3. Benchmarking: Benchmarking involves comparing the organization's performance and practices against industry leaders or best-in-class competitors. This method helps identify areas where the organization may be falling short and provides insights into best practices that can be adopted to improve performance. It is often used to evaluate strategic success by measuring key performance indicators (KPIs) such as market share, product quality, and customer satisfaction.

• Example: A company may compare its manufacturing processes with those of the industry leader to identify efficiency gaps and adopt more effective production techniques.

4. Strategic Surveillance:

Strategic surveillance is an ongoing monitoring process that tracks external factors (such as market trends, technological developments, or regulatory changes) and internal factors (such as employee performance, resource allocation, or financial health) that can affect the organization’s strategy. This method involves gathering and analyzing data from various sources, including market research, competitor analysis, and employee feedback, to detect any changes or risks that may require a shift in strategy.

• Example: A company may use strategic surveillance to monitor shifts in consumer preferences and adjust its product offerings accordingly.

5. Management by Objectives (MBO): MBO is a method in which managers and employees collaborate to set specific, measurable objectives that align with the organization’s overall strategic goals. These objectives are then monitored and evaluated regularly to assess performance. The MBO process emphasizes goal-setting, accountability, and performance reviews, ensuring that everyone within the organization is working toward common strategic objectives.

• Example: A company’s marketing department may set specific objectives related to brand awareness, customer engagement, and lead generation, and track progress toward achieving these goals over time.

6. Critical Success Factors (CSFs): CSFs are the key areas or activities that are essential for an organization to achieve its strategic objectives. By identifying these critical factors, organizations can focus their efforts on the most important aspects of their strategy. Evaluating performance based on CSFs helps organizations ensure that they are prioritizing the right actions and allocating resources effectively.

• Example: A company in the technology sector may identify innovation and product development as CSFs and regularly evaluate its progress in these areas to ensure that it is staying competitive in the market.

Conclusion

Strategic control is a critical aspect of effective strategic management, as it ensures that an organization’s strategies are executed efficiently and produce the desired outcomes. Through methods such as feedback control systems, balanced scorecards, benchmarking, strategic surveillance, management by objectives, and critical success factors, organizations can continuously monitor their strategic performance, adapt to changing conditions, and improve their overall effectiveness. By evaluating and adjusting strategies based on these methods, organizations can stay competitive and achieve long-term success.

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