Strategic Management Chapter 11 Evaluation And Control

Strategic Managementchapter 11 Evaluation And Controlevaluation And C

Evaluation and control information consists of performance data and activity reports. Controls are essential components of strategic management that help organizations ensure they are on track to achieve their goals. There are two primary types of controls: output controls and input controls. Output controls specify what is to be accomplished by focusing on the end results of behaviors through objectives and performance targets or milestones. They allow managers to evaluate success based on measurable outcomes and results. Input controls, on the other hand, emphasize resources such as knowledge, skills, abilities, values, and motives of employees. These controls focus on managing and regulating the inputs that influence performance but do not directly measure results.

The Balanced Scorecard is a strategic management tool that integrates financial and non-financial performance measures to provide a comprehensive view of organizational performance. It combines traditional financial metrics, which reflect the results of past actions, with operational measures that track customer satisfaction, internal processes, and organizational learning and innovation. These latter aspects are considered the drivers of future financial performance, enabling organizations to balance short-term objectives with long-term strategic planning.

Scorecards visually represent these metrics, often through dashboards or score sheets that allow managers to monitor progress across multiple dimensions simultaneously. Examples of scorecards include measures for financial outcomes, customer satisfaction, internal process efficiencies, and innovation activities. These visual tools are designed to facilitate strategic control and enable timely interventions to keep organizations aligned with their strategic objectives.

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Strategic management involves a comprehensive framework for guiding organizations toward achieving their long-term objectives. Integral to this framework are evaluation and control mechanisms that ensure strategic plans are effectively implemented and adapted as necessary. These mechanisms include various techniques and tools that facilitate continuous performance monitoring, measurement, and feedback, enabling organizations to remain agile and competitive in dynamic environments.

One fundamental aspect of strategic control is the collection of performance data and activity reports. These reports serve as the foundational information that managers rely upon to assess progress. They include detailed metrics on operational efficiency, financial performance, market position, and other critical areas of organizational activity. This data-driven approach allows decision-makers to identify discrepancies between planned objectives and actual performance, fostering a proactive management style that emphasizes corrective action and continuous improvement.

Among the various control mechanisms, output controls are paramount due to their focus on end results. These controls specify what is to be accomplished, setting clear objectives, milestones, and performance targets that define success. For instance, sales growth targets, market share expansion, or customer retention rates serve as output controls that guide organizational efforts. By concentrating on measurable outcomes, output controls enable managers to evaluate performance relative to strategic goals objectively. When performance falls short, strategic adjustments can be made to address underlying issues, thus maintaining alignment with overarching objectives.

Input controls complement output controls by emphasizing the resources and capabilities necessary to achieve desired outcomes. These include the knowledge, skills, abilities, values, and motives of employees—elements considered crucial in executing strategies effectively. For example, training programs, recruitment policies, and incentive schemes serve as input controls to develop and reinforce organizational competencies. While input controls do not directly measure results, they influence performance by ensuring that organizational inputs align with strategic priorities.

The Balanced Scorecard further enhances evaluation and control by providing a multidimensional framework that integrates financial and operational perspectives. Developed by Robert Kaplan and David Norton, the balanced scorecard encompasses four primary viewpoints:

• Financial perspective: Metrics that assess financial performance and profitability.
• Customer perspective: Measures of customer satisfaction and retention.
• Internal process perspective: Indicators of operational efficiency and quality management.
• Learning and growth perspective: Measures related to organizational innovation, employee development, and knowledge management.

This holistic approach ensures that organizations do not overly focus on short-term financial results at the expense of long-term sustainability. Instead, it encourages a balanced pursuit of strategic objectives across multiple dimensions, fostering continuous improvement and innovation.

Scorecards are typically visualized through dashboards, which display key performance indicators (KPIs) in real-time. These tools enable managers to monitor current performance status, identify areas requiring attention, and make data-informed decisions swiftly. Examples of scorecard components include financial ratios, customer feedback scores, internal process cycle times, and employee training completion rates. The integration of these measures into strategic control mechanisms supports proactive management and strategic agility.

In conclusion, effective evaluation and control are pivotal for strategic success. They encompass a range of tools, including performance reports, output and input controls, and the balanced scorecard framework. By systematically measuring, analyzing, and adjusting activities and resources, organizations can align their operations with strategic goals, adapt to environmental changes, and sustain competitive advantages in their respective industries.

References

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