Financial and Strategic Management

What is Strategic Control Techniques?

Strategy formulation is based on certain assumptions. In fact, there is a time gap between strategy formulation and its implementation. Sometimes the strategy formulated may not work effectively as devised by the strategists. In order to overcome this situation the following strategic control techniques are followed:

1. Premise Control: Premise control is designed to check systematically whether the assumptions set during strategy formulation and implementation process are still valid. Premises include assumptions or forecasts of the future and known conditions that affect the operations of a strategy. Premises are usually concerned with environmental and industry factors. Environmental factors are–economic, political-legal, technological, sociocultural, and global, which affect the operation of business organizations. Any major change in these factors between the time of strategy formulation and its implementation necessitates a change in strategy. An industry factor affects the operation of a business directly while formulating a strategy. So every organization makes assumptions about industry structure and the nature of competition it faces.

For effective premise control, an organization may take into account the following measures such as:
(i) Identify the key premises which are vital to strategy implementation.
(ii) People in the organization who are likely to have access to the relevant information about the premises should be entrusted the responsibility for monitoring premises.
(iii) Identify the trigger points at which a change in strategy is required.

2. Strategic Momentum Control: These techniques are suitable for organizations working in a relatively stable environment. The major assumptions made at the time of strategic formulation remain valid for quite a long time.
There may be a change in the environmental factors but such change is gradual and on predicted lines. There are three approaches for strategic momentum control as under:

(a) Responsibility Control Centers: Responsibility control centers are created on the basis of control criteria used and termed as revenue centers, expense centers, profit centers, and investment centers.
(b) Underlying Success Factors: The organization can achieve its objectives by focusing continuously on the success factors.
(c) Generic Strategies: Generic strategic approach to strategic control is based on the assumption that an organization’s strategy should be compared with others in the same industry. Based on this, the organization can adjust its strategy.

3. Strategic Leap Control: Strategic leap control enables the organizations operating in a relatively unstable and turbulent environment in defining new strategic requirements and to cope with environmental realities. The following techniques are generally used for exercising strategic leap control.

(a) Strategic Issue Management: It involves identifying strategic issues and assessing their impact on the organization. By managing strategic issues in time, the organization can avoid the adverse impact on environmental surprises.
(b) Strategic Filed Analysis: It involves examining the nature and extent of synergies that can be developed in a changing environment.
(c) Systems Modeling: It refers to the simulated technique of decision making in which various organizational features and environmental scenarios are analyzed on a simulated basis.

4. Implementation Control: This is designed to assess whether the overall strategy should be changed in the light of unfolding events and the results associated with incremental steps and actions to implement the overall strategy. In designing implementation control, the following two aspects are taken into consideration:

(a) Monitoring Strategic Thrusts: For the implementation of strategy, actions are divided into different identifiable new thrusts. These thrusts provide information that can be used as the basis for subsequent actions.
(b) Milestone Review: It is an identifiable segment of a strategy that may be in the form of crucial events, major resource allocation over a passage of a certain time. Each milestone requires critical assessment in terms of time and cost.

5. Strategic Surveillance: This is a non-focused control and is designed to monitor a broad range of events inside and outside the organization which is likely to threaten the course of strategy. The idea behind the strategy surveillance is that some form of general monitoring of multiple information sources should be encouraged with the objective to reveal unanticipated situations.

6. Special Alert Control: This measure is undertaken to assess the impact of any major environmental events such as technological invention, regional disturbance between countries affecting the business, strategic actions taken by a country or countries together in controlling some critical issues. For example, a sudden increase in critical resources may invite an immediate reassessment of the organization’s strategy.

About the author

Shreya Kushwaha

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