Strategic control & motivation unit iii

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  • 1. Stages of Strategic Management Strategic Formulation Strategic Implementation Strategic Control Situational Analysis
  • 2. Strategic Control
    • Control is taking measures that synchronize outcomes as closely as possible with plans
    • Organizations must have effective strategic controls to successfully implement their strategies
    • Creation of control systems to monitor and evaluate strategic performance of the organization .
    • Tracking the strategy as it is being implemented and taking proactive actions
  • 3. The Importance of Strategic Control
      • Checking performance against Expectations
      • Achieving Strategic efficiency
      • Maintaining focus on Targets & Objectives
      • Checking on activities I.e.Schedules
      • Fostering right direction
      • Matching costs, revenues and cash flows against Projections
      • Insuring responsiveness to Deviations
  • 4. Types of Strategic Control
    • Premise Control:
    • Basis for Strategy Prediction
    • Assumptions and perceived conditions
    • Check systematically validity of Premises
    • Environmental Predictions
    • Industry Predictions : Porter’s 5 force model
      • Change variables & their Impact
    • Identification of Key Variables
    • Up dation of the same
    • Key Strategic Areas for adjustments
  • 5. Implementation Control
    • Implementation is process comprising of series of events and activities
    • Implementation control is concerned with reviewing the strategy in context of events with incremental steps and actions
    • Monitoring Strategic Thrusts:
      • Thrusts as per the Project demand
      • CSF’s : Critical Success Factors in Strategy of the Firm
    • Milestone reviews:
      • Critical events, Major resource allocations, Time Factor
      • Assessment of the Strategy vis-à-vis achievement of the mile stones
  • 6. Strategic Surveillance
    • Monitor a broad range of events inside & outside the company
      • Multiple Information System
    • Special Alert Control:
      • Reconsideration of the firm’s strategy based on a sudden unexpected event
      • Immediate & Intense reassessment of the company’s strategy and its strategic situation
      • Companies develop contingency plans to overcome crisis
  • 7. Strategic Control
    • Special Alert Control:
    • Need to reconsider the firm’s basic strategy based on sudden & un expected event
    • Immediate & Intense reassessment of company’s strategy & current strategic situation
    • Synonymous with the Contingency Approach
    • 9/11 Scenario – Export firms
    • Energy Crises- Gulf War
    • Domino’s Pizza wrong servings
  • 8. Operational Control Systems
    • Top Management and Middle Management
    • Strategic Controls & Operational Control
    • Allocation and use of company’s resources
    • Guiding parameters for ANNUAL Targets & Objectives
    • Shorter Time Period Focus
    • Post Action Control System
    • Set Standards of Performance
    • Measure Actual Performance
    • Identify Deviations from Standards
    • Initiate Corrective action or adjustment
  • 9. Operational Control Systems
    • Three Types:
    • Budget
    • Schedules
    • Key Success Factors
  • 10. Budget
    • Resource Allocation Plan
    • Revenue Budgets
    • Capital Budgets
    • Expenditure Budgets
  • 11. Operational Control Systems
    • Scheduling:
      • Time
      • Sequence
    • Key Success Factors:
      • Critical Factors in Firms success
      • Attention
      • Each Function has its own KSF’s
  • 12. KEY SUCCESS FACTORS Staff Qualifications Response Times Call Answering Times Customer Data Accuracy Infrastructure Channel Specific Measures Complaints NPD Times Staff Turnover Response Levels Conversion Ratios Operational Risk Profile Acquisition Development Retention Life Time Value Customer Profitability Customer Strategic Cost Ratios Customer Loyalties Profit Growth Margin Growth Market Share Revenue Growth Corporate
  • 13. Monitoring Performance & Evaluating Deviations
    • Identification of KEY SUCCESS FACTORS
    • Setting the OBJECTIVES
    • Setting the TARGETS
    • PERFORMANCE Evaluation
    • DEVIATION if any – Acceptable; High : Trigger Points
    • ANALYSIS : Internal; External
    • ACTION Plan : Contingency Plans
  • 14. Reward Systems: Motivating Execution & Control
    • Execution’s key Parameter is Employee Performance
    • Motivation & Reward Systems to act as Input
    • Positive Factors Increase & Negative Factors Decrease
    • Reward Sanction Mechanism & Control Mechanisms:
      • Compensation, Rewards, Bonus, Incentives
      • Fear, Accountability, Tension
    • Reward System : Two Components:
      • Short Term Linked Rewards : Incentives
      • Cumulative Progress Rewards : Career Path & Incentives
  • 15. Mechanism
    • Measure Progress towards Strategic Targets separately from results of established operations
    • Determine Incentive Awards separately for established operations and for progress towards strategic targets
    • Devise a Long Term, Stock Option equivalent to encourage revisions of strategy and entrepreneurial risk Taking
  • 16. Characteristics of Effective Reward & Incentive Systems
    • Objectives are clear and widely accepted.
    • Rewards are clearly linked to both performance and desired behaviors.
    • Performance measures are clear.
    • Feedback is prompt and unambiguous.
    • The compensation system is perceived as both fair and equitable.
    • The system is adaptable to meet changing circumstances.