The document discusses strategic control, which involves tracking strategy implementation and making adjustments. It describes establishing standards and monitoring performance, evaluating results and taking corrective action if needed. Key types of strategic control include premise control, special alert control, implementation control, and strategic surveillance. Strategic surveillance involves monitoring various information sources to uncover unexpected factors that could impact strategy. The case study describes how Citicorp uses strategic surveillance control to closely monitor political announcements and market intelligence from its international branches for signs of changing financial conditions in host countries that could affect its strategy regarding exposure to third world loans.

1. STRATEGIC CONTROL

2. What is Strategic Control ?
 Process used by organizations to control the formation and
execution of strategic plans; it is a specialized form of management
control, and differs from other forms of management control in
respect of its need to handle uncertainty and ambiguity at various
points in the control process.
 Focused on THE ACHIEVEMENT OF FURURE GOALS.
 SC involves tracking a strategy as it’s been implemented. It’s also
concerned with detecting problems or changes in the strategy and
making necessary adjustments.

3. An ideal control system
Establish standards and
targets
Create measuring and
monitoring systems
Comparing actual
performance against the
established targets
Evaluate results and
take action if necessary

4. Questions involved in Assessing a
Strategy’s Success
1. Are we moving in the proper
direction? Are our assumptions
about major trends and changes
correct? Should we adjust or
abort this strategy?
2. How are we performing? Are
objectives and schedules being
met? Are costs, revenues, and
cash flows matching
projections? Do we need to
make operational changes?

5. Types of Strategic Control
 Premise Control
 Special Alert Control
 Implementation Control
 Strategic Surveillance

6. Premise Control
 Every strategy is based on certain planning premises or predictions.
 Premise control is designed to check methodically and constantly
whether the premises on which a strategy is grounded on are still
valid.
 If you discover that an important premise is no longer valid, the
strategy may have to be changed. The sooner you recognize and
reject an invalid premise, the better.
 This is because the strategy can be adjusted to reflect the reality.

7. Special Alert Control
 The rigorous and rapid reassessment of the organization’s strategy
because of the occurrence of an immediate, unforeseen event.
 An example of such event is the acquisition of a company’s
competitor by an outsider.
 Such an event will trigger an immediate and intense reassessment
of the firm’s strategy.
 The company must form crisis teams to handle it’s initial response
to the unforeseen events.

8. United Airlines

9. Implementation Control
 Implementing a strategy takes place as a series of steps, activities,
investments and acts that occur over a lengthy period.
 As a manager, one will mobilize resources, carry out special
projects and employ or reassign staff.
 Must be carried out as the events unfold.
 Two types: Strategic thrusts or projects and milestone reviews.

10. Days Inn

11.  Strategic thrusts provide you with information that helps you
determine whether the overall strategy is shaping up as planned.
 Two approaches: 1) to agree early in the planning process on which
thrusts are critical factors in the success of the strategy or of that
thrust. 2) to use stop/go assessments linked to a series of
meaningful thresholds (time, costs, research and development,
success, etc.)
 With Milestone reviews, you monitor the progress of the strategy at
various intervals or milestones.
 A milestone review usually involves a full-scale reassessment of the
strategy and the advisability of continuing or refocusing the direction

12. Strategic Surveillance
 Designed to observe a wide range of events within and outside the
organization that are likely to affect the track of the organization’s
strategy.
 Based on the idea that one can uncover important yet unanticipated
information by monitoring multiple information sources.
 Such sources include trade magazines, journals such as The Wall
Street Journal, trade conferences, conversations and observations.

13. Operational Control
Systems that
guide,
monitor, &
evaluate
progress in
meeting short-
term
objectives,
providing
post-action
evaluation and
control over
short periods.
 Operational control systems are designed to ensure
that day-to-day actions are consistent with
established plans and objectives.
 Focuses on events in a recent period.
 Derived from the requirements of the management
control systems.
 Corrective actions is taken where performance does
not meet standards.
 This action may involve training, motivation,
leadership, discipline, or termination.

14.  Effective operational controls add value by ensuring that the people,
processes, and technology that drive the organization’s core
functions remain aligned.
 Can be automated and manual
 In addition to flagging potential risks as they occur, operational
controls can identify misalignments that arise from inefficient
business processes, poor training, improperly configured IT
systems, and fraud.
 Three categories: Transactional, configurable and master data
controls.

15. Master Data Controls
 Core information about an organization’s customers, vendors,
employees, raw materials, and chart of accounts; this data is
fundamental to the execution of mission-critical business processes.
 Ensure integrity of this data
Examples-
 Ensure that vendor and employee address do not match;
 Ensure that vendor and employee bank information do not match;
 Ensure that duplicate vendors are identified and merged.
*The key is that rules are enforced consistently, regardless of which
transactions affect the data.

16. Transaction-Level Control
 As individuals perform day-to-day business processes, key steps and
milestones are recorded as transactions and can take form of entries in
systems, e-mails, or even conversations.
 Serve to prevent, identify, or detect inappropriate , inaccurate, or
unauthorized transactions in these systems wherever they are.
Examples-
 Ensure purchase orders are created before goods are received;
 Ensure purchase orders are created before an invoice is received;
 Ensure goods are purchased from preferred vendors.
*Typically embedded in enterprise resource planning software or other
core systems and are performed as transactions occur.

17. Configurable Controls
 Business processes and corporate policies are comprised of a
prescribed sequence of tasks, events, and transactions.
 Ensure that processes are executed as intended.
Examples-
 Ensure that minimum and maximum inventory levels are defined
and that inventory levels stay within these boundaries.
 Ensure rules around invoice and purchase orders are configured
and that neither invoices not purchase orders stay open beyond
these tolerances.
*Typically embedded in system parameters and settings.

18. Case Study: CITICORP (Strategic Surveillance)

19. Citicorp: Scenario & Problem
Citicorp has been pursuing an aggressive product development
strategy intended to achieve an annual earnings growth 15% while it
becomes an institution capable of supplying clients with any kind of
financial service anywhere in the world.
A major obstacle to the achievement of this earnings growth is
Citicorp’s exposure to countries.
Citicorp is sensitive to the wide variety of predictions about
impending Third World defaults.

20. Citicorp: Strategic Surveillance
Control
 Citicorp’s long-range plan assumes an annual 10% default on its
Third World loans over any five-year period. Yet it maintains active
strategic surveillance control by having each of its international
branches monitor daily announcements from key governments and
from inside contacts for signs of changes in a host country’s
financial environment.
 When the surveillance detects a potential problem, management
attempts to adjust Citicorp’s posture.
 For example, when Peru’s former president, Alan Garcia, stated
that his country would not pay interest on its debt as scheduled.
 Citicorp raised its annual default charge to 20% of its $100 million