A planning action or forecasting is built around several assumptions. These relate to the environmental and organizational factors which are ever-changing. Strategies once formulated, are not translated into action immediately. The implementation process itself takes a lot of time. During the period, changes might occur that have major implications for the strategy’s ultimate success. As a result, the traditional post action controls should be replaced by some early warning systems that help managers rectify things as the strategies are implemented. The most important purpose of control with an action plan is to help the top management achieve organizational goals through monitoring and evaluating the strategic management process.
The strategic management process results in an assessment of organizational environment the establishment of organizational mission and goals, the development of ways to deal with competition in order to reach these goals and fulfil the organization’s mission and a plan for translating organizational strategy into action. There are four types of strategic control:
- Premise control
- Implementation control
- Strategic surveillance
- Strategic alert control
As mentioned above, strategy is built around certain assumptions about environmental and organizational factors. Premise control is designed to check systematically and continuously whether the premises on which the strategy is based are still valid. If an important premise is no longer valid, the strategy may have to be changed. For instance, the slowdown in the economy in late 1990s has forced commercial vehicle manufacturers (Ashok Leyland, TELCO) to trim their workforce shift to a 4 day work week with reduced working hours and initiate several other cost cutting measures simultaneously. They did not wait for the economy to pick up nor continued with their traditional ways of working. Instead, they have tried to take corrective action at the right time taking note of the futility of continuing with a strategy based on invalid assumptions. The responsibility for identifying such key premises and checking on their continued validity can be assigned to the corporate planning staff.
Strategy implementation takes place as a series of steps, programmes, investments and moves that occur over an extended period of time. Resources are allocated, key people are put in place, and special efforts are made from time in order to implement a strategy. Implementation control is aimed at assessing whether the plans, programmes and policies are actually guiding the organization towards its predetermined objectives or not. If the resources that are committed to a project at any point of time would not benefit an organization as envisaged corrective steps should be undertaken immediately. This way the organization can find the success of new product launches, diversification moves and proceed in a cautious manner. An important method for achieving implementation control is the milestone review in which all key activities necessary for implementation of a strategy are identified in terms of events, major resource allocation or time. After tracking important milestone, a thorough review of the implementation process is undertaken to find its continued relevance to achievement of objectives.
Special Alert control
A special alert control is the thorough and often fast reconsideration of the firm’s strategy because of a sudden unexpected event. Examples of such events can be the sudden fall of a government a complete shift in competitor’s posture, a natural calamity, a racial or religious battle, an industrial disaster etc. In the face of such unexpected events the firm should respond immediately and reassess its strategies quickly. Contingency plans and crisis management teams must be kept ready to handle such situations.
Strategic controls, thus, are designed to continuously and proactively question the basic direction and appropriateness of strategy. The common theme running through each type of strategic control is quite simple: whether the strategic direction should be changed in the light of unfolding events. Since change is an inevitable part of organizational life, it must be managed through strategic controls that are primarily designed to steer the company towards its long term strategic goals.
Operational controls provide post action evaluation and control over short periods. They require systematic evaluation of performance against predetermined standards. An important issue here is identification and evaluation of performance deviations, with careful attention paid to find the underlying causes for and implications of observed deviations before the management reacts. Firms generally employ trigger points and contingency plans for this purpose.
Exercise of control – Exclusively by top management may be through lower level support. Mainly by executive or middle level management on the direction of top management.
Main techniques – Environmental scanning, information gathering, questioning and review. Budgets, schedules and MBO.