Strategy and Governance - Strategic Performance Management Flashcards
What is strategic control and why is it necessary
Strategic control is setting and monitoring progress toward goals
It is necessary for evaluating the chosen strategy, KSF, and method of tracking progress
What are the two types of strategic control
Informational - organization doing the right thing
Behavioural - doing the right thing
Explain what strategy evaluation is and the three stages to use
Strategy evaluation - is to determine whether the strategy is working
Stages:
1. Confirm whether or not there have been any changes in the factor or assumption
2. Compare actual performance with target performance
3. Initiate corrective action according to requirement
Provide some organizational stakeholder
Examples are:
1. Government
2. Employees
3. Supplier
4. Creditors
5. Customers
6. Shareholders
Explain what organizations need to do to examine performance. Also, why is it difficult to monitor or evaluate non-financial results?
To examine performance, organizations need to:
1. Compare actual performance to target to see expectation
2. Failing to meet target
3. Strategic plan not carried out as expected
Non-financial results are different from monitoring and evaluating the more subjective susceptible to different opinion
How can companies monitor and evaluate competitive strategies? What are the types of controls
Monitoring is a competitive environment that is highly fluid and an ongoing process.
- Valuable information, reveals competitor satisfaction with present market condition
Input controls - occur before action, and limit the way to achieve the goal. Ex. Mission, vision, statement
Output controls - Determine whether the action has taken place
- Feedback is critical
How are policies and procedures used in strategic management and what is crucial to have a code of conduct
- Policies and procedures - are used to familiarize corporate culture, guidance, boundaries and influence behavior
Ex. Strategy standard - centrally maintained, clearly identify the person who is ultimately responding for compliance
A code of ethics - is crucial because it formalizes the organization’s adherence to good behavior and should be capable of guiding all management decisions to implement
Provide the weaknesses of policies and procedures. What should ethics do to help with the issue? What is used for output control
Weakness and policy - The manager caught an employee taking a small stationary item for personal use.
- No procedures put in place and could ignore or dismiss an employee
- Ethics help by the ability to scale response to an instance
Output control - Examine the result of activities. Ex. variance, budget
Explain what key success factors are and the benefits
Key success factors - are elements that occur to accomplish an organization’s strategic goals
Benefits of KSF - to include, all factors that organizations need to do or achieve
Ex. Stating or reducing turnover is not KSF. We need to explain why the KSF is important for the strategy.
What is the acronym VRINE
Valuable - Reduce or capability helps the firm to reduce cost or improve differentiation
Rare - Is the firm able to possess resources and capability
I/N - Inimitable/ non-substitute - Resource/ capabilities cannot be easily copied or substitutes
E - Exploitable - Organization must be able to take advantage of resources or capability
Applying leads to a better understanding of the ability of organization resources and capabilities to provide an advantage
Explain the value chain analysis
- It helps the KSF as a means for the company to have a competitive advantage
- Activities are broken down into primary activities
- Will be communicated to peak into the department to affect the desired outcome
Ex. Inbound logistics (primary activities) - Operation - Outbound logistics - marketing/ sales - service
Support activities - H/R management, Technologies procurement, Firm infrastructure
Explain the four perspectives of a balanced scorecard
- Financial perspective - How the business is seen by owners/ investor
- Customer perspective - How customers see the business in the market
- Internal business process - What a business must excel at executing
- Learning/ growth - Skills and capabilities that business must develop/ create
Explain key performance indicators and the use of SMART
Key performance indicators - are used to measure activities or elements that have been identified as a key (crucial) success factor
Developed alongside KSF - KPI, relates to a business structure based on the value proposition
Ex. Sales growth - Report % and dollar increase in sales by customer
Customer intimacy strategy - measure customer satisfaction
SMART - Specific, Measurable, Attainable, Relevant, Timely
Leading indicator - actively measure to do predictive outcome
Lagging indicator - they measure past performance
