Topic 5 STRATEGIC CONTROL AND EVALUATION

Question 1

Topic 5 STRATEGIC CONTROL AND EVALUATION Question 1 -

Explain what strategic control entails.(5)

Answer 1

(Evaluate/ verify, timing implementation/ results, effective/ corrective, focal points review and evaluate, identifying events/ initiates management blah)

1.SC concentrates on evaluating the chosen strategy in order to verify whether the results are produced by the strategy are in fact those intended.
2.SC focus on the long term future of the organisation, and time elapses between the formulation and implementation of a strategy and the achievement of the intended results.
3. -SC ensure that the implementation activities are
performed effectively and efficiently,
-identify deviations from the strategic plan to take
corrective action.
4. SC has two focal points:
—-to review the content of the strategy
—-to evaluate and control the implementation process.
a. SC identifies and interprets critical events or changes/ triggers in the external environment that require a response from the organisation.
b. Strategic control should initiate managerial questioning of performance, assumptions and expectations in order to determine to what extent the organisation is achieving its short term objectives.

Question 2

Topic 5 STRATEGIC CONTROL AND EVALUATION
Question 2 -

Explain how strategic control can be introduced.(6) [B3.1-Jun14 + B3.1-Jun13]
[B3.1-Nov13 + B3.2-Nov12 + B3.2-Nov11 + B3.4-Jun09 + SG-p127]

Answer 2

(Evaluate and Monitor how Prem Surves Special Implements) (thrusts/stones)

(A) Strategic control has two focal points,
——to evaluate the content of the strategy
——to monitor strategy implementation activities.
(B) Types of strategic control that orgs can use:
(1) premise control,
(2) strategic surveillance,
(3) special alert control and
(4) implementation control.
(C)The first three are used to review the content of a strategy and the last is used to evaluate strategy implementation.

Two types of implementation control can be used, namely strategic thrusts and milestone reviews.
If actions are not implemented properly or do not achieve the planned results, strategy must be altered.
It provides management with information regarding the success of the implementation

Premise Control:
Check whether assumptions on which strategy choice was made are still valid
Strategic surveillance:
To identify both internal and external events that may affect the course of the strategy. The sources may include conferences,periodicals etc.
Special Alert Control:
Rapid reconsideration of Strategy in light of unexpected event. For example 9/11 terrorist attack
Implementation Control:
Provides information regarding the successfulness of the implementation process in terms of performance levels, and indicates whether the strategy direction requires alteration. Enabled through operational control

Question 3

Topic 5 STRATEGIC CONTROL AND EVALUATION Question 5 -

Differentiate between the different types of strategic control. (8) [B3.1-Nov13 + B3.2-Nov12 + B3.2-Nov11 + B3.4-Jun09 + SG-p127]

Answer 3

(Prem Surves Special Implements)

1. Premise Control: Premise control is designed to check systematically and continuously whether the premises or assumptions on which strategy is based, are still applicable.
2. Surveillance Control: Surveillance control is designed to monitor a broad range of events inside and outside the organisation that are likely to affect the course of the strategy.
3. Special Alert Control: it entails the thorough, rapid reconsiderations strategy in view of a sudden, unexpected event. Strategy is adapted to changed conditions.
4. Implementation Control: Implementation control is designed to assess whether the overall strategy could be changed in the light incremental action taken to implement strategy. Two types of implementation control can be used, namely strategic thrusts and milestone reviews. If actions are not implemented properly or do not achieve the planned results, strategy must be altered. It provides management with information regarding the success of the implementation.

Question 4

Topic 5 STRATEGIC CONTROL AND EVALUATION Question 6 -

Comment on the criteria used to evaluate strategies during the control phase.(5) [B3.4-Jun14 + B3.3-Nov12 + B3.3-Nov11]

Answer 4

(App, Fes, Des)

1. During strategy selection, organisations make a choice between the different strategies that will help the organisation to go to the next level of competitiveness.
2. During strategy formulation, top management teams would typically ask several questions pertaining to these criteria.
3. During strategy evaluation and control, managers can again use these criteria to test whether the strategy is still on track, whether it is achieving the expected outcomes and whether it is being or has been successful.
4. The three criteria are:
   a. Appropriateness. Is the strategy in line with the mission?
   b. Feasibility. Can it be carried out?
   c. Desirability. What are the stakeholder preferences? Has the strategy produced adequate results in the short term?

Question 5

Topic 5 STRATEGIC CONTROL AND EVALUATION Question 3

Discuss corporate governance and strategic control with reference to the King III report.(5) [B3.3-Jun14 + B3.3-Jun13 + SG-p127]

Answer 5

1. The King III report contains several recommendations that impact on strategic control.
2. Among others, the King III report states that the board must retain full and effective control over the company and must monitor management implementation of the board’s plans and strategies.
3. The board must also ensure that the adequate internal control exists and that the organisations information systems can cope with the strategic direction in which the organisation is headed.
4. From King II - Corporate governance is critical in the strategic management process to control and evaluation with regards to the following areas:
   a) Clarifying the role of the audit committee in managing and overseeing strategy implementation.
   b) Determining checks and balances for strategy control.
   c) Ensuring that executives are appropriately penalised or rewarded for failure or success (responsibility of the director board)

Question 6

Topic 5 STRATEGIC CONTROL AND EVALUATION Question 4 -

Discuss the balanced scorecard as a strategy-implementation and control system.(10-15) [B3.2-Jun14 + B3.4-Jun13 + B3.4-Jun12 + B3.4-Nov10 + SG-p132]

Answer 6

(TV ComLink BP LearnFeed)

1) The use of a single measure, such as financial ratios, is not the most effective means of controlling the implementation of strategy, because it may fail to take all perspectives into account. The reason for this is that control measures are often applied in isolation and do not take measures such as customer knowledge, internal business process evaluation and organisational; learning and growth criteria into account
2) The balanced scorecard provides for the use of both financial and non-financial performance measures
3) It incorporates financial performance measures, customer knowledge; internal business processes measures and criteria for assessing learning and growth prospects.
4) These measures are combined to monitor implementation of strategies in a holistic way, to ensure that the implementation process is linked to long-term objectives of the organisation, through a series of short-term actions.
5) There are 4 processes that make up the overall balanced scorecard framework: (1) translating the vision; (2) communicating and linking; (3) business planning and (4) feedback and learning.
6) Translating the vision it is the first process that forms the framework.
- It ensures that the strategy is the reference point
- it forces top management to gain consensus on the organisation’s vision and strategy.
- It ensures that the vision is translated into integrated measures and goals linked to the strategy on which people can act.
7) Communicating and linking.
- Long-term strategies must be clearly understood by the entire workforce.
- Communicating the strategy to all employees ensures that both the strategy and the critical goals that have to be met are clear to the entire workforce.
- The balanced scorecard is also a means by which the organisation’s strategy can be communicated to its outside stakeholders.
- Communicating the balanced scorecard promotes commitment and accountability to the organisation’s strategy.
8) Business planning.
- The third process forces organisations to link their business plans to the strategy through the setting of targets or milestones.
- Strategic initiatives are clearly identified and indicate where investments should be made.
- Through this process organisations integrate their strategic planning and budgeting processes, ensuring that the resources allocation plans support the chosen strategies.
9) Feedback and learning.
- Strategic learning consists of gathering feedback, testing the assumption on which the strategy is based and making the necessary adjustments.
- The balanced scorecard supports strategic learning as it tests, validate and modifies the assumption on which the strategy is based.

Question 7

Topic 5 STRATEGIC CONTROL AND EVALUATION Question 7 -

Discuss the four “levers” that are considered when designing strategic control systems.(8) [B3.2-Nov13 + B3.3-Jun12]

Answer 7

(BS BS DCS ICS)

1. Diagnostic control systems
2. Belief systems
3. Boundary systems
   4. Interactive control systems

The 4 levers of control that should be taken into consideration in designing strategic control systems are:
1.Diagnostic control systems
a.These systems are used to track the performance of departments, managers and employees, to monitor goals and to measure progress towards profitability and revenue growth targets.
2.Belief systems
a.These systems relate to the organisations values and organisational culture and provide guidelines for implementing decisions.
3.Boundary systems
a. These systems supplement diagnostic control systems and belief systems.
b. Diagnostic and Belief systems tell the managers and employees what should be done and what behavior is accepted,
boundary system provide information on what should not be done and what falls outside the scope.
4.Interactive control systems
a.Provides the managers with a sense of what is happening in different areas of the organisation.

Question 8

Topic 5 STRATEGIC CONTROL AND EVALUATION Question 8 -

Diagrammatically depict and explain the four dimensions of the balanced scorecard (8) [B3.4-Nov12 + SG-p132]


Answer 8

(FinCus learnIBS)
(Ob Me Tar Init)
(TV ComLink BP LearnFeed)

The balanced scorecard serves as a guideline for translating vision into strategic goals in four perspectives:
1.) financial,
2.) customer,
3.) internal business process
4.) learning and growth.

The balanced scorecard sets goals, measures, targets and initiatives for four organisational areas based on the vision or strategy

These goals are statements of critical success factors that indicate what must be achieved for the strategy to be successful.

Each of these long-term goals has measures that indicate how the achievement of the goal will be measured and tracked.

Within the balanced scorecard, these measures become drivers of performance.

Short-term goals are set for each of the measures.
This translates the long-term goals into specific targets which indicate the performance or level of improvement needed.

Key action programs or initiatives are developed to achieve the goals.
The balanced scorecard should incorporate a set of cause-and-effect relations amongst critical variables

Four management processes provide the framework for strategy implementation and control.
( translating the vision) (communicating and linking) ( business planning) (feedback and learning)

Question 9

Topic 5 STRATEGIC CONTROL AND EVALUATION

??????????? Explain how continuous improvement builds customer value.(9) [B3.3-Nov13 + B3.2-Jun13 + SG-p132]

Answer 9

Organisations can achieve continues improvement by adopting practices such as benchmarking, total quality management and re - engineering.

1) Benchmarking
a. The comparison of selected performance measures or operational processes that serve as challenging, yet comparable, yardsticks.
b. These include the organisations own history, major competitors or best in class/world performance.
2) Total quality management
a. A culture, inherent in which is a total commitment to quality and attitude expressed by everybody’s involvement in theprocess of continuous improvement of products and services by using innovative scientific methods.
3) Re-engineering
a. An organisation is reorganized in such a way that it creates value for customers by eliminating barriers that create distance between employees and customers.
b. As such costs are lowered and service to customers improved.
4) Six sigma approach
a. A methodology linking improvement to profitability.
b. Highly rigorous and analytic approach to quality and continuous improvement with the objective of improving profits through defect reduction, yield improvement, improved customer satisfaction and best in class performance.