Strategic management planing for domestic and global competition 14th john robinson chapter 13

Summarize the balanced scorecard approach and how it integrates strategic and operational control.. Types of Strategic Control• Premise control • Strategic surveillance • Special alert

Strategic

Control

Chapter 13

Learning Objectives

1 Describe and illustrate four types of strategic

control.

2 Summarize the balanced scorecard approach and

how it integrates strategic and operational control.

3 Illustrate the use of controls to guide and monitor

strategy implementation.

Strategic Control

it is being implemented, detect problems

or changes in its underlying premises, and

make necessary adjustments

Questions That Drive Strategic Control

1 Are we moving in the proper direction?

2 How are we performing?

Types of Strategic Control

• Premise control

• Strategic surveillance

• Special alert control

• Implementation control

Ex 13.1 Four Types of Strategic Control

Chapter 13 exhibit 1.CLP

Ex 13.1 (contd.) Characteristics of the Four Types of Strategic

Control

Chapter 13 exhibit 2.CLP

Premise Control

• Premise control is designed to check

systematically and continuously whether the premises on which the strategy is based are still valid

Strategic Surveillance

• Strategic surveillance is designed to monitor a

broad range of events inside and outside the

firm that are likely to affect the course of its

strategy

as possible

provides an ongoing, broad-based vigilance in all daily operations

Special Alert Control

rapid, reconsideration of the firm’s strategy

because of a sudden, unexpected event

intense reassessment of the firm’s strategy and its current strategic situation

Implementation Control

• Implementation control is designed to assess

whether the overall strategy should be changed

in light of the results associated with the

incremental actions that implement the overall

strategy

Implementation Control (contd.)

control are:

Strategic Thrusts or Projects

• Special efforts that are early steps in executing

a broader strategy, usually involving significant resource commitments yet where

predetermined feedback will help

management determine whether continuing

to pursue the strategy is appropriate or

whether it needs adjustment or major change

Milestone Reviews

• Points in time, or at the completion of major parts of a bigger strategy, where managers

have predetermined they will undertake a

go-no go type of review regarding the underlying strategy associated with the bigger strategy

Operational Control Systems

• To be effective, operational control systems must

take four steps common to all postaction controls:

– Set standards of performance

– Measure actual performance

– Identify deviations from standards set

– Initiate corrective action

The Balanced Scorecard Methodology

strategic control, developed by Harvard Business School professors Robert Kaplan and David

Norton, is a system they named the balanced

scorecard

Balanced Scorecard

• A management control system that enables

companies to clarify their strategies, translate them into action, and provide quantitative

feedback as to whether the strategy is creating value, leveraging core competencies,

satisfying the company’s customers, and

generating a financial reward to its

shareholders

Kaplan and Norton on the Balanced

Scorecard

• “The balanced scorecard retains traditional financial

measures But financial measures tell the story of past

events, an adequate story for industrial age companies

for which investments in long-term capabilities and

customer relationships were not critical for success

These financial measures are inadequate, however, for guiding and evaluating the journey that information

age companies must make to create future value

through investment in customers, suppliers, employees,

Ex 13.5 Integrating Shareholder Value and Organizational Activities

across Organizational Levels

Balanced Scorecard

Four perspectives:

1 The learning and growth perspective: How well

are we continuously improving and creating

value?

2 The business process perspective: What are our

core competencies and areas of operational

excellence?

Balanced Scorecard Perspectives

(contd.)

1 The customer perspective: How satisfied are

our customers?

2 The financial perspective: How are we doing

for our shareholders?

Ex 13.6 Exxon’s NAM&R Division’s Balanced

Scorecard

Ex 13.6 (contd.)

Strategic Objectives Strategic Measures

Ex 13.6 (contd.)

Strategic Objectives Strategic Measures

Ex 13.6 (contd.)

Strategic Objectives Strategic Measures

Dashboard Uses

• Key management tool for timely strategic and operational control

• Users can decide the key indicators that tell

them about the unfolding success of their

strategies

Summing Up Strategic Control

• Strategic control and comprehensive control programs like the balanced scorecard bring

the entire management task into focus

• Organizational leaders can adjust or radically change their firm’s strategy based on feedback from a balanced scorecard approach as well as other strategic controls