MS-11 Question 5

Explain how strategic control helps in balancing the interaction between the business’s internal and the external environment

Three fundamental perspectives
-strategic control,
-continuous improvement,
-balanced scoreboard
provide the basis for designing strategy control systems.
Strategic controls are intended to steer the company toward its long
-term strategic goals.
- Premise controls,
-implementation controls,
-strategic surveillance, and
-special alert controls are types of strategic control. All four types are designed to meet top management's needs to track the strategy as it is being implemented, to detect underlying problems, and to make necessary adjustments. These strategic controls are linked to the environmental assumptions and the key operating requirements necessary for successful strategy implementation. Ever-present forces of change fuel the need for and focus of strategic control. Operational control systems require systematic evaluation of performance against predetermined standards or targets. A critical concern here is identification and evaluation of performance deviations, with careful attention paid to determining the underlying reasons for and strategic implications of observed deviations before management reacts. Some firms use trigger points and contingency plans in this process. The "quality imperative" of the last 20 years has redefined global competitiveness to include reshaping the way many businesses approach strategic and operational control. What has emerged is a commitment to continuous improvement in which personnel across all levels in an organization define customer value, identify ways every process within the business influences customer value, and seek continuously to enhance the quality, efficiency, and responsiveness with which the processes, products, and services are created and supplied. This includes attending to internal as well as external customers. The "balanced scorecard" is a control system that integrates strategic goals, operating outcomes, customer satisfaction, and continuous improvement into an ongoing strategic management system.
THE FOLLOWING CONTROLS
- Premise controls,
-implementation controls,
TO TRACK /MONITOR/ ACTION PLANNINGBUSINESS INTERNALS.
1.HOW THE COMPANY MAXIMIZES THE STRENGTHSAS PART OF BUSINESS STRATEGYCriteria examples
Advantages of proposition? Capabilities? Competitive advantages? USP's (unique selling points)? Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing - reach, distribution, awareness? Innovative aspects? Location and geographical? Price, value, quality? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Cultural, attitudinal, behavioural? Management cover, succession?Philosophy and values?-------------------------------------------------------------------
2.HOW THE COMPANY OVERCOMES THE WEAKNESSESAS PART OF BUSINESS STRATEGY
Criteria examples
Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines and pressures? Cashflow, start-up cash-drain? Continuity, supply chain robustness? Effects on core activities, distraction? Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc? Processes and systems, etc? Management cover, succession---------------------------------------------------------------------------
3.HOW THE COMPANY TAKES ADVANTAGE OF THE OPPORTUNITIESAS PART OF BUSINESS STRATEGY
Criteria examples
Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal? Niche target markets? Geographical, export, import? New USP's? Tactics: eg, surprise, major contracts? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?----------------------------------------------------------------
4. HOW THE COMPANY MANAGES THE THREATSAS PART OF BUSINESS STRATEGY
Criteria examples
Political effects? Legislative effects? Environmental effects? IT developments? Competitor intentions - various? Market demand? New technologies, services, ideas? Vital contracts and partners? Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing? Economy - home, abroad? Seasonality, weather effects? -------------------------------------------------------------------------------THE FOLLOWING CONTROLS
-strategic surveillance, and -special alert controls TO TRACK /MONITOR/ ACTION PLANNINGBUSINESS EXTERNALS.
Political (incl. Legal)
-Environmental regulations and protection [what are the government regualtions/ protection laws that must be observed ]
-Tax policieswhat tax hinder the business and what taxes incentives are available]
-International trade regulations and restrictions[ does the government encourage exports / with high tariffs on imports]
-Contract enforcement law/Consumer protection[does the government enforce on consumer protection ]
-Employment laws][ is the government encouraging skilled immigrants with temp. permits]
-Government organization / attitude[ does the government have a very positive attitude towards this industry]
-Competition regulation[ are there regulation for limiting competition]
-Political Stability[ politically , does the government have a very stable government ]
-Safety regulations[ has the government adopted some of the modern safety regulations]================================================================= Economic
-Economic growth[ what is the economic growth rate / what are the reasons ]
-Interest rates & monetary policies[ are the interest rates under control / is there a sound monetary policies]
-Government spending[is government spending is significant and is it under control ]
-Unemployment policy[what is the employment / unemployment policies of the government ]
-Taxation[ has the taxation encouraged the industry ]
-Exchange rates[ is there well managed exchange controls and is it helping the industry]
-Inflation rates[ is the inflation well under control ]
-Stage of the business cycle[ is your industry is on the growth pattern]
-Consumer confidence[ is the consumer confidence is high/ strong and if not, why ]
==================================================
Social
-Income distribution[is there balanced income distribution policy ]
-Demographics, Population growth rates, Age distribution[ what is population growth and why ]
-Labor / social mobility[ what are the labor policies and is there labor mobility]
-Lifestyle changes[ are there significant lifestyle changes taking place--more modernization/ why ]
-Work/career and leisure attitudes[ are the population career minded and are seeking better lifestyle]
-Education[ what are the education policies / is it successful ]
-Fashion, hypes[are the people becoming fashion conscious ]
-Health consciousness & welfare, feelings on safety[ are the people becoming health consciousness]
-Living conditions[ is the living conditions improving fast and spreading rapidly]
=========================================================
Technological
Government research spending[is the government spending on research and development]
Industry focus on technological effort[are the industries focused on using improved technology]
New inventions and development[ are new inventions being encouraged for developments]
Rate of technology transfer[ is the rate of technology transfer is speeding up ]
(Changes in) Information Technology[ is the information technology rapidly moving and is there government support]
(Changes in) Internet[ is the internet usage rapidly increasing and why]
(Changes in) Mobile Technology[is the Mobile technology rapidly developing and is there government support]