Business Strategy
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Textbook:
Pages : 323;
Paperback;
210 X 275 mm approx.
Workbook:
Pages :
321; Paperback;
210 X 275 mm approx
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Textbook Price: Rs. 750 ;
Workbook Price: Rs. 700;
Available only in INDIA
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Strategic and Operational Control : Chapter 13
SUMMARY: In management, control systems are broadly concerned with the attainment of goals and implementation of strategies. According to Robert Simons, diagnostic control systems, beliefs systems, boundary systems, and interactive control systems are the four levers of control used in management. Based on the object of control, management controls are classified into action controls – behavioral restrictions, pre-action appraisals, and action accountability; results controls; and personnel/cultural controls. Depending on the situation, various combinations of controls may be used in a management control system. An adaptive management control system facilitates organizational learning and the adoption of new strategies (where required) with the external environment in focus, and making innovations which lead to improved processes and better responsiveness to the market conditions. |
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The control mechanisms that increase the organization's probability of achieving its strategic objectives are collectively referred to as strategic control. According to Rockart, CSFs are "the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish." They are "areas of activity that should receive constant and careful attention from management." Each industry and, in turn, each organization, has a different set of CSFs. The alignment between the mission and strategic goals which determine the CSFs is ensured by strategic controls. Performance measures are required to track and monitor the activities which lead to the achievement of the CSFs. Performance measures are of three types: performance indicators (lead or lag indicators), key performance indicators, and key result indicators.
'The Balanced Scorecard (BSC)' is a concept that combines financial and non-financial measures, short-term and long-term goals, the organization's market performance and internal improvements, past outputs, and ongoing requirements. The BSC framework considers the customer perspective (To achieve our vision, how should we appear to our customers?); internal business process perspective (To satisfy our customers and shareholders, what business processes must we excel at?); and the innovation/learning and growth perspective (To achieve our vision, how will we sustain our ability to change and improve?); in addition to the financial perspective (To succeed financially, how should we appear to our shareholders?). In the implementation of the BSC, these perspectives are seen and evaluated in an interconnected manner and not as standalone perspectives. The BSC is useful as a tool for strategic performance control and strategic learning.
Operational control systems help operating managers to implement strategy at their level. These systems help to guide, monitor, and evaluate progress in meeting the annual objectives of the company. Corporate resource planning, budgets, and policies and procedures are three important topics in operational control. The most common types of budgets that translate company objectives are revenue budgets, capital budgets, and expenditure budgets. Many organizations have shifted their focus away from traditional budgets to 'rolling budgets' or 'rolling forecasts'.
Bechmarking has transformed the way businesses are organized, managed and run. Benchmarking is the process of improving performance by continuously identifying, understanding (studying and analyzing), and adapting outstanding practices and processes found inside and outside the organization, and implementing them in the organization. Benchmarking is beneficial in raising operational efficiency. Operational efficiency leads to gains in productivity that can result in increased profits. But benchmarking is not a strategic decision-making tool.
Business process reengineering is an improvement philosophy. This process can be applied at the level of the individual process or at the level of the organization. Re-engineering achieves performance improvements by redesigning operational processes and maximizing value-added content. There are two broad approaches to redesigning: the systemic approach, and the clean sheet approach. When actually redesigning processes, most firms follow a mix of both the approaches.
