Strategic Control

Definition

Strategic control is a process that ensures an organization is effectively implementing its strategic plans and achieving its objectives. It involves monitoring the internal and external environments, evaluating performance, and making necessary adjustments to strategies based on this analysis. This ongoing assessment is crucial for aligning resources and capabilities with the dynamic nature of markets and competition.

5 Must Know Facts For Your Next Test

1. Strategic control helps organizations identify whether they are on track to meet their goals and allows for timely interventions if there are deviations from the plan.
2. There are two main types of strategic control: formative control, which occurs during strategy formulation, and retroactive control, which evaluates outcomes after implementation.
3. Effective strategic control requires both quantitative measures, such as financial metrics, and qualitative assessments, like stakeholder satisfaction.
4. Tools such as balanced scorecards and dashboards are often used to provide a comprehensive view of organizational performance under strategic control.
5. Regular reviews of strategic plans ensure that organizations remain agile, adjusting their strategies in response to changes in the competitive landscape.

Review Questions

• How does strategic control contribute to effective decision-making within an organization?
  • Strategic control contributes to effective decision-making by providing leaders with real-time data and insights about organizational performance against set objectives. By continuously monitoring both internal processes and external market conditions, management can identify areas that require adjustment or improvement. This dynamic approach ensures that decisions are informed by current realities rather than outdated assumptions, allowing organizations to remain competitive.
• Discuss the relationship between strategic control and performance measurement in organizations.
  • Strategic control is closely linked to performance measurement as it relies on various metrics to evaluate the success of implemented strategies. Performance measurement provides the necessary data that feeds into the strategic control process, helping organizations assess whether they are achieving their goals. By analyzing performance outcomes against established benchmarks, organizations can identify strengths, weaknesses, and areas for improvement, thus ensuring alignment between strategy and operational execution.
• Evaluate the challenges organizations face in implementing effective strategic control mechanisms and suggest potential solutions.
  • Organizations often encounter challenges in implementing effective strategic control mechanisms due to factors such as resistance to change, lack of accurate data, or insufficient communication channels. These challenges can hinder timely decision-making and adaptation of strategies. To address these issues, organizations should foster a culture that values adaptability, invest in robust data collection systems, and enhance communication among departments. By creating an environment that supports transparency and collaboration, organizations can improve their strategic control processes.

Related terms

Performance Measurement: A systematic process of evaluating the efficiency and effectiveness of an organization's actions in relation to its goals.

Feedback Loop: A system where outputs of a process are circled back and used as inputs, enabling continuous improvement and adjustment.

Benchmarking: The practice of comparing an organization’s processes and performance metrics to industry bests or best practices from other companies.