Session 9 HighlightsApproaches to Strategic ControlsTraditional Approach to Strategic ControlContemporary Approach to Strategic ControlSlide 5Informational ControlSlide 7Strategic Planning/Management ProcessBehavioral Control: Balancing Culture, Rewards, and BoundariesBehavioral ControlSlide 11Slide 12Something to Think AboutSession 9 HighlightsStrategic ControlsMGT 670Approaches to Strategic ControlsTraditional With a traditional approach to strategic control, goals and objectives are set, strategies are implemented, and performance is compared to the desired standards. Then there is a feedback loop in which information about how performance compares to goals is used to revise strategies. Thus, it is a highly sequential process. Contemporary Because business conditions typically change rapidly, information controls are needed that can quickly adjust. With contemporary controls, an organization’s assumptions, goals, and strategies are continuously monitored, tested, and reviewed. Thus, anticipating and adapting to change is built into the control process.Traditional Approach to Strategic ControlTraditional approach is sequential–Strategies are formulated and top management sets goals –Strategies are implemented–Results are monitored–Strategies are adjusted8-3Relationships between strategy formulation, implementation and control are highly interactiveTwo different types of control–Informational control–Behavioral controlContemporary Approach to Strategic Control8-4Informational control–Concerned with whether or not the organization is “doing the right things”Behavioral control–Concerned with whether or not the organization is “doing things right” in the implementation of its strategyBoth types of control are necessary conditions for successContemporary Approach to Strategic Control8-5Informational ControlDeals with internal environment and external strategic contextKey question–“Do the organization’s goals and strategies still ‘fit’ within the context of the current strategic environment?”Two key issues–Scan and monitor external environment (general and industry)–Continuously monitor the internal environment8-6Informational ControlTraditional approach–Understanding of the assumption base is an initial step in the process of strategy formulationContemporary approach–Information control is part of an ongoing process of organizational learning that updates and challenges the assumptions underlying the firm’s strategyBoth approaches relate to earlier steps in the Strategic Planning/Management Process8-7Strategic Planning/Management ProcessRev iew/adjust Strategic Plan:VisionMissionStrategic ObjectivesInternal Analysis:Value ChainFinancial R atiosStak eholder Perspectiv eBalanced ScorecardExternal Analysis: General Env ironmentFiv e ForcesStrategic GroupsSW OT Dev elop/adjust Corporate-Level StrategyDev elop/adjust Business-Level StrategyDiv ersif ication (mergers & acquisitions, alliances, joint v entures), Core Com petenc ies, Vertical Integration PlansStrategies (cost leadership, diff erentiation, f ocus) and how they ov ercom e Fiv e Forces and Pitf allsDev elop/adjust Organizational DesignEstablish/adjust/monitor Strategic ControlsBehavioral control is focused on implementation— doing things rightThree key control “levers”–Culture–Rewards –BoundariesBehavioral Control: Balancing Culture, Rewards, and Boundaries8-9Behavioral ControlOrganizational culture is a system of shared values (what is important) and beliefs (how things work) that shape a company’s people, organizational structure, and control systems to produce behavioral norms (the way we do things around here). Rewards and incentive systems are important means of influencing an organization’s culture, focusing efforts on high-priority tasks, and motivating individual and collective task performance.Boundaries and constraints are the rules laid down for appropriate conduct of business. They are important to focus individual efforts on strategic priorities, providing short-term objectives and action plans to channel efforts, improving efficiency and effectiveness and minimizing improper and unethical conduct.Behavioral Control: Balancing Culture, Rewards, and Boundaries8-11Behavioral Control: Balancing Culture, Rewards, and BoundariesContemporary approachA balance betweenCultureRewardsBoundariesCan be effective in more dynamic environmentsCan be used with traditional approachTraditional approachEmphasizes comparing outcomes to predetermined strategies and fixed rulesCan be effective in stable environmentsCan be combined with contemporary approach8-12Something to Think About Possible exam question: Describe the strategic control system at your organization. Propose improvementsSource: