Strategic controls, which can be enforced by certain operational controls, are designed to answer following questions:
(a) Are we moving in right directions?
(b) Are key things falling into place?
(c) Are our assumptions about major trends and changes correct?
(d) Are the critical things we need to do being done?
(e) Do we need to adjust or abort this strategy?
(f) How are we performing?
(g) Are we meeting objectives and schedules?
(h) How are costs, revenues and cash flows matching projections?
(i) Do we need to make operational changes?
To establish strategic control:
(a) Allow the time between initial implementation and achievement of intended results.
(b) Steer the organization through different action (like undertaking of project, investment, etc.), environmental situation and firm’s internal situation.
(c) Correct the actions and directions of the firm as required by certain developments and chances in external environment and internal situation.
Types of Strategic Control:
There are four basic types of strategic control:
(a) Premise Control
(b) Implementation Control
(c) Strategic Surveillance
(d) Special Alert Control
1. Premise control is designed to check systematically and continuously whether or not the premises set during the planning and implementation process are still valid, for example, a bank may adopt an aggressive marketing strategy to achieve 15 per cent annual growth, establishing a planning premise that not more than 10 per cent would be their non-performing assets. Premise control should be ensured monitoring the non-performing assets at the branch level on a regular basis.
2. Implementation control is designed to assess the overall strategy results associated with the incremental steps and actions that implement the overall strategy. To take an example, an internationally known fast food centre decided to maintain 3:1 company-owned franchise ratio as the part of their expansion strategy, to ensure control over the quality of foods, rates, etc. However, growing competition in this business later forced them to reverse the ratio to accelerate its ability to open new locations.
3. Strategic surveillance is designed to monitor a broad range of events inside and outside the company that are likely to threaten the course of the firm’s strategy. To take an example, in the early years of its attempt to sell the PGDBA CFA Course, ICFAI made its course more finance oriented, covering all conceivable finance- laden papers, targeting the financial services sector as the prospective employers of their students.
Now, financial services sector being highly unstable for market volatility, ICFAI felt the need to target other sectors as the prospective employers of their students with adequate shift in focus to PGDBA papers like; Marketing, HRD, Information Technology, Strategic Management, etc.
Similar shift in focus was adopted by IBM in marketing their large expensive mainframe computer worldwide, from corporate house to libraries
4. Special alert control is the need to thoroughly and often rapidly, reconsider the firm’s basic strategy based on a sudden, unexpected event. To take an example, political coup or civil war in a country would put pressure on exporters to those countries, who may have to thoroughly reconsider their export strategy. Another example would be a major airline facing a devastating effect after an air crash.