Dr,Jerry L,Huxell
Business Policies and
Strategies
Strategy Control and Evaluation
Dr,Jerry L,Huxell
Strategic Control
? Premise control
? Strategic surveillance
? Implementation control
? Performance measurements
Dr,Jerry L,Huxell
Premise Control
? Economic growth
? Demand growth
? Competitor behavior
? Costs and availability of inputs
? Technological changes
Dr,Jerry L,Huxell
Strategic Surveillance
? New process engineering techniques
? Lower defects per unit
? Turnovers/resignations
? Ecology issues
? Material shortages
Dr,Jerry L,Huxell
Implementation Control
? Operations control
? Profit and loss budgets
? Capital budgets
? Cash flow budgets
? Growth rates
? Market share
Dr,Jerry L,Huxell
Measurement Matters
? If you can not measure it,you can not
manage it.
? An organization’s measurement system
strongly affects the behavior of both
people inside and outside the organization.
Dr,Jerry L,Huxell
Performance Measurements
? Encourage operational excellence
? Must relate to customer
? Foster communication
? Provide feedback
? Promote learning
? Match organizational objectives
Dr,Jerry L,Huxell
Types of Controls
? Behavior controls – policies,rules and
standard operating procedures
? Output controls – objectives and
performance targets
? Input controls – knowledge,skills abilities,
values,and motives
Dr,Jerry L,Huxell
Primary Performance Measures
? Traditional financial measures
– Return on investment (ROI)
– Earnings per share (EPS)
– Return on equity (ROE)
? Shareholder value
– Economic value added (EVA)
– Market value added MVA)
Dr,Jerry L,Huxell
Economic Value Added (EVA)
? EVA = Net profit after tax – weighted cost
of capital
? Ways to increase EVA
– Earn more profit without using more capital
– Earn same profit with less capital
– Invest capital in high return projects
Dr,Jerry L,Huxell
Balanced Scorecard
? Customer perspective – how do customers
view us?
? Internal business process perspective –
what must we excel at?
? Innovation and learning perspective – can
we continue to improve and create value?
? Financial perspective – how do we appear
to shareholders?
Dr,Jerry L,Huxell
Guidelines for Control
? Focus on strategic factors
? Monitor only meaningful activities and
results
? Timely
? Use long-term and short-term controls
? Pinpoint exceptions
? Give rewards for meeting and exceeding
expectations