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Strategy implementation, evaluation and controls - Coggle Diagram
Strategy implementation, evaluation and controls
Strategic management is an organisational process that entails strategy formulation, implementation, evaluation and control
The monitoring system provides feedback on the progress towards objectives and the control mechanisms that help keep the organisation on course
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Mechanisms include the allocation of responsibility and authority through the organisational structure, policies, the use of budgetary controls and the use of performance metrics through feedback loops, known as diagnostic controls
Control is about ensuring plans are properly executed and assuring the organisation functions as planned; it is the process of ensuring that a firms activities conform to its plans and that its objectives are achieved
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Strategic control
Shaping the behaviour in business its as well the internal context within which managers are operating
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Strategy implementation occurs when a firm adopts organisational policies and practices that are consistent with its strategy
A policy is a guiding principle designed to influence decisions, actions and behaviours
Policy is developed within the frame of the objectives and details the how, where and when in terms of course of action which must be followed to achieve the objectives
Policies are designed to guide the behaviour of managers in relation to the pursuit and achievement of strategies and objectives, they can guide thoughts or actions, indicating expectations
In some cases, policies will be written but this need not be the case as policies can also emerge from patterns of behaviour and may be a facet of values and culture
Policies may be organisation wide or may be restricted to (or emanate from) a particular functional area
Policies are the guidelines developed by an organisation to govern its actions, they define the limits within which decisions must be made
Formal, written policies are often viewed as elements of bureaucratic control, they are used along with procedure and the allocation of authority within the hierarchy to ensure employees behave in the best interests of the organisation
Typically organisations emphasised bureaucratic controls and this type of control works hand in hand with hierarchy - critics of bureaucracy argue that bureaucratic control reduces the extent to which those lower down in the organisation can exercise personal judgement and make decisions which may stifle creativity
The mission and fundamental goals of the organisation ultimately need to be translated into departmental goals throughout the organisaion, traditionally translating organisational goals into individual goals was a key aspiration of management by objectives, metrics such as KPI are then implemented to define targets and monitor progress
Metrics are typically used as part of a feedback control system - the metric / target represents the standard of performance required
Standards or metrics must be developed from, our strategy in this case and that these will be used to control performance in the transformational model
Measurements are taken of actual performance and this through feedback is used and compared with standards to identify discrepancies that is where the system is not performing as required
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In bureaucratic control, it is the manager or supervisor who receives the feedback and then determine appropriate action
Such an approach has been criticised for being too slow and demotivating for staff - more recently organisations have seen the benefit of self regulation - in such situations feedback information is provided directly to staff and any relevant team and they decide for themselves what corrective action may be necessary - this has the advantage of being more responsive, motivating and support an empowered culture
Budgetary controls
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This is a control on how resources and money are used and spent to accomplish the plan and associated goals
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It also serves as a vehicle for delegating activities and responsibilities to lower management levels in the organisation
Budgeting typically occurs alongside strategy formulation and bridges the gap to implementation - it is the implementation of he long term plan for the year ahead through the development of detailed financial plans
Budgets indicate how much will be spent by which department, when and for what purpose - there are three types of budget relevant to strategy formulation and implementation
The sales budget is used to forecast revenues flowing into the organisation and is a key input to planning
Once the organisation has created its strategy, it will need to allocate departmental budgets for operating costs and also for the allocation of capital expenditure in buildings, plant, equipment and IT for example
All managers who spend money and whose departments consume resources will be allocated a budget which will be closely related to the manager's objectives
Budgets and objectives are related and as a result, resources should be allocated to those areas and activities seen as priorties
Once a budget has been allocated and agreed by a particular department or manager this represents a target for spend or savings
Information is routinely collected to measure the actual spend or savings and this will be compared periodically with targets
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This feedback loop is used to ensure that targets are accomplished and the desired performance attained
Budgeting is seen as essential for resource allocation in the short term and progress monitoring against budget target can help ensure efficiency - however contemporary organisations must balance this with the need for flexbility in dynamic environments