MGT 599 Strategic Management

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MGT 599Strategic Management

• Dr. Anastasia M. Luca
• Strategic Controls

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Module 5 Strategic Controls

• Road Map
• Definition/Systems/Importance
• Control Processes
• Control Levels Types
• Structure and control
• Organizational Culture
• Reward System
• Ethical Issues

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Module 5 Strategic Controls

• Definition/Systems
• Strategic control represents the process of
  monitoring and ensuring that organizational goals
  and objectives are met.
• This process entails
• Evaluating activities and employees to ensure
  that activities are fulfilled effectively and
  efficiently
• Correcting problems that may occur

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Module 5 Strategic Controls

• Definitions/Systems
• Importance of Strategic Controls
• Quality
• Efficiency
• Innovation
• Customer Response

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Module 5 Strategic Controls

• Controls
• Market
• External market standards, such as market share
• Bureaucratic
• Authority, rules, regulations, procedures,
  policies
• Tall hierarchies
• Clan
• Shared values, beliefs, goals, traditions
• Flat organizations/team structures

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Module 5 Strategic Controls

• Control Processes
• 1. Set standards and goals
• 2. Develop measuring, evaluating, and monitoring
  systems
• 3. Compare actual performance to the developed
  measurable standards and goals.
• 4. Assess whether there is discrepancy
• 5. Take corrective action, if necessary

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Module 5 Strategic Controls

• Control Process
• Input
• Feed-forward controls
• Anticipates problems
• Processes
• Concurrent control
• Correcting problems as they occur
• Output
• Feedback control
• Corrects after errors occur

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Module 5 Strategic Controls

• Control Levels
• Corporate Level
• Divisional Level
• Functional Level
• First Supervisory Level Output Controls
• Management Objectives

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Module 5 Strategic Controls

• Control Types
• Structural/Organization Design
• Financial
• Output
• Behavioral
• Organizational Culture

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Module 5 Strategic Controls

• Control Types
• Structural/organization design
• Centralized versus decentralized
• How integrated are the divisions or departments?
• The higher the integration (centralization), the
  higher the controls and associated costs.
• A more complex hierarchy (tall company), with a
  narrow division of labor and a narrow span of
  control, have more controls

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Module 5 Strategic Controls

• Control Types
• Financial
• Stock Price (corporate /company level)
• ROI (Return on Investment or Net Income /
  Invested Capital)
• Both corporate and divisional level

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Module 5 Strategic Controls

• Control Types
• Output Controls forecast estimates for all
  company levels are compared to the actual level
• Division Level e.g.. market share, sales
• Department Level e.g. number of customers
  served, complaints, returns
• Employee Level number of pieces produced,
  customers served, etc.

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Module 5 Strategic Controls

• Control Types
• Behavior Controls
• Operating budgets how resources are distributed
  in order to optimally reach goals
• Standardization development of precise standards
  regarding input, activities, and outputs, making
  activities and behaviors predictable
• Rules and procedures manage employees behavior
• Performance Evaluations

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Module 5 Strategic Controls

• Organizational Culture
• Definitions of culture
• Edgar Schein MIT Sloan School of Management
  Professor and prominent culture scholar
• Culture is a set of shared norms, values, and
  assumptions that groups have developed and that
  influences their actions
• set of shared, taken-for-granted implicit
  assumptions that a group holds and that
  determines how it perceives, thinks about, and
  reacts to its various environments (Schein,
  1996)

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Module 5 Strategic Controls

• Organizational Culture
• Refers to values and norms shared by people in an
  organization
• Values represent beliefs and goals
• Norms are unwritten rules of behavior
• Organizational culture is a form of control, as
  it directs behavior in an organization
• Organizational culture is shaped by founders,
  CEOS, and management.

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Module 5 Strategic Controls

• Reward Systems
• Individual commission, piecework, bonus,
  promotion
• Team reward team rather than individual members
• Group reward group rather than individual
  members
• Organizational profit sharing, stock option
  plans

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Module 5 Strategic Controls

• Technology and Control
• Technology can be a strategic method of control
• Wal-Mart is an example of success due to a big
  extent to strategic controls and use of
  technology
• Technology can automate production and supply
  chains
• Technology can retrieve, store, and provide
  important information for manufacturing (Dell
  Computers), customer service, marketing.

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Module 5 Strategic Controls

• Sam Walton and Wal-Mart
• Sam Walton created the largest retail company
  that employs most people in several decades.
• The use of strategic controls has been very
  important.
• System of permanent feedback to all employees
  financial control system that provides daily
  performance feedback
• High-technology system (satellite) connecting all
  stores and sharing financial information of all
  stores

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Module 5 Strategic Controls

• Sam Walton Wal-Mart
• Rewards determined by performance
• Rules and standards all stores the same,
  employees trained in the same way, same behavior
  towards customers
• Culture strong corporate culture
• Computerized inventory and distribution system
• Sophisticated supply chain

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MGT 301Module 5 Strategic Controls

• Quality Control Management Standards
• TQM (Total Quality Management)
• Six Sigma
• ISO 9000