Business policies and Strategies Strategy control and evaluation Dr. Jerry L. huxell
Dr. Jerry L. Huxell Business Policies and Strategies Strategy Control and Evaluation
Strategic Control Premise control Strategic surveillance mplementation control Performance measurements Dr. Jerry L. huxell
Dr. Jerry L. Huxell Strategic Control • Premise control • Strategic surveillance • Implementation control • Performance measurements
Premise Control Economic growth Demand growth Competitor behavior Costs and availability of inputs Technological changes Dr. Jerry L. huxell
Dr. Jerry L. Huxell Premise Control • Economic growth • Demand growth • Competitor behavior • Costs and availability of inputs • Technological changes
Strategic Surveillance New process engineering techniques Lower defects per unit Turnovers/resignations Ecology issues Material shortages Dr. Jerry L. huxell
Dr. Jerry L. Huxell Strategic Surveillance • New process engineering techniques • Lower defects per unit • Turnovers/resignations • Ecology issues • Material shortages
Implementation Control Operations control Profit and loss budgets Capital budgets Cash flow budgets Growth rates · Market share Dr. Jerry L. huxell
Dr. Jerry L. Huxell Implementation Control • Operations control • Profit and loss budgets • Capital budgets • Cash flow budgets • Growth rates • Market share
Measurement matters If you can not measure it, you can not manage it An organizations measurement system strongly affects the behavior of both people inside and outside the organization Dr. Jerry L. huxell
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
Performance measurements Encourage operational excellence Must relate to customer Foster communication · Provide feedback Promote learning Match organizational objectives Dr. Jerry L. huxell
Dr. Jerry L. Huxell Performance Measurements • Encourage operational excellence • Must relate to customer • Foster communication • Provide feedback • Promote learning • Match organizational objectives
ypes 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
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
Primary Performance Measures Traditional financial measures Return on investment(ROD) Earnings per share(EPs) Return on equity(ROe · Shareho| der va|ue Economic value added(EVA) Market value added mVa Dr. Jerry L. huxell
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)
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
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