Strategic Performance Control

P. GURU PRASAD

FACULTY

INC GUNTUR

Strategy and control

• Significant change in the business environment may make it difficult for an organization to survive in the market place.

Strategic change takes place the form of• changing competitor moves, • changing customer value-price perceptions,• changing technology conditions, • changing competitor profile , and • changing supplier equations.

Vision and Mission

• The vision and mission statements together provide the growth directions for the organizations and control the allocation of resources.

• For ex, a theater complex might define its mission as exhibiting movies. On the other hand a theater complex might define its vision as providing entertainment.

Vision and Mission

• Entertainment is broader than movie exhibition and will permit the organization to have business activates like video game consoles and dining outlets built into the premises of the complex that exhibits movies.

• Such an organization , in order to grow, will not engage in business activates like cement manufacturing, retailing apparel, or selling computers

Vision and Mission

• Dabur India the fourth largest FMCG company’s vision is “ Dedicated to the health and well-being of every household”

• Strategies that an organization adopts control its strategic positioning, which translates into customer perception of the organization’s products and services. The resources and strengths available with the organization and the strategic gaps existing in the marketplace play a key role in the choice of strategy that controls it performance.

Critical success factors and controls (CSF)

• The strategy crafted by an organization aims at leveraging on its resources or strengths and aligns them with the environment in which it operates. Its ability to do so depends on how well it addresses its critical success factors.

• If the critical success factors are ignored, then the organization will fail sooner or later

Critical success factors and controls (CSF)

• For example, in domino’s pizza, the critical success factors are related to four broad areas, customer’s preference fro pizza as a food item , its ability to prepare a pizza within a short time, to deliver it within 30 minutes of recording the order, and the store location.

• Since domino’s business model is based on home delivery, the speed of preparing the pizza and delivering it are the critical success fetors.

Critical success factors and controls (CSF)

• Each industry will have a different set of critical success factors. For instance, in the case of grocery chains such as reliance Fresh, one of the critical success factors would be to source farm fresh vegetables at low prices which will translate into building sustainable supplier relationships

Critical success factors and controls• For each organization the critical success factors

may be different, depending on its mission and strategic goals. The strategic controls ensure that there is an alignment between the mission and strategic goals.

• For example the mission of a television manufacturing organization may be to be recognized as a top end organization in its industry. The strategic goal would be to frequently introduce state of the art products in the electronics industry. The critical success factor for the organization would be the research and development activity and speed to the market with new versions

Critical success factors and controls (CSF)

• Once the organization has decided on the critical success factors , it becomes necessary to track the activates that lead to their achievements and to monitor the performance of each of these activates.

• Performance measures are required for the organization to know whether the approach it is taking to address the critical success factors

Performance Measurement

• Performance measures can be of three types

• Performance indicators

• Key performance indicators

• Key result indicators

Performance indicators

• An organization may have a variety of performance indicators indifferent areas.

• Marketing performance indicator

• HR performance indicator

• Production performance indicator

• Performance indicators may be lead indicators or lag indicators

lead indicators or lag indicators

• In the Domino pizza example, consider the performance indicator, late delivery of pizzas. This may be considered as an lag indicator (focus is on late) as well as a performance lead indicator (focus is on delivery).

• Good performance indicators are specific, measurable, attainable, realistic, and a have time perspective

Key Performance Indicators

• Occupancy levels would be a key performance indicator for Pizza Hut for the following reasons

• The restaurants ability to succeed depends on the critical success factors of location ,menu offering, the ambience, and the dining experience.

• The success of the restaurant in terms of the occupancy levels would be high only if the restaurant is able to address most of the listed critical success factors effectively.

Key result indicators

• Return on capital employed, (ROI) and profitability are two examples of key result indicators that are relevant for many organizations.

CFS for Airlines

• A full service airline in this market typically provide more services to passengers than a no-frills (low-cost) airline. Full service airline tend to attract business travelers an other frequent flyers who expect such services, along with guaranteed connectivity of flights, punctuality, etc., Under normal circumstances, full service airlines charge a premium for the seats as compared to a no-frills airline.

CFS for Airlines

• A suggested set of critical success factors are listed below

• Timely departure and arrival of aircraft• Retaining key employees• Time slots of departure and arrival• Parking bays at the airport• Safety • Seamless travel experience (Alliance with

hotels, tourism, portals, transportation companies)

KPI for Airlines

• Passenger load factor

• On time flight performance index

• Number of incidents affecting safety or security per day

PI for Airlines• Training hours per employee per month

• Promotion expenses / ticket sales

• Number of flying hours per aircraft per month

• Tickets booked online / by the call center employees

• Customer loyalty

• Referral booking

KRI for Airlines

• Net profit before tax

• Customer satisfaction

• Debt-service coverage ratio

• Average service period of key employees

• Safety measures

IT&S

• If the operations of the organization are geographically widespread, and cut across multiple industries, or the nature of industry is such that it requires global sourcing to be successful. IT&S becomes crucial to control the diverse operation of the organization

IT&S• For example , a diversified conglomerate might have

operations in the steel industry in China, • the software industry in India, • electronic chips in Taiwan, • and coffee in Brazil with headquarters in India.• The steel produced in China may be exported to

Bangladesh and Nepal;• software services and support may be provided to clients

in Europe and North America,• electronics chips may be sold in India and Russia ,• and coffee may be exported to the Middle East

countries,• in the case of such organizations , IT&S becomes a

critical success factor.

Thanking you• Cherish your visions and your dreams, as they

are the children of your soul, the blueprints of your ultimate achievements.- Napoleon Hill

• Ambition, fueled by compassion, wisdom and integrity, is a powerful force for good that will turn the wheels of industry and open the doors of opportunity for you and countless others.

•- Zig Ziglar is an American author, salesperson, and motivational speaker.