LEARNING OBJECTIVES
1. Two Levels of Control: Strategic and Operational
-Strategic control: The process by which an organization tracks the strategy as
it is being implemented, detecting any problem areas or potential problem
areas that might suggest that the strategy is incorrect, and making any
necessary adjustments.
-Operational control: A process concerned with executing the strategy.
2. Types of Control
- Proactivity: The active monitoring of problems in a way that provides their
timely prevention, rather than after-the-fact reaction.
- Concurrent Controls: Processes that entail monitoring and adjusting ongoing
activities.
- Feedback Controls: Processes that involve the gathering of information about
a completed activity, evaluating that information, and taking steps to improve
the similar activities in the future.
- Outcome controls: Processes that are generally preferable when just one or
two performance measures (say, return on investment or return on assets) are
good gauges of a business’s health.
- Behavioral controls: The direct evaluation of managerial and employee
decision making, not of the results of managerial decisions.
- Financial control: The management of a firm’s costs and expenses to control
them in relation to budgeted amounts.
- Nonfinancial controls: Processes that track aspects of the organization that
aren’t immediately financial in nature but are expected to lead to positive
financial performance outcomes.