Strategic controlling

From CEOpedia | Management online

Strategic controlling is a process that involves monitoring and evaluating a company’s performance and progress towards its long-term goals. It is an essential part of any successful organization, as it allows for the identification of potential problems, the setting of corrective actions, and the development of strategies for future growth and success.

During strategic controlling process decisions are made on major issues related to what the company should do to achieve its goals. It involves monitoring, analysis and evaluation processes to direct company's course in the right direction.

The concept of strategic controlling was created in order to develop strategic planning capabilities, proper management tasks assignment, control of the process of their implementation and monitoring of results.

Strategic controlling creates the conditions for ensuring long-term existence and development of the company and generate new potential profits

Process of strategic control

Strategic controlling involves the following steps:

  1. Developing a clear and concise vision and mission for the organization: This involves identifying the purpose and goals of the organization and articulating them in a way that is easily understood and remembered by all employees.
  2. Setting measurable and achievable goals that align with the company’s vision and mission: This involves setting objectives that are realistic and achievable, and that align with the organization’s overall purpose.
  3. Establishing a system of metrics and key performance indicators (KPIs) that measure progress towards the stated goals: This involves setting up a system of tracking and measuring the performance of the organization against its stated goals. KPIs provide an accurate and effective way of doing this.
  4. Monitoring the KPIs and taking corrective action when necessary: This involves regularly monitoring the KPIs and taking corrective action when needed to ensure that the organization is progressing towards its goals.
  5. Regularly evaluating performance and making adjustments as needed: This involves regularly reviewing the performance of the organization and making adjustments to the strategy and tactics as needed.
  6. Developing strategies for future growth and development: This involves identifying areas of opportunity and developing strategies and plans to capitalize on them.
  7. Communicating the results of strategic controlling activities to the relevant stakeholders: This involves regularly informing stakeholders of the progress and results of the organization’s strategic controlling activities.

Features of strategic controlling

The importance of strategic controlling lies in its ability to help organizations to identify and manage risks, set and measure performance goals, develop strategies for future growth and success, and ensure that the organization is progressing towards its long-term objectives. Strategic controlling allows organizations to proactively identify and address potential problems before they arise, and to ensure that their strategies are effective and are achieving the desired results. Furthermore, strategic controlling provides the necessary information for stakeholders to make informed decisions about the organization’s future. It:

  • Helps to identify and manage risks.
  • Allows organizations to set and measure performance goals.
  • Enables organizations to develop strategies for future growth and success.
  • Provides the necessary information for stakeholders to make informed decisions.
  • Helps organizations to proactively address potential problems.
  • Ensures that the organization’s strategies are effective and are achieving the desired results.

Methods and techniques used in strategic controlling

The main methods are:

  • Balanced Scorecard: This method is used to measure and evaluate the performance of an organization in multiple areas.
  • Strategic Planning: This involves the development of plans for the future direction of an organization.
  • SWOT Analysis: This involves analyzing the internal and external environment of an organization in terms of its Strengths, Weaknesses, Opportunities and Threats.
  • Benchmarking: This involves comparing the performance of an organization to that of other organizations in the same industry.
  • Risk Analysis: This involves assessing the risks associated with an organization’s strategies and plans and developing strategies to mitigate them.
  • Financial Analysis: This involves analyzing the financial performance of an organization in order to identify any areas of improvement.

Detailed tasks of strategy controller

Fig.1. Strategic controlling key elements

The tasks of strategic controlling are:

  • Analysis of the feasibility of long-term corporate goals: This involves assessing the feasibility of the organization’s long-term goals and objectives.
  • Tests for the correctness of the division of tasks into phases: This involves testing the accuracy and effectiveness of the division of tasks into different phases.
  • Assistance in selecting methods, techniques, standards and other tools that are applicable in the planning and control: This involves helping to select the methods, techniques, standards and other tools that are most suitable for the organization’s planning and control activities.
  • Assistance in the development and oversight of strategic plans: This involves helping to develop and oversee strategic plans that are tailored to the organization’s goals and objectives.
  • Assistance in creating an managerial information system: This involves helping to create a system of information that is relevant and useful for managerial decision-making.
  • Monitoring of quality of information sources: This involves monitoring the accuracy and reliability of the information sources used by the organization.
  • Conducting a pre-emptive monitoring and evaluation of options, opportunities and threats: This involves conducting a pre-emptive analysis of potential options, opportunities and threats that the organization may face.
  • Determining the deviations from planned results, broken down by relevant/irrelevant and dependent/independent: This involves determining any deviations from the planned results and breaking them down into relevant and irrelevant, and dependent and independent factors.
  • Assistance in designing the necessary measures for correction of goals, elimination of interference from environment and adapting the environment to the strategic objectives: This involves helping to design the necessary measures for correcting goals, eliminating interference from the environment and adapting the environment to the organization’s strategic objectives.

Limitations of strategic controlling

The main limitations are:

  • Information overload: Strategic controlling can lead to an overload of information, making it difficult to identify relevant data.
  • Difficulty in maintaining focus: Strategic controlling can lead to a focus on short-term objectives at the expense of long-term goals.
  • Difficult to interpret data: Strategic controlling relies heavily on data, which can be difficult to interpret.
  • Time consuming: Strategic controlling can be time-consuming, as it requires significant effort and resources.

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