What Are the Four Types of Strategic Control?

Companies and businesses operate to achieve specific goals. These goals may differ from one company to another. On top of that, the steps these companies take to achieve those goals may also vary.

Those steps constitute the business strategy a company follows. It includes a combination of the decisions taken and actions performed to achieve business objectives. Usually, these objectives define how successful the company is.

A strategy acts as the supporting pillar of the activities performed by a company. It lays the roadmap that companies believe will help them achieve their expectations.

Furthermore, it helps plan for future operations based on specific goals. Business strategies come from the senior management within a company. It involves various aspects of a company’s business and operations.

However, strategies need the proper implementation to accomplish the expected results. This process may vary from one company to another. It is a part of the strategic management process within a company.

Similarly, it also falls under the scope of strategic control, which has four types. Before discussing those types, it is crucial to understand strategic control and its different aspects.

What does Strategic Control mean?

Strategic controls help companies achieve long-term strategic plans. Once companies select a strategy, they implement it over a long time. However, these plans come with significant uncertainty.

In most cases, it leads to higher risks within the implementation process for the strategic plan. Therefore, companies must seek various methods to implement their strategic plan while managing those risks.

Strategic control refers to the process of managing and executing a business strategy. It is a part of any company and falls under the strategic management function.

During this process, companies ensure they can manage the execution of a strategic plan effectively. On top of that, it also controls the process of planning and forming business strategies. It is a type of management control within companies.

Strategic control is essential to the long-term survival of companies. It differs from other types of management control. Similarly, the primary purpose of the strategic control process is to manage risks concerning strategic plans.

See also  Are accounts payable debit or credit? And what is its normal balance?

It handles any uncertainty within the process. On top of that, it covers various stages within that process. Strategic control also helps companies achieve future goals.

The primary purpose of strategic control is to find and assist companies in dealing with risks. Likewise, it helps them adapt to different situations. These situations can be internal or external.

By helping ensure these, strategic control allows companies to achieve an effective balance between those situations. Since it relates to the strategic plans within a company, strategic control is a continuous and long-term process.

Overall, strategic control involves managing the implementation and execution of strategic plans. Several steps within this process are detrimental to its success.

It involves tracking a strategy during its implementation stage. Similarly, it detects any issues that may exist during that stage. Then, it requires companies to take corrective actions to manage those issues.

What is the Strategic Control process?

Strategic control is a long and continuous process and involves various stages. These stages may differ based on the implementation of a strategy. Nonetheless, it involves a similar approach. The strategic control process involves the following steps.

Identify areas to control

The first step in the strategic control process is identifying areas that require control. These areas relate to the goals a company has set. Based on that, companies must establish what to control.

Set standards

Once companies identify the areas that need control, they must set standards. These standards define the expectations they have from those areas. The standards must consider both quality and quantity.

Gauge performance

Once companies set standards, they must measure their performance. Usually, companies schedule this process to occur after a specific time. However, this process is not complete without the subsequent stages.

Compare performance

Companies can measure their performance. However, that does not provide meaningful information without comparison. Once companies gauge those areas, they must compare them with the set standards and objectives.

See also  Trade Expenses – Accounting Treatment, Journal Entry, and Much more!

Analyze any variances

A variance will exist in many areas. Companies must analyze those areas to understand the weaknesses and shortcomings within the process. Similarly, variance analysis is also crucial to know if issues exist within the set standards.

Take corrective actions

Once companies analyze the variances, they must establish corrective actions. Usually, it involves making the processes more effective and efficient. Sometimes, it may also require revising the standards.

What are the four types of Strategic Control?

Strategic control falls under four types. These types differ based on the areas they impact. Therefore, companies must know how they work. On top of that, defining them is also critical in differentiating between them. Overall, the four types of strategic control are below.

Premise control

Premise control relates to strategic control based on specific assumptions. When companies design strategies, they make these assumptions. Premise control helps verify if those assumptions still apply.

These premises are crucial in implementing and evaluating the underlying strategy. Usually, premise control relates to how external variables impact a strategic plan.

Premise control helps companies track environmental variables. Based on these, they can detect if any assumptions made during planning still hold true. If these do not apply, companies can take corrective actions to ensure the strategy implementation goes smoothly. However, doing so for every premise may not be possible in some circumstances.

Implementation control

Implementation control is one of the most crucial types of strategic control. It involves assessing the implementation activities associated with a strategic plan.

Usually, this control tracks those activities at every stage. It focuses on how those stages progress and contribute to the overall strategic plan. Implementation control can have two further subcategories.

The first subcategory is monitoring strategic projects. It involves specific projects that companies create to drive an overall strategy. Usually, it applies to particular areas only.

See also  Accounting for Repair and Maintenance (Journal Entry and More)

The other subcategory is reviewing milestones. It includes tracking specific points and assessing them to ensure they contribute to that strategy. Overall, implementation control applies to various areas within a strategic plan.

Strategic surveillance control

Strategic surveillance control does not cover a specific area. Instead, it applies to a broader range of operations. This process involves identifying any weaknesses within the existing areas. Usually, it includes looking for factors that companies may have overlooked during strategic planning. These areas may be internal or external to a company.

Strategic surveillance control helps companies monitor a broad range of events. Usually, these events can impact a company’s strategic plans adversely.

Therefore, companies implement strategic surveillance to track those areas. The primary objective of this type of strategic control is to identify events that can impact strategic planning. Once identified, companies can take the necessary corrective actions.

Special alert control

Despite controls in place, companies will still have difficulties with special circumstances. However, that does not imply that companies cannot handle them. Special alert control allows companies to deal with unexpected situations. This control involves a reactive approach to any issues that companies may not have predicted earlier.

Special alert control allows companies to employ a rapid response to a specific case. It also involves an immediate assessment of a strategic plan considering that case.

Usually, these cases occur due to external factors. Companies cannot predict them. Therefore, they cannot design controls for those cases. However, they can still limit the impact of those cases based on special alert control.

Conclusion

Strategic control is a part of the strategic management process that companies employ. This process involves ensuring the effective implementation of a strategic plan. Similarly, it helps identify any risks within the process and take corrective actions. Companies can use the four types of strategic control to benefit from this process.