Strategic Management: Formulation and Implementation

Measure Performance

Once standards are determined, the next step is measuring performance. The actual performance must be compared to the standards. In some work places, this phase may require only visual observation. In other situations, more precise determinations are needed. Many types of measurements taken for control purposes are based on some form of historical standard. These standards can be based on data derived from the PIMS (profit impact of market strategy) program, published information that is publicly available, ratings of product / service quality, innovation rates, and relative market shares standings. PIMS was developed by Professor Sidney Shoeffler of Harvard University in the 1960s.

Strategic control standards are based on the practice of competitive benchmarking - the process of measuring a firm's performance against that of the top performance in its industry. (see last part of this Chapter)

The proliferation of computers tied into networks has made it possible for managers to obtain up-to-minute status reports on a variety of quantitative performance measures. Managers should be careful to observe and measure in accurately before taking corrective action.