Question

Evaluation and control are part of the business management process along with planning, organizing, and directing. Evaluation and control are often used to break down the control function into two separate components.

Discuss evaluation and control and its importance by explaining how it used in today's business world by using a Fortune 500 company as an example.

***Ford Motor Company***

Answer 1

When you're immersed in carrying out a program or strategic plan, it's important to build in times to evaluate how it's going so you can make adjustments as needed. The alternative — waiting until the program ends to evaluate its success — risks wasting resources on unsuccessful activities and missing opportunities to amend the program as needed.

When you're immersed in carrying out a program or strategic plan, it's important to build in times to evaluate how it's going so you can make adjustments as needed. The alternative — waiting until the program ends to evaluate its success — risks wasting resources on unsuccessful activities and missing opportunities to amend the program as needed.

You wouldn't hire someone for a job and wait until he fails completely and is let go from the job to look back and see what went wrong. You evaluate him at intervals to steer his direction, adjusting his course or responsibilities as needed. This is called "evaluation and control," and it's an important part of managing any program, plan or job.

Understanding the Purpose of Evaluation

When you initially plan your strategy, you're basing it on that moment in time. What happened in the past is irrelevant except to learn from it, and you don't know what will happen in the future, so you can't plan for it. However, as you implement your strategy — especially over several years of a plan — you may be doing so based on information that has changed. After all, the market is continually changing.

When you're immersed in carrying out a program or strategic plan, it's important to build in times to evaluate how it's going so you can make adjustments as needed. The alternative — waiting until the program ends to evaluate its success — risks wasting resources on unsuccessful activities and missing opportunities to amend the program as needed.

You wouldn't hire someone for a job and wait until he fails completely and is let go from the job to look back and see what went wrong. You evaluate him at intervals to steer his direction, adjusting his course or responsibilities as needed. This is called "evaluation and control," and it's an important part of managing any program, plan or job.

Evaluation and control is a step built into a strategic plan so the plan can be evaluated while it's being implemented and changes can be made to the plan as needed.

Understanding the Purpose of Evaluation

When you initially plan your strategy, you're basing it on that moment in time. What happened in the past is irrelevant except to learn from it, and you don't know what will happen in the future, so you can't plan for it. However, as you implement your strategy — especially over several years of a plan — you may be doing so based on information that has changed. After all, the market is continually changing.

A new entrant to your market with a product that competes with yours can change the buying habits of your target market. Perhaps you may sense that your strategy isn't working well, but you aren't sure why. Perhaps you have no idea that the market has changed, but you don't want to be blindsided by it if it has changed.

The importance of evaluation is that many times, you don't know what you don't know. Scheduling evaluation and control in your strategic plan isn't a reflection on those who devised the plan. The evaluation isn't "grading" the people who worked on the plan; it's a built-in opportunity for the plan's designers to be participants in strategic evaluation of the plan — to see how it's going and make adjustments if needed. Change is natural over time, and the need to make adjustments to strategic plans is very common.

Knowing the Meaning of Control

The word "control" by itself can make people uneasy. When someone has control of something, everyone else doesn't have control, and certainly, no one wants to be controlled.

In the context of the phrase "evaluation and control," however, "control" means that those who evaluate the strategic plan have the ability to control the strategy by making changes as needed while the plan is still operational. Those who devised the strategic plan take control by evaluating it at this point, and they:

• Determine how well the plan is working
• Pinpoint where the plan is not working well
• Look for gaps that need to be filled to cover unexpected actions
• Decide if adjustments or changes need to be made to the plan
• Alter the strategic plan by making changes

Defining Four Types of Control

Management strategists have defined four types of control:

1. Premise control: The designers of your strategic plan relied on specific premises, such as specific competitors and known industry factors. If any of these have changed, you probably need to make changes to the plan with these new factors in mind.
   
2. Implementation control: Have activities or projects been implemented on time, have they unfolded as planned and have milestones been met? If not, what do you need to change so the rest of the plan will be implemented as intended?
   
3. Special-alert control: If a competitor introduces an unexpected product that's directly competing with one of your products, you need to evaluate its effect immediately and not wait until your planned evaluation. A fire in your warehouse that causes delivery delays, an IT problem that slows the order process or the discovery that your system has been hacked are all reasons for special-alert control.
   
4. Strategic-surveillance control: This means paying attention to everything going on around you in your industry and the general economy. Scan industry publications, go to or read about conferences and conventions, network and review social media regularly so you're in the loop on any happenings or changes that could affect your strategic plan.

The evaluation and control process allows you to intelligently adjust your strategic plan, changing its course or putting it back on track so it continues to work for you.

FORD

In 2008, Ford Motor Company’s operations management (OM) was reformed along with massive changes throughout the organization. Under the One Ford plan of then CEO Alan Mulally, Ford’s operations management became more effective in addressing the 10 strategic decision areas. As one of the biggest firms in the global automotive industry, Ford maintains operations management strategies that deal with a variety of business conditions based on different market contexts. As such, in the 10 strategic decisions of operations management, Ford must ensure flexibility along with consistency throughout its global organization.

Ford applies the 10 strategic decisions of operations management with emphasis on consistency and high productivity. Ford also maintains a considerable degree of flexibility to address business variations in different areas around the world.

Ford Motor Company’s Operations Management, 10 Decision Areas

1. Design of Goods and Services. Ford’s goal in this strategic decision area of operations management is to achieve global consistency. The One Ford mission requires such consistency in goods and services. This condition contributes to Ford’s financial efficiency and its ability to optimize customer satisfaction.

2. Quality Management. The main concern in this strategic decision area of operations management is the satisfaction of quality expectations. Ford Motor Company does so through standard quality assurance practices. The firm also conducts random batch tests on its products to ensure quality. Quality evaluation also involves data Ford acquires through market research to identify customers’ quality expectations.

3. Process and Capacity Design. This strategic decision area of operations management supports production goals. Ford pioneered the assembly line method, which maximizes production capacity. Also, Ford continues to improve its capacity by developing new facilities for its production network and supply chain.

4. Location Strategy. Ford Motor Company’s aim in this strategic decision area of operations management is to ensure strategic benefits of its facility locations. The company’s strategy involves regional production facilities, such as the Ford factories in Germany. On the other hand, dealership locations are based on market size.

5. Layout Design and Strategy. In this strategic decision area of operations management, the objective is to maximize efficiency of workflows and resources. Ford addresses this objective through automation of production processes, such as through the use of robotics in production facilities.

6. Job Design and Human Resources. Ford has the goal of maximizing human resource effectiveness and efficiency in this strategic decision area of operations management. Ford has a number of programs to support HR capacity and employee satisfaction. The company ensures continuous improvement and personnel development in its strategies.

7. Supply Chain Management. This strategic decision area of operations management focuses on streamlining and cost-effectiveness in the supply chain. Ford’s supply chain is global and involves company-owned production facilities, as well as third parties. The company-owned facilities, such as those in the Ford River Rouge Complex in Michigan, are a result of Ford’s backward vertical integration strategy. This strategy empowers Ford to control the supply of some of the materials used for manufacturing its vehicles.

8. Inventory Management. Ford’s inventory management supports just-in-time manufacturing methods, which require continuous monitoring to adjust the inventory and minimize its costs. However, in this strategic decision area of operations management, Ford’s actual inventory management performance also points to market-based inventory decisions. Different markets present different challenges, such that Ford has varying inventory management practices in different markets.

9. Scheduling. In this strategic decision area of operations management, the short-term and intermediate schedules of processes and resources are considered. Ford addresses these concerns through automated scheduling in its production facilities, and semi-automated scheduling in its offices, such as corporate offices and regional offices.

10. Maintenance. The goal in this strategic decision area of operations management is to maintain adequate business processes to satisfy demand. Ford addresses this goal through a combination of strategies for HR, IT, manufacturing and other areas, as well as maintenance teams for facilities and other assets.

Productivity at Ford Motor Company

Ford Motor Company’s operations management addresses productivity goals for the 10 strategic decision areas. Since the firm has various operations and products, a wide array of productivity measures are used. Some of Ford’s productivity criteria are as follows:

1. Number of service jobs completed per day (aftersales service productivity)
2. Number of vehicles rolled out per day (manufacturing productivity)
3. Number of applications processed per day (Ford Motor Credit Company productivity)