GB580 Unit 9 Strategic Control Measures Example

Watching the Assumptions: A Unit 9 Strategic Control System for Tollefson's Lightweight Strategy

[Student Name]

Purdue University Global

GB580: Strategic Management

Unit 9 Strategic Control Measures

[Instructor Name]

[Date]

Tollefson Body Works, its partners and every target are composite and illustrative; the frameworks and sources cited are real.

Four Kinds of Control

Conventional control, which compares results with plans after the fact, comes too late for strategy, and controls that run alongside the strategy are needed instead (Schreyögg & Steinmann, 1987). This system uses four.

Premise control checks whether the assumptions behind the lightweight strategy still hold. It watches the four premises listed below.

Implementation control checks whether the Unit 8 plan is on schedule and producing expected results. It watches the phase gates and the scorecard's process measures.

Strategic surveillance is a broad, unfocused watch for events that no premise anticipated, such as a rival's lightweight launch or a new chassis maker entering the market. The engineering manager and the sales director each bring three observations to the quarterly strategy review.

Special alert control is a rapid response to a sudden event, such as the Dutch partner's insolvency or a refrigeration unit recall, and it names who convenes the response within a week.

Four Premises with Numbers Attached

Premise 1: grocery fleets in the region begin buying electric Class 4 to 6 trucks. Signal: the share of Tollefson's refrigerated quotes that specify an electric chassis, tracked monthly in the quoting system. Trigger: below 5 percent by the end of month 24. A trigger here would not end the strategy, since a lighter body pays on diesel chassis too, but it would delay spending on electric-specific features such as battery mounting brackets.

Premise 2: the panel line reaches its cost target. Signal: cost per body set, including materials, labor, depreciation and the lease, reported monthly by the panel operations manager. Trigger: above $6,900, against the $6,450 target, for three consecutive months after month 18.

Premise 3: the Dutch licensor remains financially stable. Signal: the partner's annual accounts, filed publicly in the Netherlands, and a credit report reviewed every six months. Trigger: two consecutive years of losses or a credit downgrade.

Premise 4: refrigeration unit makers ship electric units in volume. Signal: lead times quoted by the two dominant unit makers for electric truck units. Trigger: lead times above 20 weeks, which would hold up electric body orders regardless of Tollefson's readiness.

Each premise carries a number someone checks every month, because a premise watched only in annual reviews is discovered failing a year late.

Twelve Measures in a Balanced Scorecard

Kaplan and Norton (1992) proposed setting financial results beside three other perspectives so that managers see what drives future earnings, not only what past earnings were. The scorecard below has three measures in each perspective, each with a baseline, a target for month 24 and an owner. It is read from the bottom up, because learning and process measures lead customer and financial results.

Learning and growth. Engineers certified on electric refrigeration unit integration: baseline 0, target 6 by month 18, owner engineering manager. Design changes from the Dutch exchange adopted into production: baseline 0, target 8. Electric refrigeration bodies built: baseline 6, target 60.

Internal process. Panel line first-pass yield: target 96 percent, owner panel operations manager. Thermal test pass rate for lightweight bodies: target 100 percent, owner quality manager. On-time delivery: baseline 91 percent, target at least 90 percent, which accepts a small slip during conversion.

Customer. Average weight of the standard 16-foot refrigerated body: baseline 3,500 pounds, target 2,900, owner lightweight engineering cell. Share of quotes won where the customer specified a maximum body weight: baseline about 20 percent, target 35 percent, owner sales director. Trial fleets converting to orders: target both of the two pilot customers.

Financial. Gross margin on lightweight bodies: target 19 percent, against about 15 percent on standard bodies, owner chief financial officer. Panel cost per body set: target $6,450. Lightweight bodies as a share of refrigerated revenue: target 40 percent by month 24.

A Measure for the Weakness

The scorecard deliberately includes the number of electric refrigeration bodies built. Unit 4 rated electric unit integration as Tollefson's weakest key capability, with only six trial bodies built. A scorecard that measured only financial and customer results would show the weakness only when orders were lost. Counting bodies built and engineers certified shows whether the weakness is closing early enough for the board to respond. The same reasoning applies to chassis maker relationships, the third key weakness, which the scorecard tracks indirectly through electric bodies built, since each electric body requires approval from that chassis maker's body builder program. If the count stalls, the most likely cause is a missing approval, and the sales director owns the follow-up.

How the Review Works

The control system meets in two forums. Monthly, the chief operating officer reviews implementation measures with the panel operations manager, the engineering manager and the sales director, using a one-page report that shows each scorecard measure against its target and trend. Quarterly, the owners' board reviews the four premises and the strategic surveillance observations, with the scorecard as background. Separating the two keeps the board's attention on whether the strategy is still right, while the monthly meeting handles whether it is being carried out. Each measure has exactly one owner, and an owner whose measure misses target for two months presents a recovery plan at the next monthly review. The system adds about one day of staff time a month to produce, most of it from the quoting and cost systems Tollefson already runs.

What a Trigger Sets in Motion

A premise trigger goes to the owners' board, not to a line manager, because it questions the strategy rather than its execution. Within thirty days of a trigger, the chief operating officer presents the evidence and one of three pre-defined responses. For Premise 1, the responses are to continue, delay electric-specific spending or shift the cell's work toward diesel weight savings. For Premise 2, they are to accept a higher cost, redesign the panel or return part of the volume to the Indiana laminator. For Premise 3, they are to accelerate Tollefson's own development of the design or seek a second licensor. For Premise 4, they are to work with the second unit maker or offer diesel-ready bodies designed for later conversion. Simons (1995) describes this kind of system as interactive control, in which senior managers use a small set of measures to debate strategy, rather than diagnostic control, in which measures only flag deviations from plan. Naming the responses in advance keeps a trigger from becoming either a panic or a delay.

References

Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71-79.

Schreyögg, G., & Steinmann, H. (1987). Strategic control: A new perspective. Academy of Management Review, 12(1), 91-103. https://doi.org/10.5465/amr.1987.4306487

Simons, R. (1995). Levers of control: How managers use innovative control systems to drive strategic renewal. Harvard Business School Press.