The evaluation of gaps between goals and performance typically occurs in three areas and this leads to three types of controls in the organizational level which includes Financial, strategic and cultural controls.
Financial control: Financial control is the type of control which focuses on the gaps between the financial outcomes set by the firm and the outcomes actually produced by the firm. Once the firm identifies the gap it tries to improve the gap by adopting suitable methods. The firms that use unrelated diversification rely on financial control because it is difficult to employ strategic and cultural controls in such firms as the firms lack common strategic direction or culture among the employees.
Strategic control: Strategic controls works by checking that the firm is meeting its strategic goals or not. The goals mostly include becoming the market leader for a particular product or expanding to a new market. The measure would be easy when it is based on market share or the competitor’s position. The firm tries to understand the gaps between the strategic goals and outcomes and then try to address those gaps by making appropriate changes in the business. These adjustments may include expanding the firm’s innovation efforts that helps to develop a new product line or a production process or acquisition and divestment.
Cultural control: Cultural control is the measure of a firm’s ability to make the individuals act consistently according to the firm’s corporate culture and relevant national culture. The common behavior and beliefs among employees are very important to ensure smooth operation of the international firms. The culture control helps to foster desired actions and behavior among the employees and discourage the undesired actions and behaviors. Cultural control is the most powerful and least quantifiable control in organization. it very difficult to change and managers should employ them with care.
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