Strategic Performance Evaluation Mechanism: Theoretical And Practical Approach To Run

During the past two decades, managers have been trying to adapt to the fast change of modern commercial society for keeping corporate competitive advantages. More powerful management theories and methods have been sought to guide business practices. Strategic Management is a logical result of the evolution of business management. MNCs need a powerful management tool to make proper long-term strategy, so as to operate in the dynamic business environment with the impact of globalization and information technology. However, more support from other parts of management is needed to implement strategy successfully. Performance evaluation is a sub-system of management control system, but earlier performance evaluation system has suffered too much criticism for its lack of strategic relevance. This paper studies the interrelation of strategic management and performance evaluation, while they used to be two relatively independent academic fields. Strategic management is an ongoing process, and performance evaluation plays an important role in the process. On the other hand, performance evaluation system has been much influenced by strategic management. Based on the interrelation, strategic performance evaluation mechanism has to be built up in light of corporate needs and conditions. Strategic performance evaluation mechanism needs suitable management tools to help implementation. Nowadays, there are some prevalent management tools related to performance evaluation, such as EVA, budgeting, BSC, etc. Enterprises have to choose suitable management tools and integrate them into one system with tailored revision. One of the ideal methods for strategic performance evaluation is to use BSC as a basic framework, integrating with some traits of other tools. But there is a fact that BSC still has no technology of quantitative analysis. To improve BSC, multivariate statistics methods can be used for comprehensive evaluation model, and an example has been given in this paper to explain this way. Affected by different factors, such as business environment, organization structure and historical background, strategic performance evaluation in Chinese enterprises is facing different problems compared with their counterparts in western countries. There is no surefire evaluation model. But one thing is sure: strategic performance evaluation will be an important part of business management when Chinese enterprises are growing bigger and bigger.