STRATEGYIMPLEMENTATI

ON

Nature of Strategy Nature of Strategy ImplementationImplementation Action Orientation

Comprehensive in scope

Demanding varied skills

Wide-ranging involvement

Integrated process

Barriers to Strategy Implementation Inability to manage change Poor or vague strategy No model to guide implementation efforts Poor or inadequate information sharing

Can be properly managed by Adopting a clear model of strategy

implementation Effective management of change in complex

situations

Interrelationship of Formulation and Implementation Forward Linkages

Strategic Intent (environmental and org. appraisal) Strategic Alternatives Strategic Analysis Choice of Strategic Plan

Backward Linkages Past Strategic Actions Analysis and Thinking vs. Action and Doing Henry Mintzberg (Formulated and Implemented)

Deliberate Strategy

Forms of Strategy

RealizedStrategy

IntendedStrategy

UnrealizedStrategy

EmergentStrategy **Normally emergent strategy comes from

learning and dissemination within the organization.

A Model of Strategy Implementation

•Strategic Plan

•Activating Strategies

•Managing Change

•Achieving Effectiveness

•Evaluation and Control

Major themes in Strategy Implementation

Activating Strategies

Managing Change

Degree of Change

Timing of Change

Activity Areas of Change

Achieving Effectiveness

Project ImplementationProject and Project Management

InitiatingPlanningExecutingControllingClosing

Project Management and Strategy Implementation

Procedural ImplementationRegulatory mechanisms in India

IDRA, 1951Foreign Collaboration procedureFERA, 1973 requirementsMRTP, 1969 requirementsCapital issue control (Act, 1956)requirementsImport and export (Control Act, 1947)requirementsIncentives and facilities benefitsPatenting and Trade Mark RequirementsLabour Legislation RequirementsEnvironmental Protection and Pollution Control Rq.Consumer Protection Rq.

Resource Allocation Procurement of resources

Financial, physical and human Approaches to resource allocation

Top-down-approach Bottom-up-approach

Means of resource allocation Strategic budgeting BCG-based budgeting PLC-based budgeting Capital budgeting, Zero based and Parta System.

Aligning Resource Allocation to Strategy

Boston Consulting Group (BCG) Matrix Business portfolio matrix that uses

market growth rate and relative market share as the indicators of the firm’s strategic position. Market growth rate

A measure of the annual growth percentage of the market in which the business operates.

Relative market share

The firm’s market share divided by the market share of its largest competitor.

BCG Matrix

BCG Matrix: Stars and Cash Cows

Stars: Businesses that fall into the high market growth/high market share cell of the BCG matrix. Offer attractive profit and growth opportunities.

Cash Cows: Businesses that fall into the low market growth/high market share cell of a BCG matrix. Generate substantial cash surpluses. Generally yesterday’s stars that have matured.

BCG Matrix: Dogs and Question Marks Dogs: Businesses that fall into the low

market growth/low market share cell of a BCG matrix. Typically generate low profits, and in some

cases may even lose money.

Question Marks: Businesses that fall into the high market growth/low market share cell of a BCG matrix. Businesses that look attractive from an industry

standpoint, however, their low market share makes their profit potential uncertain.

Factors affecting resource allocation Objectives of the organisation

Preference of dominant strategies

Internal politics

External influence

Difficulties in resource allocation

Scarcity of resources

Restrictions on generating resources

Overstatement of needs

Tendency to imitate competitors

Organizational Structure The structure of an organization can be

defined simply as the total of the ways in which

its labor is divided into distinct tasks and then

its coordination achieved among those task.

Organizational Structure: The manner in

which tasks & responsibilities are grouped

together into offices, dept’s, and divisions.

Organizational Structure Structure follows strategy But strategy must also follow structure Types of structures

Functional Geographic Divisional Strategic Business Unit

Organize synergistic units together Matrix

Figure1: Structuring the Organization to Promote Successful Strategy Execution

AN

ORGANIZATION

STRUCTURE

MATCHED TO

THE

REQUIREMENTS

OF

SUCCESSFUL

STRATEGY

EXECUTION

Identify strategy-critical value chain activities

Decide value chain activities to perform internally and those to outsource

Make internally-performed strategy- critical value chain activities the main building blocks in the structure

Decide how much authority to centralize at the top and how much to delegate to managers and employees

Provide cross-unit coordination and collaboration to build/strengthen internal competencies and capabilities

Provide the necessary collaboration and coordination with outsiders

Matching Structure to Strategy Build structure to support strategically

critical activities Organize to achieve organizational objectives Place authority and control where it belongs

Accountability should follow structure Reengineer processes to break down

barriers between the firm and customers Process, not a functional structure Reducing cycle time Flattening the organization Customer focus

Strategy Implementation

Problems in ImplementingStrategic plans

1. More time than planned2. Unanticipated problems3. Activities ineffectively coordinated4. Crises deferred attention away5. Employees w/o capabilities6. Inadequate employee training7. Uncontrollable external factors8. Inadequate leadership9. Poorly defined tasks10. Inadequate information systems

Structure Follows Strategy:

– Changes in corporate strategy lead to

changes in organizational structure

Strategy Implementation

Stages of corporate development

• Simple Structure

• Functional Structure

• Divisional Structure

• Beyond SBU’s

Strategy Implementation

Simple Structure:– Stage I:

• Entrepreneur – Decision making tightly controlled– Little formal structure– Planning short range/reactive– Flexible and dynamic

Strategy Implementation

Functional Structure:– Stage II:

• Management team

• Functional specialization

• Delegation decision making

• Concentration/specialization in industry

Strategy Implementation

Functional Structure

PRES.

VPENG

VPMKTG

VPMFG

VPFIN

Strategy Implementation

Divisional Structure:– Stage III:

• Diverse product lines

• Decentralized decision making

• SBU’s

• Almost unlimited resources

Product Divisional Structure

CEO

Washers& Dryers

Dish-Washers

Refrigerators& Ranges

Mfg Mktg

Finance

Geographical Divisional Structure

CEO

SE Region

WesternRegion

NE & Mid-West Region

Mfg Mktg

Finance

Multi-Divisional Structure

General MotorsCEO

Buick Division

ChevroletDivision

PontiacDivision

Autos Trucks

Saturn Division

Beyond SBU’s:– Stage IV:

• Increasing environmental uncertainty

• Technological advances

• Size & scope of worldwide businesses

• Multi-industry competitive strategy

• Better educated personnel

Strategy Implementation

Strategic Business Unit Structure

Dover CorpCEO

Dover Diversified

DoverIndustries

DoverResources

Marathon Rotary Lift

Dover Technologies

Matrix Structure:– 3 Distinct Phases

• Temporary cross-functional task forces

• Product/ brand management

• Mature matrix

Strategy Implementation

Matrix Structure

Manufacturing

Finance

Sales

Personnel

Manager: Project

A

Manufacturing Unit

Finance Unit

Personnel Unit

Manager: Project

B

Manufacturing Unit

Finance Unit

Sales Unit

Personnel Unit

Manager: Project

C

Manufacturing Unit

Finance Unit

Sales Unit

Personnel Unit

Manager: Project

D

Manufacturing Unit

Finance Unit

Sales Unit

Personnel Unit

Top Management

Sales Unit

Network Structure:– “non structure” – elimination of in-house

business functions– Termed “virtual organization”

• Useful in unstable environments

• Need for innovation and quick response

Networks within and between firms

Firms’ value chains can be geographically dispersed

Strategy Implementation

Network Structure – The Virtual Organization

CEO

MRKTGR&D

ContractMfr

PURCH

DataProcess

Cellular or Horizontal Structure

PRESCFTeam

CFTeam

CFTeam

CFTeam

Relationship between Structure and Strategy

• The good structure is one which best fits with the strategy.

1. What actions and activities must be

performed for the organizations strategy

to succeed?

2. Is structure adaptable to the pressure of

external environment?

Aspects of Structure-strategy fit.1. The type of functions that the organization structure

should facilitate to perform.

2. The adaptive characteristics of the environmental

pressure on the organization.

Problems of structure strategy fit. Unclear and emerging strategy.

Implicit symptoms of organizational malfunction.

Malfunctioning symptoms have multiple causes.

How to overcome these problems? Relate significant areas of authority and responsibility

with given markets, industries etc.

To delegate authority and decentralize strategy

planning.

Proper resource allocation in supervision of top

management.

Result centered emphasis rather than profit centered

decentralization.

Organizational Design and Change

What is required to implement the strategic

plan and how best it can be done?

Organizational Design

Which structure is best suited to particular strategy?

Structures evolve as the organization moves from one stage of growth to the next

External and internal environments affect the structural design in different ways

Stable environment: Functional Structure Volatile environment: Matrix or divisional

structure

Steps of Organizational Design Identification of key activities Grouping of activities. Choice of Structure. Creation of Departments. Establish interrelationship between

departments.

Major issues of organizational design.

Span of management

Departmentation

Line staff relationship.

The use of commodities and decision

making.

Organizational Change

Re-organization of structure.

Causes of Change in or

Planning for Change

Discrepancy between what is happening and

what should happen leads to change.

Identifying alternative solution and appropriate

implementation of strategy

Explicit of implicit strategic choices about the

speed of effort, the amount of preplanning, the

involvement of others and relative emphasis

they will give to different approaches.

Managing Organizational Change

The Process involves four steps:

-Planning for Change

-Assessing Change Forces

-Overcoming Resistance to Change

-Implementing Change

Planning for Change

Faster-Clearly Planned

-Little involvement of

others

-Attempt to overcome

any resistance

Slower-Not clear planning at

the beginning.

-Lots of involvement of

others

-Attempt to minimize

any resistance.

Assessing Change Forces Some factors favors and some resist it.

“Field of Forces” by Lewin.

Driving and Restraining Forces.

Equilibrium is needed.

Assessing Change ForcesFour Factors of Organizational Change:

1. Amount and Type of Resistance

2. The Position of Initiator and Resistor

3. The Locus of Relevant data in Change

4. The Stakes involved.

Overcoming Resistance to Change

Education and Communication

Participation and Involvement

Facilitation and Support

Negotiation and Agreement

Manipulation and Co-optation

Coercion

Implementing Change If the favorable conditions for change is

created, the change can be implemented.

To put various change in action:

1. New Organizational Relationship

2. Assignment of new jobs

3. New work procedures, etc.

Monitoring after implementation is essential

Strategy Implementation:

Nonstructural Issues Leadership

Functional Policies

Resource Allocation

Management Information System

LEADERSHIP

Leadership is the ability to persuade

others to seek defined objectives

enthusiastically. It is the human factor

which binds a group together and

motivates it for achieving objectives.

Key Considerations of Organizational Leadership

Organizational leadership involves action on two fronts

Guiding the organization to

deal with constant change

Providing the management skill to cope with the ramifications of constant change

Strategic Leadership: Embracing Change

Activities involved in galvanizing commitment to change

Clarifying strategic intent

Building an organization

Shaping organizational culture

What Competencies Should Managers Possess?

The Leadership Needs of Organization

The ability to:

• build confidence

• build enthusiasm

• cooperate

• deliver results

• form networks

• influence others

• use information

The Required Competencies of Business

Leaders

• business literacy• creativity• cross-cultural effectiveness• empathy• flexibility• proactivity• problem solving• relation building• teamwork• vision

LEADERSHIP ROLES

Institutionalization of Strategy

Integrating Conflicting Interests

Motivation

Setting Organizational Climate

INSTITUTIONALIZATION OF STRATEGY

Promoter and defender

Fundamental analytical entrepreneurial

decisions-character of organization

Appeals and obtain support.

INTEGRATING CONFLICTING INTERESTS

Interest Groups- People, organizational

Processes, and Organizational Processes.

Conflict between line and staff, superior

and subordinates.

MOTIVATION

Motivate people in the organization

Effective performance and implementation of

strategy.

SETTING ORGANIZATIONAL

CLIMATE A set of characteristics that describe an

organization and distinguish it from other organizations.

Internal environment: cooperation, commitment and dedication etc.

FUNCTIONAL POLICIES

What are Policies?Policies are directives designed to guide the

thinking, decisions, and actions of managers and

their subordinates in implementing a firm’s

strategy.

-Policies of are guide to action.

ROLE OF POLICIES IN IMPLEMENTING

STRATEGY• Previously referred to as standard operating

procedures, policies increase managerial effectiveness by• Standardizing many routine decisions

• Clarifying discretion managers and employees can exercise in implementing functional tactics

• Should be derived from functional tactics with key purpose of aiding strategy execution

EMPOWERMENT AND POLICIES

Training, self-managed work groups, eliminating whole levels of management in organizations, and aggressive use of automation are some of the ways of empowering employees. At the heart of empowerment is the need to ensure that decision making is consistent with the mission, strategy, and tactics of the business while at the same time allowing considerable latitude to operating personnel. One way operating managers do this is through the use of policies.

WHY POLICIES EMPOWER PEOPLE?

Establish indirect control over independent action

by clearly stating how things are to be done now.

Promote uniform handling of similar activities

Ensure quicker decisions by standardizing answers

to previously answered questions.

Institutionalize basic aspects of organizational

behavior.

Reduce uncertainty in repetitive and day-to-day

decision making.

Counter resistance to or rejection of chosen

strategies by organization members.

Offer predetermined answers to routine problems.

Afford managers a mechanism for avoiding hasty

and ill-conceived decisions in changing

operations.

WHY POLICIES EMPOWER PEOPLE? cont….

ADVANTAGES OF FORMAL WRITTEN POLICIES

• Require managers to think through policy’s

meaning, content, and intended use.

• Reduce misunderstanding.

• Make equitable and consistent treatment of

problems more likely.

• Ensure unalterable transmission of policies.

ADVANTAGES OF FORMAL WRITTEN POLICIES cont…… Communicate authorization or sanction of policies

more clearly.

Supply a convenient and authoritative reference.

Systematically enhance indirect control and

organization-wide coordination of the key purpose

of policies.

DEVELOPMENT OF POLICIES

Grand Strategy compatible, workable, and

just theoretically sound policies.

Amount of Policy making vary with the size and

complexity of organization.

Policies cover functional areas like operations,

marketing, finance, research and development,

personnel etc.

Process of policy making.

SIGNIFICANCE OF GOOD POLICIES

Specify more precisely how the strategic

choice will come into being.

Establish follow-up mechanism.

Lead to new strength.

DIFFERENT AREAS OF BUSINESS POLICIES

Marketing Policies

Financial Accounting Policies

Production/ Operations Policies

Personnel and Other Policies

-Integration of Policies.

MARKETING POLICIES

Product research and development Marketing research and information system Price Credit and discount Distribution channel structure Promotion Product Packaging Physical distribution Inventory levels

FINANCIAL AND ACCOUNTING POLICIES Deals with raising, administering and

distribution of funds by the organization. Three major dimensions:

-determination of total amount of funds

-allocation of funds among various assets in efficient manner

-Obtaining best mix of financing

Major policy decisions in the financial and

accounting areas…….

-Capital Structure

-Level of working capital

-Level of dividend payment

FINANCIAL AND ACCOUNTING POLICIES cont….

PRODUCTION/ OPERATIONS POLICIES Plant location and capacity Facilities layout Planning of aggregate output Raw material and work-in-progress inventory Process planning and job design

PERSONNEL AND OTHER POLICIES Manpower planning, recruitment, selection

and placement. Training and development of manpower Transfer, promotion, demotion, and separation Working conditions and employee services Communication, consultation and negotiation Terms of employment, methods and standard

remuneration Human and social implications of changes

INTEGRATION OF POLICIES Internal consistency in the policies

Lack results in sub-optimization.

e. g. Plant capacity.

RESOURCE ALLOCATION Budgets

Preparation of Position Papers Position Paper on Environment Position Paper on Organisational Constraints

and Resources Position Paper on Past Performance Position Paper on Future Direction of Activities

Preparation of Budget