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Strategic Implementation as a Part of Strategic Management

Article  in  Procedia - Social and Behavioral Sciences · January 2014

DOI: 10.1016/j.sbspro.2013.12.931

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Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870

Contemporary Issues in Business, Management and Education 2013

Strategic implementation as a part of strategic management

Mária Mišankováa*, Katarína Kočišováa
a
University of Žilina, Faculty of Operation and Economics of Transport and Communications,
Department of Economics, Univerzitná 1, 010 26 Žilina, Slovakia

Abstract

The article is dedicated to the problem of strategic implementation as a part of strategic management. It has become necessary to
formulate vision and mission of the company in business plan. Strategic management, formulation of the strategy and its
implementation are important tools of the company for its future development and for maintaining competitiveness. Achieving
defined strategy in an effective way is basic factor for company future success. Evaluation of effectiveness of the strategy is
conditioned by a number of decisions concerning its modification and actualization.

© 2014 The Authors. Published by Elsevier Ltd. Open access under CC BY-NC-ND license.
Selection and peer-review under responsibility of the Contemporary Issues
Issues in
in Business,
Business, Management
Management and
andEducation
Educationconference.
conference.

Keywords: strategy; implementation of the strategy; company; strategic management; Model ,,7S”; Balanced Scorecard.

1. Introduction

Strategic management has become important part of companies in today´s dynamic and competitive environment.
Strategic management consists of three separate processes which are interconnected together and influence each
other. These processes are – strategic planning, strategic implementation and strategic control. Researches in
companies showed that the most important and the most underestimated part is strategic implementation.
Implementation of the strategy is a part of strategic management which success is conditioned by managers,
employees, their organization, as well as by the transformation of company´s culture. The main task of
implementation of the strategy is to bring the strategy into the life as a part of everyday decision making process of
the company. It is necessary to find appropriate indicators characterizing company activities and a system for

* Corresponding author. Tel.: +421-41-513-3227.

E-mail address: [email protected].

1877-0428 © 2014 The Authors. Published by Elsevier Ltd. Open access under CC BY-NC-ND license.
Selection and peer-review under responsibility of the Contemporary Issues in Business, Management and Education conference.
doi:10.1016/j.sbspro.2013.12.931
862 Mária Mišanková and Katarína Kočišová / Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870

measurement to eliminate deficiencies in the implementation of the strategy. Strategic implementation was firstly
introduced on scientific conference held on the University in Pittsburg in 1978.
In connection with strategic implementation is important to define strategy as a basic element of strategic
management of the company. The strategy translates into the functional politics which specify how should be
allocated resources and which way should be implemented goals of the company (Cisko & Klieštik, 2009).
The strategy was considered in the past as the science about planning and defining directions of military actions,
while the birth of company strategy occurred in 60´s by publication of Alfred Chandler (1962) who pointed out the
problem solving by managers in American companies connecting with long-term objectives, allocating resources
and creating a structure to enable and support their implementation.
Gradually the concept of strategy has become more relevant and has been expressed by several authors. Quinn
(1980) considers a strategy as a model or plan that integrates objectives of the company, as well as policies and
activities into a coherent whole. On the other hand Glueck (1980) sees strategy as a single, comprehensive and
integrated plan that is designed to ensure the achievement of the basic objectives of the company.
Currently the strategy is one of the key factors of the company and with its definition may be encountered in a
number of domestic and foreign literatures dealing with strategic management.
According to Sadler (2003) strategy is a complex process defining activities need to be undertaken to achieve
company objectives and prefers medium-and long-term goals before operational solutions.
The proposed strategy is defined by Grunig & Kuhn (2006) as a managerial directive or declaration, which serves
as decision support providing the possibility of appeal.

2. Strategic implementation

Strategic planning was considered as an effective way of implementation of the strategy in the past. As Figure 1
shows strategic planning is involved in process of preparation of the strategy, it supports implementation and
develops strategy into detailed strategic plan, which is part of the implementation of the strategy. Strategic planning
also coordinates the process of development of strategic plans at lower hierarchical levels. (Papula & Papulová,
2009)

Fig. 1. Relationship between strategic planning and formulation of the strategy.

Source: Papula, J., & Papulová, Z. (2009)

Through the last period of years have been developed and created other opportunities and insights to enable
effective implementation so strategic planning is nowadays not only one option for strategic implementation. Table 1
provides a brief overview of views and tools of implementation of the strategy based on the review of recent
domestic and foreign publications. From the Table 1 we can see organizational elements which provide basic and
long – term institutionalization of company´s strategy. These elements are management of the company, company´s
culture, organizational structure and the main tools of implementation represent control, rewarding and
administrative tools.
Control is used not only for the review of the process but primarily as a process of regulation and the emphasis is
on receiving concrete measures and on adaption to new circumstances. Rewarding is considered as the most
 Mária Mišanková and Katarína Kočišová / Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870 863

effective tool for implementation while administrative tools help to harmonize actions of employees with the
strategy. Administrative tools include plans, budgets, policies, procedures and rules. (Slávik, 2009)
We can define that strategy will not be successful in the case of the absence of implementation of the strategy
through the whole company. This is based on the research of relevant literature. Table 1 shows views and tools of
implementation of the strategy such as critical factors of the implementation.

Table 1. Summary of views, tools and critical factors of implementation of the strategy
Author Views and tools of implementation of the strategy Critical factors of implementation of the strategy
Slávik (2009) Formal activities: • Communication,
• Administrative tools (plans, budgets, policies) • Creation of an appropriate organizational structure,
• Balanced Scorecard • Implementation of administrative support systems,
• Control systems and Rewarding • Assemble of control systems,
Informal activities: • Creation of systems of rewarding and stimulating,
• Strategic Leadership • Formulation of company´s culture,
• Company´s Culture • Strategic leadership.
• Interests and power
• Internal conflict
Vološin(2003) 1. Creation of adequate organizational structure • Inadequate organizational structure,
2. Creation of mechanisms for control of the • Disregard the specifics of the company and activities,
strategy, motivation and rewards • Strategy, structure and control are not aligned.
3. Formation of the overall favorable environment
for the implementation of the strategy
Majtán et al. (2007) Administrative activities: • Employees – their motivation and organization,
Hard tools – communication, organizational • Company´s culture,
structure, administrative agenda, control • Discrepancy between strategy and real company´s activities.
and rewarding
Soft tools – company culture and leadership
Keřkovský & 1. Creation of organizational conditions – plans, • Lack of appropriate resources required for the
Vykypěl (2003) budgets, powers and responsibilities implementation of the strategy,
2. Company climate • Lack of control and adaptation to changes of the company´s
3. The role of top management environment,
• Employee’s resistance.
4. Information to employees about roles and
responsibilities
5. Control and revision of strategies and plans
Mallya (2007) • Strategic leadership • Inadequate monitoring and implementation of information,
• Organizational structure • Employee’s resistance to change
• Company culture • Rewarding system based on past successes and not related
• Business ethics and strategic management to the future objectives

• Motivational system of the company • Critical factors are also strategic leadership, company´s
climate and culture, resource allocation
• Resource allocation
Šmída (2007) Implementation of the strategy is done through: • critical success factors of implementation of projects
• projects – single, non – recurring activities, • critical success factors of implementation of processes
resulting in a step change
• processes –recurring sequence of interrelated
activities
864 Mária Mišanková and Katarína Kočišová / Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870

End of Table 1
Author Views and tools of implementation of the strategy Critical factors of implementation of the strategy
Niven (2002) • Balanced Scorecard • Vision Barrier – only 5% of the workforce understands the
strategy
• People Barrier – only 25% of managers have incentives
linked to strategy
• Management Barrier – 85% of executive teams spend less
than one hour per month discussing strategy
• Resource Barrier – 60% of organizations don´t link budgets
strategy
Kassay (2010) • Administrative tools • The unclearly formulated strategic objectives and their
• Inspection inconsistency,

• Remuneration • The unsuitably stated strategy and subsequent partial or full

inability of realization,
• Leadership
• The insufficiently worked out strategic operations,
• Company culture
• The lack of determination of the top management to
enforce the strategic objectives to life “by all possible
means”,
• The continuing climate of indifference of the middle
management and working team resulting from low –quality
work of the top management with employees,
• The professional inability of the company employees to
realize the strategic operations,
• Underestimating the need of resources and an insufficient
continuity between the strategic operations and creation of
the resources necessary for their realization,
• The insufficient inspection system during the strategic
operation,
• The weak motivation of the employees and the team of
workers to realize the strategic operations consequently and
in a creative way.
Gurowitz (2012) Implementation of the strategy is inseparable from • Formulation and effective communication of vision and
effective leadership and communication within the values,
company.
• Formulation and effective communication of mission,
• Generation of enthusiasm and buy-in at all levels,
• Commitment to projects and business results that will fulfill
on the mission,
• Design of organizational architecture that allows for
empowerment and communication,
• Creation of tactics and short-term goals at the local level,
• Effective Action in a context of accountability.
Beer & Eisenstat Not defined • Top – down or laissez – faire senior management style,
(2000) • Unclear strategy and conflicting priorities,
• An ineffective senior management team,
• Poor vertical communication,
• Poor coordination across functions, business or borders,
• Inadequate down – the – line leadership skills and
development.
 Mária Mišanková and Katarína Kočišová / Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870 865

Based on the Table 1 we can see different views of authors on critical factors of implementation of the strategy.
Factors which required the most attention understand of the strategy, its acceptance by employees and implementers
of the strategy, effective communication and coordination of company´s activities.
Gavurová (2010) in her publication defines basic principles which could help to achieve an effective
implementation of the strategy of the company:

• communication of the strategy through the whole company: employees are not inclined to organizational changes
that accompany the implementation of the strategy so there is a need for effective communication of strategic
goals, their achievement as well as their influence on daily activities of employees,
• involving employees in the implementation of the strategy: keeping initiative on employees to find effective way
for achieving strategic goals allows company to eliminate employee´s resistance to changes,
• assignment of responsibilities for strategic projects: defining responsibilities and financial involvement of
employees have a significant impact on success of strategic goals,
• adaption of the organizational structure: company should adjust the organizational structure to company´ s
processes in connection with outputs from employees and control systems,
• implementation of effective controls: control is in the process of implementation of the strategy necessary and the
problem is content and methodology of control, it is necessary to focus not only on control of the implementation
of the strategy but also on the relevance of the strategy given by changing internal and external environment of
the company.

Strategic management system that implements company´s strategy can benefit from several methods. Their
success depends on the accuracy and appropriateness of the method for the company emphasizing its specifics. In
the article are further analyzed methods: the Balanced Scorecard and Model ,,7S".

3. Model ,,7S”

One comprehensive approach used to implementation of the strategy was developed by Peterson & Waterman at
McKinsey & Company in the early 80th. The model is based on seven internal company factors that must be aligned
together for successful implementation of the strategy in the company.
The Model ,,7S” can be used in a wide variety of situations where an alignment perspective is useful
(mindtools.com):

• Improve the performance of a company.

• Examine the likely effects of future changes within a company.
• Align departments and processes during a merger or acquisition.
• Determine how best to implement a proposed strategy.

Based on the figure 2 we can see that Model ,,7S” consists from ,,hard and soft” factors. Hard elements are easier
to define and management can directly influence them. The three hard elements of the model are (Mallya, 2007):

• Strategy – express how the company achieves its vision and how responds to opportunities and threats from
environment, means awareness of the strategy, its explanation to external subjects not only to internal,
• Structure – the way how the company is structured, inferiority and superiority relations, organizational structure
supports the implementation of the strategy,
• Systems – formal and informal everyday activities and procedures carried out by employees, it is about systems
of planning, control and information that support the implementation of the strategy.

On the other hand soft elements of the model are more difficult to define, they are less specific and influenced by
company´s culture. Despite the soft elements are as important as hard if the company wants to achieve success. Soft
elements of the model are (Papula & Papulová, 2012):
866 Mária Mišanková and Katarína Kočišová / Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870

• Style – style of leadership and choice of the appropriate style of leadership of the company belong to important
factors affecting the implementation of the strategy,
• Staff – employees and their basic skills are key factors of the success, companies should have right people on the
right place,
• Skills – actual skills and abilities of company´s employees, companies should focus on the development of the
skills in the future, extension of knowledge and acquisition of experiences,
• Shared values – values enforced in the strategy are based on shared interests and are included in the mission of
the company, they are a key element that influences the effectiveness of all other factors, it is an important
feature of company´s culture that supports the creation and implementation of the strategy.

Fig. 2. Model ,,7S” by McKinsey company.

Source: Mallya, T. (2007)

Model ,,7S” represents a model that can be applied in any company and if something does not work in the
company probably is there a conflict between some elements listed in the model. After identifying these
discrepancies and their re-harmonization company proceeds to the outlined objectives and values. Experiences of
companies showed that these elements support the implementation of the strategy and contribute to the long – term
success of the company.

4. Balanced scorecard

Strategic Management System Balanced Scorecard was developed by Kaplan & Norton in 1992 and was firstly
introduced in the journal Harvard Business Review. In 1996 was published the first book devoted to this issue,
entitled Balanced Scorecard: Translating Strategy Into Action (Kaplan & Norton, 1996).
Balanced Scorecard translates mission and strategy of the company into a comprehensive set of performance
indicators that provide a framework for assessing company´s strategy and management system. It represents a
multidimensional system that is used to define and implement organizational and management strategies at all
organizational levels of the company to maximize the process of value creation. Balanced Scorecard is a
management system used in companies which provides efficient utilization of resources for shareholders. BSC in
 Mária Mišanková and Katarína Kočišová / Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870 867

companies facilitate the formulation and subsequent implementation of strategic mission through whole company
and employees (Kaplan & Norton, 2000).
Although there are several methods and approaches used to implement company´s strategy there are several
reasons to use the Balanced Scorecard. These reasons include for example orientation towards the learning
organization, highlighting the status of human resources in the company and orientation to the future (Gavurová,
2010).
Horvath & Partner's (2002) indicate the main reasons for the implementation of BSC in company:

• necessity to enforce the strategy,

• criticism of the classical system of indicators,
• the need for transparency of reporting,
• the need to simplify the planning process.

Balanced Scorecard maintains traditional financial indicators of past performance that are complemented by new
indicators of future performance. Goals and indicators of Balanced Scorecard are based on the vision and strategy of
the company and follow the performance of the company from four perspectives (Marinič, 2008):

• customer perspective,
• internal perspective,
• learning and growth perspective,
• financial perspective.

Four Balanced Scorecard perspectives and their derivation from vision and strategy is shown in Figure 3.

Fig. 3. Four perspectives of Balanced Scorecard and their derivation from vision and strategy.
Source: Wagner, J. (2009)
868 Mária Mišanková and Katarína Kočišová / Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870

Balanced Scorecard expands the set of objectives of the company beyond the normal financial measures.
Management of the company can measure how the business units create value for current and future customers as
well as how to change the quality of systems, procedures and human resources to improve future performance of the
company. Although BSC captures short-term performance through a financial perspective, it reveals the value-
drivers which lead to higher long-term financial performance. It is management system of the company and system
for the implementation of the strategy (Kaplan & Norton, 2001).
Four Balanced Scorecard perspectives allow the company to achieve a balance between short-term and long-term
objectives, between desired outcomes and the drivers of those outcomes and between hard and soft indicators,
subjective indicators. Despite the large number of indicators used in the BSC properly assembled BSC contains only
meaningful data because all indicators are directed to achieving an integrated strategy.
This system refers to a comprehensive economic activity of the company by using quantifiable financial as well
as non-quantifiable indicators of quality and meets the need of the company to be competitive in long – term.
The measurement is generally seen as a tool of control and evaluation of the past performance while the
indicators used in the BSC are used to formulate the strategy of the company, its adaptation to individual and
company needs and also to needs of individual departments to achieve a common goal. Balanced Scorecard should
be used as a system of communication and information not as a controlling system (Gavurová, 2010).

Fig. 4. Balanced Scorecard as a strategic management system.

Source: Kaplan, R., & Norton, D. (2001)

4.1. The development of the Balanced Scorecard as a strategic management tool

Concept of Balanced Scorecard in its essence remains unchanged – four groups of indicators and focus on the
strategy. To the form in which we know it today has transformed over the years and there can be specified three
generations of development. A brief overview of the development of BSC is processed on the basis of Cobbold &
Lawrence (2002), Gavurová (2010), Niven (2002), Kaplan & Norton (2007).

First generation – BSC as a system for performance measurement:

• measuring performance of the company requires not only financial indicators but also operational (in customers,
internal processes, innovation and improvement) which are incorporated into the BSC,
• BSC offers clarity – a limited number of measurements in four perspectives,
• into the center of attention goes strategy, not control,
• in the process of selection of indicators are used subjective questions about vision and strategy,
• cooperation with top managers.
 Mária Mišanková and Katarína Kočišová / Procedia - Social and Behavioral Sciences 110 (2014) 861 – 870 869

Second generation – BSC as a system for implementation of the strategy:

• supplementation of the model by aligning fur perspectives on vision, mission and strategy,
• two important elements of BSC – choice of specific indicators and their classification into perspectives,
• essence of each area of indicators is caught by short sentences that are connected to the four perspectives,
• formulation of the relations between objectives and indicators with the responsible subjects,
• formation of model of strategic maps – graphic relations of goals and perspectives.

Third generation – BSC as a tool of strategic management:

• the term ,,destination statement” – clear statement of company´s objectives and determination of what the
company wants to achieve,
• determination of cause and effect relationship between the declared goals – what needs to be done to achieve the
expected results,
• development of a broader model of strategic maps and perspectives – establishment of a clear interconnection
and interaction of indicators in four perspectives,
• definition of the strategic initiatives that are assigned to the indicators of strategic objective and represent projects
with clearly defined duration supporting the achievement of strategic objective,
• connection of budget process and planning process with BSC,
• development of scenarios of future development.

5. Conclusion

Strategic implementation as a part of strategic management of the company plays an important role in achieving
prosperity and competitiveness. The strategy reflects the fundamental ideas on which way the objectives of the
company will be achieved. Definition of a good strategy is not easy. Formulation of the strategy and related
objectives is a difficult process as well as the process of implementation of the strategic objectives into the business
plan.
Prosperity and competitiveness of the company are conditioned also by flexible strategic management.
Companies without strategic management can´t be competitive in long – term and without appropriate strategy is
strategic development unsuccessful. In the article are analyzed two methods used for the implementation of the
strategy. First method is Model ,,7S” and second one is Balanced Scorecard.

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