CBMEC 2

Basic Model of
Strategic Management
IMPLEMENTATION OF
STRATEGY
Lecture 4
Ruel C. Ajes, MBA
IMPLEMENTATION
OF STRATEGY

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 After the evaluation of the alternatives, the choice of
strategy is made. This choice now needs to be implemented
i.e. strategy is now put into action. This step of strategy
process is the implementation step. This includes the
activation of the strategic alternatives chosen. Strategy
making and strategy implementation are two different
things. Strategy making requires person with vision while
strategy implementation requires a person with
administrative ability. If the strategy made is not
implemented properly then the objectives would be lost.
Strategy implementation is as good as starting a new
business. The stage requires looking at the problems and
eliminating them.
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In strategy implementation, one has to pass through
different steps:

 Project Implementation
 Procedural Implementation
 Resource Allocation
 Structural Implementation
 Functional Implementation
 Behavioral Implementation
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Project implementation is a
comprehensive plan of action
from acquiring land to the
installation of machinery within
a time frame.

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Procedural implementation takes place by following the “Law
of the Land” i.e. the rules and regulation in terms of wastage
cost, utility etc. It involves completing all those procedural
formalities that have been prescribed by the governments
both central and state. A procedure is a series of related tasks
that make up the chronological sequence and the established
way of performing the work to be accomplished. Procedural
implementation involves different steps. These steps vary
from industry to industry. Also these may change as per the
changes in the government policies.

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The major procedural requirements are

 Licensing Requirements
 FEMA Requirements
 Foreign Collaboration Procedure
 Capital Issue Requirements
 Import and Export requirements
 Incentives and benefits
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 After procedural implementation there comes resource
allocation. The organization has to allocate resource both inside
the company and outside the company. It has to make decisions
regarding short term and long term allocation. The problems
associated with resource allocation is the problem involved in to
process. The problems emerge because:

 Resources are limited

 There are competing organizational units with each trying to
have the major portion.
 Organization’s past commitment.
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The structural implementation of strategy involves
designing of the organization structure and interlinking
various units and sub units of the organization. It
involves issues like

 How the work of the organization will be divided

 How will the work be assigned among various
positions, groups, department, divisions, etc.
 The coordination among these for achievement of
organizational objectives.

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There are basically two aspects
1. Differentiation and
2. Integration
Differentiation refers to, “the differences in cognitive and
emotional orientations among managers in different functional
departments.”
Integration refers to, “the quality of the state of collaboration
that are required to achieve unity of efforts in the organization.”
The organization has to emphasize on both aspects and
therefore, it must design organization structure and provide
systems for integration and coordination among
organization’s parts and members.
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Functional implementation deals with the development of
policies and plans in different areas of functions which an
organization undertakes. The major functions of the
organization include:
1. Production
2. Marketing
3. Finance
4. Personnel

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 Each and every function makes its own policies and
plans in tune with the whole organization’s strategy and
then implements to fulfill the objectives. For example, the
production function may involve decisions relating to size
and location of plants, technology to be used, cost factor,
production capacity, quality of the product, research and
development etc. Similarly marketing function may
include the decisions relating to type of products, price of
products, product distribution and product promotion.

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 The financial function deals with decisions
like sources of funds, usage of funds and
management of earnings. Likewise, the major
consideration in personnel policies include
recruitment of right personnel, development of
personnel, motivation system, retaining
personnel, personnel mobility, industrial relations
etc.

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 Behavioral implementation deals with
those aspects of strategy implementation that
have impact on behaviour of people in the
organizations. Since human resources form an
integral part of the organization their activities
and behaviour need to be directed in a certain
way. Any departure may lead to the failure of
strategy.

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The five issues in this context relevant to strategy
implementation are:
1. Leadership
2. Organization Culture
3. Values and Ethics
4. Corporate Governance, and
5. Organizational Politics
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EVALUATION AND CONTROL

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 This is the last step of the strategy making process. This
is an ongoing process and evaluation and control have to be
done for future course of action as well. To get successful
results and to achieve organizational objectives, there has to
be continuous monitoring of the implementation of strategy.
The evaluation and control of strategy may result in various
actions that the organization may have to take for successful
well being, such actions may involve any kinds of corrective
measures concerned with any of the steps involved in the
whole process be it choice for setting mission or objectives.
The process of strategy formulation is considered as a
dynamic process wherein corrective actions are taken and
change is brought in any of the factors affecting strategy.
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 Evaluation of strategy is done by the top
managers to determine whether their strategic
choice is implemented in a manner that it is meeting
the organization’s objectives. Evaluation emphasizes
measurement of results of a strategic action. On the
other hand, control emphasizes on taking necessary
action in the light of gap that exists between
intended results and actual results in the strategic
action.

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 When evaluation and control is carried out
efficiently, it contributes in three basic areas:

 Measurement of organizational process.

 Feedback for future actions, and
Linking performance and rewards.

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 The board of directors, the chief executive and other
managers all play a very important role in strategy
evaluation and control. Control can be of three types:

1. Control of inputs that are required in an action, known

as feed forward control
2. Control at different stages of action process, known as
concurrent control
3. Past action control based on feedback from completed
action known as feedback control

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Control is exercised by mangers in the form of
four steps:

1. Setting performance standards

2. Measuring actual performance
3. Analyzing variance
4. Taking corrective actions
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 After evaluation and control, the strategy
process continues in an efficient manner. The
effectiveness could be assessed only when the
strategy helps in the fulfillment of organizational
objectives.

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A good strategy is one which helps in the accomplishment of the
organization’ s objectives. The first step, therefore, is the
development of strategic intent i.e. the setting of organizational
mission and objectives. After this, the organization has to assess its
environment external to it and which affects its strategy. It has to
assess the opportunities and threats in the environment. Alongwith
the environmental analysis, the organization has to go for an
organizational analysis as well, through which it assess its own
strengths and weakness and then incorporates them in the strategy
being formulated. It becomes necessary for the organization to
identify the various strategic alternatives and choose from them the
one which is most compatible with the organizational objectives. The
strategic choice has to be implemented in a manner that the
organization’s culture and structure support the implementation.
After implementing the strategy, strategic evaluation and control is
carried out so that the firm is successful in meeting its objectives.
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KEY WORDS

STABILITY: Strategy in which the company

serves the same product in same market and
with existing technology.

EXPANSION: Strategy in which company

broadens its customer groups, customer
function and the technology.

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RETRENCHMENT: Strategy in which
organization has to reduce its scope in terms of
customer group, customer functions or
alternative technology.

DIVERSIFICATION: is a growth strategy which

involves adding of new products or services to
existing

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STRUCTURE: is the configuration of resources
used by management to coordinate the
activities of the organization so that the
objectives can be achieved.

DIVERSIFICATION: Diversification involves

change in business definition either in terms
of customer functions, customer groups or
alternative technology.
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MERGERS- It is an external approach to expansion
involving two or more than two organizations.

ACQUISITION - For the organization which acquires

another it is acquisition and for organization which
is acquired, it is merger.

TAKEOVERS – In takeovers, there is strong motive

to acquire others for quick growth and
diversification.
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DIVESTMENT – In divestment, the company which is
divesting has no ownership and control in that
business and is engaged in complete selling of a unit.
It is referred to the disposing off a part of the
business.

TURNAROUND STRATEGY- When the company is sick

and continuously making losses, it goes for
turnaround
It is the efforts in reversing a negative trend and
it is the efforts to keep an organization alive.
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