STRATEGY

IMPLEMENTATI
ON
Nature of Strategy Implementation

 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)
 In Forms of Strategy
St tend
rat ed
eg
y

De
lib
era
te
Str
ate
gy
Realized
Unrealized Strategy
Strategy

Emergent
Strategy **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 Implementation
Project and Project Management
Initiating
Planning
Executing
Controlling
Closing
Project Management and Strategy
Implementation
Procedural Implementation
Regulatory mechanisms in India
IDRA, 1951
Foreign Collaboration procedure
FERA, 1973 requirements
MRTP, 1969 requirements
Capital issue control (Act, 1956)requirements
Import and export (Control Act, 1947)requirements
Incentives and facilities benefits
Patenting and Trade Mark Requirements
Labour Legislation Requirements
Environmental 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
Identify strategy-critical value
chain activities
AN

Decide value chain activities to perform internally and ORGANIZATION

those to outsource STRUCTURE

Make internally-performed strategy- critical MATCHED TO

value chain activities the main building
blocks in the structure THE
REQUIREMENTS
Decide how much authority to centralize at
the top and how much to delegate to OF
managers and employees
SUCCESSFUL
Provide cross-unit coordination and collaboration to
build/strengthen internal competencies and STRATEGY
capabilities
EXECUTION
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
1. More time than planned
2. Unanticipated problems
3. Activities ineffectively coordinated
Problems in 4. Crises deferred attention away
Implementing 5. Employees w/o capabilities
Strategic plans 6. Inadequate employee training
7. Uncontrollable external factors
8. Inadequate leadership
9. Poorly defined tasks
10. Inadequate information systems
 Strategy Implementation

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
 Functional Structure
PRES.

VP VP VP VP
MFG ENG MKTG FIN
 Strategy Implementation

Divisional Structure:
– Stage III:
• Diverse product lines
• Decentralized decision making
• SBU’s
• Almost unlimited resources
 Product Divisional Structure

CEO
Finance

Refrigerators Washers Dish-

& Ranges & Dryers Washers

Mfg Mktg
 Geographical Divisional Structure

CEO
Finance

NE & Mid- SE Western

West Region Region Region

Mfg Mktg
 Multi-Divisional Structure
General Motors
CEO

Pontiac Buick Chevrolet Saturn

Division Division Division Division

Autos Trucks
 Strategy Implementation

Beyond SBU’s:
– Stage IV:
• Increasing environmental uncertainty
• Technological advances
• Size & scope of worldwide businesses
• Multi-industry competitive strategy
• Better educated personnel
 Strategic Business Unit Structure
Dover Corp
CEO

Dover Dover Dover Dover

Resources Diversified Industries Technologies

Marathon Rotary Lift

 Strategy Implementation

Matrix Structure:
– 3 Distinct Phases
• Temporary cross-functional task forces
• Product/ brand management
• Mature matrix
 Matrix Structure
Top Management

Manufacturing Sales Finance Personnel

Manager:
Manufacturing Sales Finance Personnel
Project
Unit Unit Unit Unit
A

Manager:
Manufacturing Sales Finance Personnel
Project
Unit Unit Unit Unit
B

Manager:
Manufacturing Sales Finance Personnel
Project
Unit Unit Unit Unit
C

Manager:
Manufacturing Sales Finance Personnel
Project
Unit Unit Unit Unit
D
 Strategy Implementation
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
 Network Structure –
The Virtual Organization
CEO
Data
Process

R&D MRKTG PURCH

Contract
Mfr
Cellular or Horizontal Structure

CF
Team

CF PRES CF
Team Team

CF
Team
 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 Slower
-Clearly Planned -Not clear planning at
the beginning.
-Little involvement of -Lots of involvement of
others others
-Attempt to overcome -Attempt to minimize
any resistance 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 Forces
Four 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

Providing the
Guiding the
management skill
organization to
to cope with the
deal with
ramifications of
constant change
constant change
 Strategic Leadership: Embracing
Change

Clarifying strategic intent

Activities
involved in
galvanizing Building an organization
commitment
to change

Shaping organizational
culture
 What Competencies Should
Managers Possess?
The Leadership Needs of The Required
Organization Competencies of Business
Leaders
The ability to: • business literacy
• build confidence • creativity
• cross-cultural
• build enthusiasm
effectiveness
• cooperate • empathy
• deliver results • flexibility
• form networks • proactivity
• problem solving
• influence others • relation building
• use information • 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.
WHY POLICIES EMPOWER
PEOPLE? cont….
 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.
 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
FINANCIAL AND ACCOUNTING
POLICIES cont….
 Major policy decisions in the financial and
accounting areas…….
-Capital Structure
-Level of working capital
-Level of dividend payment
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