STRATEGY IMPLEMENTATION
BY CHINTAN PRAJAPATI
BY-
Introduction
Implementation
p of strategy
gy is the pprocess through
g which a chosen
strategy is put into action. It involves the design and management of
systems to achieve the best integration of people, structure, processes
and resources in achievingg organizational
g objectives.
Implementation of Strategy affects an organization from top to bottom,
it affects all the functional and divisional areas of business.
Institutionalization of strategy
Setting Proper Organizational Climate
Developing Appropriate Operating Plans
Developing Appropriate Organization Structures
Review of Implemented Strategy
The Nature of Strategy Implementation
• Strategy implementation is managing forces during
the action
• Strategy implementation focuses on efficiency
• Strategy implementation is primarily an operational
process
• Strategy
gy implementation
p requires
q special
p motivation
and leadership skills
• Strategy implementation requires coordination among
many individuals
Issues in Strategy Implementation
Implementation
p task tests strategist
g abilityy to allocate
resources, design structures, formulate functional policies,
identify leadership styles etc.
Strategies
S h to be
have b activatedd through
h h implementation
l andd
realize the intent.
Strategies leads to plans. Plans result in different kinds of
programmes which includes goals, policies, procedures,
rules and steps to be taken in putting them into action.
Programs leads
l d to formulation
f l off the
h project which
h h is
time scheduled and costs are ppredetermined. It requires
q
allocation of funds based on capital budgeting of the
organization.
Projects creates need for infrastructure for day to day
operations in organization. Resource allocation is key to
successful projects.
Execution
Three keys to keep in mind:
Execution is a discipline, and integral to strategy.
Execution
E i isi the
h major
j job
j b off the
h business
b i leader.
l d
Execution must be a core element of an organization’s
culture.
A Framework for Executing Strategy.
Strategy
Entails converting the organization’s strategic plan
into action andd results.
l
Job for the whole management team.
Affects every part of the firm.
Each manager must answer, ‘what has to be done in my
area to implement our part of the strategic plan, and
what must I do to get these things accomplished?’
All managers become strategic implementers in their
areas and all employees are participants.
Framework for Strategy
Implementation
Implementation should be addressed initially when the
pros and cons of strategic alternatives are analyzed.
Depends
D d on nature
t andd degree
d off strategic
t t i change.
h
Probing assessment of what the organization must do
now – and what it must do differently and better to
carry out the new strategy.
Functional strategy & policies
Functional strategies (or operational strategies) are the
short-term goal-directed decisions and actions of the
organization’s
g various functional areas.
Six functional strategy areas:
Marketing
Research and development
Production-operations-manufacturing
Production operations manufacturing
Human resource management
Financial-accounting
Financial accounting
Information systems-technology
Key Elements of Functional Strategy
Core competency: - Something that a corporation can do exceedingly
well – a key strength
Distinctive competencies: -When core competencies or core capabilities
are superior
p to those of the competition.
p
Must meet 3 tests:
Customer value
Competitor unique
Extendibility
Firm can gain access to distinctive competencies in 4 ways:
Asset endowment
Acquired
Shared with another business unit
Built and accumulated
Cont…
Determining Functional Strategy:
Identify a business unit’s core competencies
Ensure that competencies are continually strengthened
Manage competencies so that competitive advantage is
preserved
Cont…
Marketing Strategy
Involved with pricing, selling, and distributing a product.
Market development strategy –
Capture a larger share of existing market through market saturation and
market penetration
Develop
p new markets for current pproducts
Product development strategy –
Develop new products for existing markets
Develop new products for new markets
Promotional Strategy
Push strategy Pull strategy
Pricing Strategy
Skim pricing Penetration pricing
Cont…
Financial Strategy
Examines the financial implications of corporate and business-
g options
level strategic p and identifies the best financial course of
action.
Maximizes financial value of the firm
R&D Strategy
Deals with p
product and process
p innovation and improvement
p
Choice:
Technological leader
Technological follower
Cont…
Operations
p Strategy
gy
Determines:
How and where product is manufactured
Level of vertical integration in process
Deployment of physical resources
Relationships with suppliers
Affected by product life cycle
Job shop
Connected line batch flow
Flexible manufacturing system
Dedicated transfer lines
Movement from mass production to:
Continuous improvement
Modular manufacturing
Mass customization
Cont…
Purchasing Strategy
Obtaining raw materials, parts and supplies
Basic Purchasingg Choices:
Multiple sourcing
Sole sourcing
Parallel sourcing
Logistics Strategy
Flow of products into and out of the process
Three current trends:
Centralization
Outsourcing
Use of the Internet
Cont…
HRM Strategy
Addresses issues of:
Low-skilled employees
p y
Low pay
Repetitive tasks
High turnover
Skilled employees
High pay
Cross trained
Self-managing teams
Information Systems Strategy
Technology to provide business units with competitive advantage
Matching structure & strategy
Relationships between Strategy and Structure
St
Strategy
ategy aand st
structure
uctu e have
ave a reciprocal
ec p oca relationship:
e at o s p:
Structure flows from or follows the selection of the firm’s strategy but …
Once in place, structure can influence current strategic actions as well as
choices about future strategies.
strategies
Evolutionary Patterns of Structure and Organizational
Structure
Firms grow in predictable patterns:
First by volume
by
b geography
h
Integration (vertical, horizontal)
through
g product/business diversification
All organizations require some form of organizational structure to
implement and manage their strategies
Firms frequently alter their structure as they grow in size and complexity
Types of structure
SSimple
p structure
Owner-manager
Staff
Matched with focus strategies and business-level strategies
Growth creates
Functional structure
Chief Executive Officer (CEO)
Functional line managers in dominant organi
organizational
ational areas
Supports use of business-level strategies and some corporate-level strategy
Multidivisional structure ((M-form))
Strategic Control
Top corporate officer delegates responsibilities to division managers
Cont…
Using the Functional Structure to Implement a Cost
Leadership Strategy
Operations are the main function.
Process engineering is emphasized over research and development.
Large centralized staff oversees activities.
Formalized procedures guide actions.
Structure is mechanical.
Job
J b roles
l are hi
highly
hl structured
t t d
Using the Functional Structure to Implement a
Differentiation Strategy
gy
Marketing is the main function for tracking new product ideas.
New product R&D is emphasized.
Most functions
f are decentralized.
d l d
Formalization is limited to foster change and promote new ideas.
Overall structure is organic.
Job roles are less structured
Cont…
Corporate-Level Strategies and the Multidivisional
Structure
A firm’s
firm s continuing success that leads to:
Product diversification, or Market diversification, or both product and market
diversification.
Increasing diversification creates control problems that the
functional structure can’t handle.
Information
I f i processing,
i coordination
di i Control
C l
Diversification strategy requires firm to change from functional
structure to a multidivisional structure.
structure
Different levels of diversification create the need for
implementation
p of a unique
q form of the multidivisional structure.
Strategic leadership & organizational
culture
Leadership is fundamental aspect of strategic management
and paramount in strategy implementation.
The ability to anticipate,
anticipate envision,
envision maintain flexibility and
empower others to create strategic change.
Strategic thinking,
thinking Strategic acting and strategic influencing
are key skills for a leader.
It is leaders'
leaders responsibility to formulate strategy and create a
strategic intent to drive the organization for results.
Leaders can fit culture to strategy or fit the strategy to
culture compromising performance
Cont…
Culture of an organization is the central thesis of
organizational strategy and implementation.
Leadership runs like a thread through all functions of
management to integrate them into a cultural of excellence.
Understanding culture is desirable for all but is a must for
leaders
Effective strategic leaders should:
Manage the firm’s operations effectively.
Sustain a high performance over time.
time
Make better decisions than their competitors.
Understand how their decisions affect the internal systems in
use by the firm.
Solicit feedback from ppeers,, superiors
p and employees
p y about
their decisions and visions.
Key Strategic Leadership Actions:
Determining Strategic Direction
Exploiting and Maintaining Core Competencies
Developing Human Capital and Social Capital
Sustaining an Effective Organizational Culture
Emphasizing Ethical Practices
Establishing
sta s g O Organizational
ga at o a Co Controls
t os
What
Wh makes
k U Up A C
Company’s
’ CCulture?
l ?
Core values and business principles of executives
Ethical standards
Patterns of “how we do things around here”
Oft-told stories illustrating company’s values
Approach to people management
Internal politics
Traditions
O
Organizational
i i l politics
li i
Relationships with stakeholders
Internal sociological
g forces
Where Does Corporate Culture Come From?
Founder or early leader
Influential
I fl ti l individual
i di id l or workk group
Policies, vision, or strategies
Traditions, supervisory practices, employee attitudes
Types of Corporate Cultures
Strong vs. Weak Cultures
Unhealthy Cultures
Adaptive Cultures
Strategic change management
Strategic change management is the process of
managing change in a structured and thoughtful way in
oorder
e to meet
eet oorganizational
ga at o a goa goals,
s, object
objectives
ves aand
missions.
Therefore, change management and related processes present
many managerial challenges and, consequently, requires a
systematic,
y , structured,, purposeful
p p and integrated
g
approach.
Change management
Five Activities Contributing to Effective Change
Management
• Motivating Change
• Creatingg Vision of Change
g
• Developing Political Support
• Managing the Transition
• Sustaining Momentum
AREAS/TYPES OF CHANGE: SS-P-O-T-S
P O TS
Strategy
People
Organizational culture
Technology
Structure
Why people resist change?
Uncertainty (i.e.
(i e fear of the unknown)
People’s self-interest is threatened
A lack of trust and misunderstanding
A low tolerance for change is also a barrier to organizational
change
BEST PRACTICE CHANGE MANAGEMENT
PRINCIPLES
At all times involve and agree support from people within system
(e.g. the environment, processes, culture, relationships,
behaviours - whether personal or organizational)
g
Understand where you/the organization is at the moment (status
Understand where yyou want to be, when, why, y and what the
measures will be for having got there
Plan development towards above in appropriate achievable
measurable stages
Communicate, involve, enable and facilitate involvement from
people, as early and openly and as fully as is possible.
APPLYING THE 7-STEP,, ORGANIZATIONAL
STRATEGIC CHANGE MANAGEMENT PROCESS
STEP 1: Forces for change
g ((internal and environmental forces)) which
affect:
STEP 2: Performance outcomes (individual, group and organizational)
which encourages
STEP 3: Diagnosis of the problem (information, participation and change
agent) which leads to
STEP 4: Selection
l off appropriate intervention (structural,
l behavioural
b h l
and technological) as constrained by S-P-O-T-S
STEP 5: Limitingg conditions ((leadershipp climate,, formal organization
g
structure and organization culture)
STEP 6: Selection and Implementation of the method (timing, scope and
experimentation) provision for
STEP 7: Evaluation of the method (feedback, adjustment, revision,
reinforcement)
THANK YOU…
Y
