Chapter [6]
Strategy Implementation and
Control
Strategy Implementation and
Control
Interrelation between Formulation and Implementation
• Translation of strategic plan into strategic action.
• To be strategically successful Strategy formulation should be effective and implementation should be efficient.
• Organization place more focus on efficiency rather then effectiveness.
Thrive Die slowly
Survive Die Quickly
Effective Ineffective
Efficient
Inefficient
Strategy FormulationS
tra
teg
y Im
ple
me
nta
tio
n
Formulation
• An intellectual process• Performed by top
management• Requires managerial
focus before action• Focus is on effectiveness• Requires creative and
analytical skill• Requires coordination
among few individuals• Based on Forward
linkages
Implementation
• An Operational process• Performed by divisional
or functional management
• Requires management focus during action
• Focus is on efficiency • Requires motivational
and leadership skills• Requires coordination
among many individual• Based on Backward
linkages
Issues in Strategy Implementation
Strategy : Stability
Strategic plan : Modernization
Programme : R&D
Project : 15 months, 1cr.,
Infrastructure : Civil construction, Machinery installation,
Skill development
Procedural Implementation, Resources Implementation, Structural Implementation, Functional Implementation, Behavioral Implementation
Structural Implementation
• Structure dictates how strategies should be developed and resources will be allocated. E.g. - Product structure develops product based strategy.
• Competitive advantages are created when there is a proper match between strategy and structure.
• Strategy is influenced by structure and structure should be changed according to the newly developed strategy.
Organization Structure
Organization
Structure
Functional
Divisional
SBU
Matrix
Network
Functional Structure
CEO
Marketing Finance Production R&D HR
Advantages ~It promotes specialization of labourEncourage efficiencyMinimum elaborate controlRapid decision making
Disadvantages ~It forces accountability to the topMin. career development opportunitiesPossible staff conflictsPoor delegation of authorityFunctional specialist may develop narrow
perspective.
Divisional StructureCEO
Division A
Marketing
Production
HRM
Division B
Marketing
Production
HRM
Division C
Marketing
Production
HRM
Type ~ Geographic Area Product Customer Process
Advantages ~ Accountability is clear Extensive delegation of authority High employee morale Offer career development opportunity
Disadvantages ~ Costly Duplication of staff Elaborate H.Q. Control system Certain region, product, customer may suffer.
SBU StructureSBU StructurePresident
CEO SBU - A
Division
Division
Dicision
CEO SBU - B
Division
Division
Division
Characteristics ~SBU is a grouping of related business that can be
taken up together for strategic planning.Corporate office manages SBU through strategic and
financial control and delegate authority and responsibility for day-to-day operations.
SBU divides into divisions under a senior executive who reports directly to the CEO.
Advantages ~More accurate monitoring of individual businessSimplifies the control problemBetter allocation of resourcesSynergy among the divisions of the group can be
achieved
Disadvantages ~Costly
Matrix Structure
Project - A
Project - B
Project - C
Production unit
Production
Production unit
Production unit
Marketing unit
Marketing
Marketing unit
Marketing unit
Finance unit
Finance
Finance unit
Finance unit
Step 1 : Cross-functional task forceStep 2 : Product ManagementStep 3 : Mature Matrix
Characteristics ~ It is combination of divisional and functional
structure. Employees have 2 bosses. It has dual-line of authority, dual-source of
reward and punishment, dual-reporting channels. Home department of employees is functional and
they are often assigned temporarily to one or more projects.
Advantages ~ Project objectives are clear. There are many channels of communication Workers can see the result of their work Shutting down a project is relatively easy It has stability of functional structure and
flexibility of divisional form.
Network Structure• The corporations organized in this manner is often
called virtual organization.• In such organizations many activities are out-
sourced.• The organization is only a shell with a small HQ
acting as a Broker and electronically connected to some independent organizations.
• Advantages ~– Provides increased flexibility and adaptability to cope with
rapid technological changes.– Allows company to concentrate on its distinctive
competencies.
• Disadvantages ~– Availability of numerous potential partners can be source
of trouble.– Keep the firm away from the benefit of synergy
Strategic Business Unit
• Relevant to multi-business, multi-product organization, which group strategically related products into a business unit.
• Traditionally organizations handles planning on territorial basis, which had 2 disadvantages –
Same product – separate treatment
Different products – Same treatment
Characteristics of SBU ~
A group of related business that can taken
up together for strategic planning.
On the basic factor such as mission,
objectives, competition, and strategy one
SBU is different from other SBU.
Each SBU will have its CEO who is
responsible for business level planning and
profit.
Facilitate correct allocation of resources
Value Chain Analysis
Value chain is a set of activities within and around an organization to provide value-for-money product/services.
VC analysis is a 2 steps process : First identify separate activities and Second assessing the value added by each of them.
SupportActivities
Primary Activities
Firms Infrastructure
Human Resources Management
Technology Development
InboundLogistics
Operations OutboundLogistics
Marketing& Sales
Services
Procurement
Core CompetencesCore CompetencesCC is a unique strength of an organization
which critically support its competitive advantages.
These tend to be easily imitated, so, organization should continually shift the ground of competition.
VC analysis can be helpful in identifying those activities which represents the competences of the organization.
– Linkages between primary activities ~• E.g. Outbound Logistics (Inventory of finished goods) and
Operations (Manufacturing).
– Linkages between support activities ~• E.g. Human Resource Management and Technology
Development
– Linkages between primary and support activities ~• E.g. Infrastructure (MIS) and Operations (Service delivery)
External linkages– Vertical linkages attempts to improve performance
through ownership of more part of value system.– TQM– Merchandising Activities
Leadership and Strategy Implementation
• A strategy manager has many leadership role : Visionary, Chief administrator, Culture builder, Resource allocater, Crisis solver, Motivator, Arbitrator etc.
• On the top of all these he is a change agent.• 5 leadership role in implementation ~
– Staying on the top of what is happening.– Promoting a culture to execute strategy– Keeping organization responsive to change– Exercise ethical leadership to make organization as
good corporate citizen.– Pushing corrective action to improve strategy
execution.
Leadership role in Implementation
Strategic leaders guide company in formation of mission, objectives and strategy.
Strategic leaders guide company implement the strategy by influencing the behavior, thought and feelings of co-workers.
They can use their frame of reference which is set of assumptions, promises and accepted wisdom to deal with environment and perform the responsibility.
Leadership StyleTransformational leadership
They use charisma and enthusiasm to inspire people to exert for the good of the company.
This appropriate in turbulent environment and when major changes are required to be made.
This style offers excitement, personal satisfaction, dream of higher level etc. to achieve dramatic improvement.
Such leaders motivate followers to stretch their abilities to do more, increase self-confidence and create innovation.
Leadership StyleTransactional leadership
This style focuses only on controlling organization activities and improve present situation.
This style uses authority of its office and follow a formalized approach of motivation such as punishment and rewards.
It is appropriate in settled environment and in mature industries.
Strategic ChangeModification in strategies due to the changes in the environment is called Strategic Change.
Need for
change
Create shared vision
Institutionalise the
change.
• Recognize the need for changeDiagnose which part of corporate culture is
not supportive to strategy so that strategy can be changed according to it.
This calls for SWOT analysis and then determine scope for change.
• Create a shared vision to manage changeCommunicate the vision with every one so
that there is no conflict between the objectives of individuals and organization.
Convince all that the change is not superficial or cosmetic. Actions must be highly visible and indicative of management’s seriousness.
• Institutionalise the change
This is action stage where changed strategy is implemented.
It calls for creating supportive attitude and ensure it does not slips back
Change process is regularly monitored and analysed for deviation; And if necessary corrective actions are taken.
Kurt Lewin change process
Un-freezing the situation
It is the process of braking down old attitude, behavior, customs and traditions.
It is the process of making employees aware of the necessity for changes because sudden changes are socially destructive.
It is all done by making announcements, holding meetings and promoting ideas etc.
Changing the new situations– Three methods of changing pattern of behavior~
ComplianceIt focuses on strictly enforcing rewards and punishment
IdentificationIt focuses on creating role models.
InternalizationIt focuses on freedom to learn to change the individual’s thought process.
Re-freezing– When new behavior becomes a normal way of
life it must be continuously reinforced by orientation training.
Organizational Control
Control is the check exercised to ensure that – Performance meets the standard Undesirable events are prevented, detected
and corrected. Use of resources is efficient Assets are adequately safeguarded.
Control function involve Monitoring, Measuring, Correcting and Maintaining the system
Setting objectives as standard
Measuring actual performance
Comparing with standard
Detecting deviation
Identifying the improvement
Feeding back corrective instruction
Co
ntr
ol P
roce
ss
Controls
Operational
Management Strategic
Premise
Surveillance
Special alert
Implementation
[A] Operational Control
– This control is applied on individual tasks where measurable relationship between input and output exist.
– It regulates the process within certain tolerable boundaries.
– Example : Quality control, Cost control, Inventory control, Production control etc.
[B] Management Control
– This control is applied over integrated activities of a department, division or entire enterprise.
– It helps to achieve corporate goals in most effective and efficient manner.
– According to Robert Anthony ~
“Management control is the process by which managers assure that resources are used effectively and efficiently in the accomplishment of the organizational objectives.”
[C] Strategic Control– According to Schendel and Hofer ~
“Strategic control focuses on the dual questions of whether : (1) the strategy is being implemented as planned and (2) he results produced by the strategy are those intended.”
1. Premise control• Strategy is formed within certain premises or
assumptions about environment.• PC is a tool to verify the validity and accuracy of
these premises on which the strategy is built.• PC focuses on environmental factors : economic,
social, technological, legal, competitive, supplier, customer etc.
2. Surveillance Control• Unlike Premise control it is unfocussed.
• It involve general monitoring of sources of information to uncover unanticipated information having bearing on strategy.
• It includes reading newspaper, business magazines, meeting, conferences discussions etc.
3. Special Alert Control• This control focuses on sudden changes in
government, natural calamities, terrorist attack, unexpected merger/acquisition by competitors and such other event that may calls for intense review of strategy.
4. Implementation Control This control directed towards assessing the
need for changes in the strategy in the light of company performance.
It requires continuous monitoring of direction movement of strategy.
Types ~• Monitoring strategic thrust
Determine whether strategy is progressing as desired .
• Milestone reviews
Evaluating the milestone achieved.
Building a strategy supportive culture
Company’s Values, Belief, Business principles, traditions, approach to decision making and problem solving etc are all collectively make corporate culture.
Organization culture comes from the complex combination of socio-cultural background of its employees.
Culture : Alloy or Obstacle• An organization culture is either a
contributor or an obstacle in the successful strategy execution.
• For e.g. – a culture where frugality is strongly shared by employee is very supportive to successfully execution of a Cost leadership strategy.
• A tight strategy-culture alignment gives 2 benefits ~– It develops a system of informal rules– Nurtures and motivates people to do their job in
strategy supportive manner.
A sizable and prolonged strategy-culture conflict weakens the managerial efforts to make the strategy work.
It is strategy maker’s responsibility to select strategy compatible with unchanged part of culture; and
It is responsibility of strategy implementer to change which ever part of culture is in conflict with strategy.
Changing a problem culture
• Tough to change heavy anchor of deeply held values.
• Requires concerned managerial actions over a period of time.
• Talk to all those concerned with that aspect of culture which is to be changed.
• Talk should be followed swiftly by visible aggressive actions to modify culture.
• There are several ways to accomplish this ~– Visibly praising and recognizing people who
display the new cultural traits.– Engineer some quick successes– Replace old-culture managers with new one.– Change long standing policies that are
dysfunctional.– Re-organize corporate structure in
alignment with strategy– Tying incentives directly to new measures.– Making major budgetary re-allocations.– Sincere, sustained commitment by CEO
Top Related