STRATEGIC

IMPLEMENTATION
 CONTENT
• N A TURE O F ST R ATEGIC IM P LEMENTATION
• A N NUAL OBJE CTIVES
• P O L ICIES
• R E SOURCE A LLOCATION
• M A NAGING C O N FLICT
• M A TCHING ST R U CTURE WIT H ST R ATEGY
• R E STRU CTURING, R E E NGINEERING, A N D E - E NGINEERING
• L IN KING P E R FORMANCE A N D P A Y T O ST R ATEGIES
• M A NAGING R E SISTANCE T O C HA NGE
• C R E ATING A ST R ATEGY -SUPPORTIVE C U LTU RE
• P R ODU CTION/OPERATIONS C ONCERNS WHE N IM P LEMENTING
ST R ATEGIES
NATURE OF

STRATEGY IMPLEMENTATION
ANNUAL OBJECTIVES
is a decentralize d activity that directly involves all managers in an
organization. Active participation in establishing annual objectives can lead
to acceptance and commitment.

1 2 3 4
re p resent t he are a p rim ary are the major e s t a bl ish
basis for m echani sm for instrument for or ganizat ional,
allocat ing e valuat i ng monitoring progress d iv is io n al, a n d
re sources m anagers toward achieving d e p art men tal
long -term p r iori t ie s
objectives
 POLICIES
refers to specific guidelines, methods, procedures, rules, forms,
and administrative practices established to support and
encourage work toward stated goals.

it sets boundaries, constraints, and limits on the kinds of

administrative actions that can be taken to reward and sanction
behavior; they clarify what can and cannot be done in pursuit of
an organization’s objectives
RESOURCE ALLOCATION
This is a centra l manageme nt activity that allows for
strategy execution. In organiz ati ons that do not use a
strategic - m a nag em e nt approa c h to decision making,
resource allocati on is often based on political or
persona l factors. Strategic manageme nt enables
resources to be allocate d accordi ng to priorities
establis he d by annua l objective s.
RESOURCE ALLOCATION
Nothing could be more detriment al to strategic
manageme nt and to organiza ti o na l success than for
resources to be alloc a te d in ways not consistent with
priorities indicate d by approve d annua l objectives
SOME MANAGEMENT TRADE -OFF DECISIONS
REQUIRED IN STRATEGY IMPLEMENTATION
• To emphasize short-term profits or long-term growth
• To emphasize profit margin or market share
• To emphasize market development or market penetration
• To lay off or furlough
• To seek growth or stability
• To take high risk or low risk
• To be more socially responsible or more profitable
• To outsource jobs or pay more to keep jobs at home
• To acquire externally or to build internally
• To restructure or reengineer
• To use leverage or equity to raise funds
• To use part-time or full-time employees
MANAGING CONFLICT
Co nflict can be defined as a
dis ag reement be tween two o r mo re
part ie s o n o ne o r mo re is s ues .

Co nflict is unavo idable in o rg aniz atio ns,

s o it is impo rtant that co nflict be
manag ed and res o lved befo re
dys functio nal co ns equences affect
o rg aniz at io nal perfo rmance. Co nflict is
no t always bad. An abs ence o f co nflict
can s ig nal indifference and apathy.
Co nflict can s erve to energ iz e o ppo s ing
g ro ups int o act io n and may help
manag ers identify pro blems
 MATCHING STRUCTURE
WITH STRATEGY
Changes in strategy often require
changes in the way an organization is
structured for two major reasons. First,
structure largely dictates how objectives
and policies will be established

F irs t, s tructure largely dictates ho w

o bjectives and po licies will be es tablished
The s eco nd majo r reas o n why changes in
s trategy o ften require changes in s tructure
is that s tructure dictates ho w res o urces
will be allo cated.
CHANDLER ’S STRATEGY -STRUCTURE
RELAT IONSHIP
S YMPTO MS O F AN INEF F ECTIVE
O RG ANIZATIONAL S TRUCTURE
1. TOO MANY LEVELS OF MANAGEMENT
2. TOO MANY MEETINGS ATTENDED BY TOO MANY PEOPLE
3. TOO MUCH ATTENTION BEING DIRECTED TOWARD SOLVING
INTERDEPARTMENTAL CONFLICTS
4. TOO LARGE A SPAN OF CONTROL
5. TOO MANY UNACHIEVED OBJECTIVES
6. DECLINING CORPORATE OR BUSINESS PERFORMANCE
7. LOSING GROUND TO RIVAL FIRMS
8. REVENUE AND/OR EARNINGS DIVIDED BY NUMBER OF
EMPLOYEES AND/OR NUMBER OF MANAGERS IS LOW COMPARED
TO RIVAL FIRMS
BASIC TYPES OF ORGANIZATIONAL STRUCTURE
01 FUNCTIONAL

02 DIVISIONA L BY GEOGRAPHIC AREA

03 DIVISIONA L BY PRODUCT

04 DIVISIONA L BY CUSTOMER

05 DIVISIONA L PROCESS

06 STRATEGIC BUSINESS UNIT

(SBU)
07 MATRIX
FUNCTIONAL
FUNCTIONAL
DIVISIONAL
DIVISIONAL STRUCTURE
MATRIX
MATRIX STRUCTURE
RES TRUCTURING, RE - ENGINEERING
& E - ENGINEERING

Restructuring —also called downsizing, rightsizing, or

delayering —involves reducing the size of the firm in terms
of number of employees, number of divisions or units, and
number of hierarchical levels in the firm ’s organizational
structure. This reduction in size is intended to improve both
efficiency and effectiveness. Restructuring is concerned
primarily with shareholder well -being rather than employee
well-being.
 RES TRUCTURING, RE - ENGINEERING
& E - ENGINEERING
Re-engineering is concerned more with employee and customer
well-being than shareholder well -being. Reengineering —also
called process management, process innovation, or process
redesign —involves reconfiguring or redesigning work, jobs, and
processes for the purpose of improving cost, quality, service,
and speed. Reengineering does not usually affect the
organizational structure or chart, nor does it imply job loss or
employee layoffs. Whereas restructuring is concerned with
eliminating or establishing, shrinking or enlarging, and moving
organizational departments and divisions, the focus of
reengineering is changing the way work is actually carried out.
LINKING PERFORMANCE AND PAY TO STRATEGIES
F ive tes ts are o ften us ed to determine whether a perfo rmance -
pay plan will benefit an o rganiz atio n:
1 . Does th e plan c aptu re atten tion ? Are peo ple talking mo re
abo ut their activities and taking pride in early s ucces s es under
the plan?
2. Do employees u n ders tand th e plan ? Can participants explain
ho w it wo rks and what they need to do to earn the incentive?
3. Is th e plan improvin g c ommu n ic ation ? Do emplo yees kno w
mo re than they us ed to abo ut the co mpany ’ s mis s ion, plans , and
o bjectives?
4. Does th e plan pay ou t wh en it s h ou ld? Are incentives being
paid fo r des ired res ults —and being withheld when o bjectives are
no t met?
5. Is th e c ompan y or u n it performin g better? Are pro fits up?
Has market s hare gro wn? Have gains res ulted in part fro m the
incentives ?
MANAGING RESISTANCE TO CHANGE
No orga niza tion or individua l ca n e sca pe change . But the thought of cha nge ra ise s
a nxieties beca use people fea r economic loss, inconvenience, uncer tainty, and a
br ea k i n norma l socia l pa tterns . Almost a ny cha nge i n structur e, te c hnolog y, people ,
or stra tegie s has the potentia l to disrupt comforta ble inter a c ti on pa tter ns . For this
reason, pe ople r esist cha nge. The strategic -management process itself can impose
ma jor cha nges on individua ls a nd pr oce sse s . Reorienting a n or g a niza tion to ge t
people to think a nd a ct str a tegically i s not a n ea sy task.

Resista nce to cha nge ca n be considered the single gr ea test threa t to successful
str a tegy implementa tion . Resista nce regula rly occurs i n orga niza tions i n the form of
sa bota ging production ma chines, a bsenteeism, filing unfounde d gr ie va nce s, a nd an
unwillingness to coope r a te . People often resist stra tegy imple me nta tion be ca use
they do not understa nd wha t is ha ppening or why cha nges a re ta king pla ce . In tha t
case, employees ma y simply need accurate information . Successful strategy
implementa tion hinges upon ma na gers ’ a bility to develop a n or ga niza tiona l clima te
conducive to cha nge . C ha nge must be viewed a s a n opportunity rather than a s a
thr ea t by ma na gers a nd employees .
CREATING A STRATEGY SUPPORTIVE
CULTURE
Strategists should strive to preserve, emphasize, and
build upon aspects of an existing culture that support
proposed new strategies. Aspects of an existing culture that
are antagonistic to a proposed strategy should be identified
and changed. Substantial research indicates that new
strategies are often market -driven and dictated by
competitive forces. For this reason, changing a firm’s culture
to fit a new strategy is usually more effective than changing
a strategy to fit an existing culture
CREATING A STRATEGY SUPPORTIVE
CULTURE
Schein indicated that the following elements are most useful
in linking culture to strategy:
• Formal statements of organizational philosophy, charters,
creeds, materials used for recruitment and selection, and
socialization
• Designing of physical spaces, facades, buildings
• Deliberate role modeling, teaching, and coaching by
leaders
• Explicit reward and status system, promotion criteria
• Stories, legends, myths, and parables about key people
and event
PRODUCTION/OPERATIONS CONCERNS
WHEN IMPLEMENTING STRATEGIES
TYPE OF ORGANIZATION STRATEGY BEING IMPLEMENTED PRODUCTION SYSTEM ADJUSTMENTS

Purchase specialized equipment and add

HOSPITAL Adding a cancer center (Product Development
specialized people

BANK Adding 10 new branches (Market Development) Perform site location analysis.

BEER BREWERY Purchasing a barley farm operation (Backward Integration) Revise the inventory control system

STEEL MANUFACTURER Acquiring a fast-food chain (Unrelated Diversification) Improve the quality control system

Alter the shipping, packaging, and transportation

COMPUTER COMPANY Purchasing a retail distribution chain (Forward Integration)
systems
THANKS FOR
LISTENING
NETFLIX
A CASE STUDY
Netflix
Introduction
Established in 1997, Netflix initially focused on providing online
movie rentals, boasting a catalog of fewer than 1000 titles.
However, the company swiftly transitioned to a subscription-
based model. In 2000, Netflix introduced a personalized movie
recommendation system, marking a significant step in its
evolution. By 2005, the platform had garnered over 4.2 million
subscribers and commenced the development of a video
recommendation algorithm. The turning point came in 2007
when Netflix launched its streaming services and delved into
original content creation. Fast forward to 2016, and Netflix
boasted a subscriber base exceeding 50 million, solidifying its
status as a global force in the video-on-demand industry.
Today, Netflix remains a dominant player, serving as a beacon
for digital marketers globally. The success story of this digital
media streaming giant offers valuable insights into how it
outshone its competitors in the market.
 Netflix

Background
Established in 1997 by Reed Hastings and Marc Randolph, Netflix began its journey as a
DVD rental company operating on a subscription model. Hastings and Randolph
conceptualized Netflix as a movie-centric e-commerce platform akin to Amazon. The
subscription model involved customers purchasing a subscription, creating wishlists for
movie rentals, and receiving DVDs delivered to their doors within approximately one
business day. The monthly subscription plan allowed users the flexibility to watch as many
movies as they desired. At its launch, Netflix didn’t have a wider movie catalog for users to
choose from, and the start was rather difficult

• In a timeline of two years from its onset, Netflix could only amass 300,000 subscribers.
• The high operational cost of shipping DVDs through the US Postal Service withdrew
Netflix into a financial crisis.
 Netflix

Netflix 2.0 - Start of Video Streaming Service in 2007

Evolving from its initial concept of a DVD rental business, Netflix expanded into a multi-
billion dollar streaming platform with a global reach. The early 21st century witnessed a
surge in high-speed internet availability and a subsequent decrease in costs, propelling
the video-on-demand (VOD) market in the 2000s, a wave that Netflix was quick to ride.

Initially contemplating an analog solution to replace DVD rentals, Netflix explored the
development of a portable device for downloading movies, but this approach, despite
offering quality, proved less convenient for users and was consequently abandoned. The
company shifted its focus to creating a direct streaming platform in 2005, and within the
next two years, the product became a reality.
 Netflix

Netflix 2.0 - Start of Video Streaming Service in 2007

Starting with just a thousand movies available for streaming in 2007, Netflix rapidly
expanded its library to over 10,000 within the subsequent two years. The growing
popularity of video-on-demand (VOD) played a crucial role in Netflix's international
growth beyond the United States. The expansion was so rapid that by 2016, Netflix had
successfully penetrated the global market, amassing over 100 million subscribers by the
end of 2017.
Netflix

The Historic Timeline of Netflix

 Netflix

Statement of the Problem

• Why Netflix made a transition from DVD

rentals to online streaming?
• How Netflix implement the shift to digital
video content?
• How Digital Transformation work for
Netflix?
• How did Netflix rise through Digital
Transformation?
 Netflix

Netflix Target Audience

Netflix caters to a broad demographic, primarily focusing on young, technologically

adept individuals and anyone with digital access. The platform attracts users across
various age groups and demographics, with a significant portion comprising
teenagers, college students, entrepreneurs, and working professionals. To broaden
its user base, Netflix actively pursues content expansion and personalization
initiatives. Additionally, the platform differentiates between the kids' and adults'
audiences, tailoring content to suit different maturity levels.
 Netflix

Key Principles
Netflix serves as a remarkable illustration of an integrated marketing strategy,
characterized by its cohesion, flexibility, and customer-centric approach, aiming for
maximum impact. The platform adopts a model centered around the customer,
striving to provide a seamless viewing experience. Employing integrated marketing
techniques for precise targeting, Netflix effectively utilizes content marketing for
data analytics

• Customer-Centric Focus
• Integrated Viewing Experience
• Innovation
 Netflix

Digital Marketing Strategy of Netflix

Netflix's marketing approach serves as a clear illustration of innovation in the
context of contemporary technological advancements. The platform consistently
adapts to market demands and user preferences, showcasing a commitment to
change. The dynamic evolution of its marketing tactics over time stands out as a
fundamental driver of its success.

Netflix demonstrates that establishing a strong connection with customers is

attainable through continuous analysis and optimization. In essence, the platform's
advertising strategy embodies agility, robust data collection, user-centric principles,
personalization, and unwavering dedication. Both major and minor brands can take
inspiration from such a strategy to enhance brand visibility and market value.
 Netflix

The situation escalated to the point where Hastings found himself compelled to
offer stakes of up to 49% to competitors like Blockbuster and Amazon.
Unfortunately, none of the negotiations proved successful. During that period,
Blockbuster held a prominent position in the movie-rental industry, operating
physical stores where customers could walk in to rent or buy DVDs. In contrast to
Netflix, Blockbuster adhered to a more traditional business model.

In a significant turnaround, Netflix reduced its reliance on postal services and

established a logistical network with over 50 warehouses dedicated to DVD
distribution. Concurrently, the platform introduced the Cinematch
recommendation system in 2000 for DVD rentals. This systematic analysis of users'
DVD-rental history aimed to provide more accurate movie suggestions, enhancing
customer engagement. The online rental model disrupted traditional video store
establishments, propelling Netflix's subscriber count to 6.3 million by 2006.
 Netflix

Digital Transformation of Netflix

By the end of the 2000s, Netflix had achieved a substantial market capitalization in
the media and entertainment sector. The digital revolution orchestrated by Netflix
not only disrupted the existing market but also instituted a new and more
streamlined order. This transformation gained momentum with the widespread
availability of high-speed internet and the encouragement of user-friendly
interfaces and interoperability under the Web 2.0 era. Let's delve deeper into the
specific measures Netflix undertook to undergo its digital transformation.
 Netflix

Netflix Recommendation Algorithm

While operating as a DVD rental service reliant on postal mail, Netflix had
implemented a recommendation system called Cinematch to bolster customer
engagement and ensure a dynamic movie request queue. However, the shift to
direct streaming necessitated a revamp of the recommendation algorithm. The
updated goals aimed to make the streaming platform more captivating and
improve the precision of movie suggestions. To reform the Netflix recommendation
algorithm, the following roadmap was pursued.
• Availability of Cache Data
• Metadata Implementation
• A/B Tests
 Netflix

Netflix Recommendation Algorithm

• Availability of Cache Data - The streaming platform left behind lots of cache data
that was accessed to better the algorithm. The data, explicit, through likes and
wishlist options, and implicit, through user behavior were extrapolated into
recommendations.
• Metadata Implementation - All content on the streaming platform was
assigned with distinctive metadata. The metadata from the collected cache was
further used to compile identical metadata of other movies. For instance, the
metadata could be covered in the movie genre like thriller or romance, or the
actors. On this basis, movies with similar components were thus recommended.
 Netflix

Netflix Recommendation Algorithm

3. A/B Tests - Apart from these, Netflix goes over the board to improve customer
experience. This is done through the A/B tests which is a manual evaluation of how
users interacted with the content. To do so, Netflix picks a random set of users and
classifies them into A and B to monitor their behavior against given layouts. The
layout that records more interaction is then rolled out across the platform.
 Netflix

Main Findings

Netflix employs a marketing approach that relies on data, personalization, and a

strong focus on customer needs. Their digital marketing strategy encompasses
multiple channels, such as social media, print media, websites, YouTube, billboards,
and other various platforms, as outlined in the Netflix marketing plan, to effectively
promote their content.

Different tactics like the hyper-personalization, meme marketing, guerilla

marketing, moment marketing and staying on the current trends.
Conclusion

In a highly competitive market, Netflix is a market leader. Technology is

continuously progressing and competitors are still entering the market. In order to
retain its benefit, the organization was able to introduce innovative tactics so far.
But the biggest threats they are currently facing is, increasing competition in
the market, government influences, and some television providers are offering free
content. But still, Netflix can expand its international market in order to survive in
the competition.
Netflix made the transition from DVD rentals to online streaming due to
evolving consumer behavior and technological advancements. The shift was driven
by the increasing demand for instant, on-demand content accessible across various
devices.
Conclusion

Additionally, they implemented the shift to digital video content by investing in

developing a robust streaming platform. They expanded their content library,
negotiated licensing deals with studios, and created original programming.
Simultaneously, they focused on improving streaming technology to provide a
seamless user experience across devices.

They also focus on content creation is a key aspect of its digital transformation.
The company has shifted its strategy from acquiring content to producing original
content, which has helped it to differentiate itself from its competitors and provide a
unique viewing experience for its customers.
Conclusion

Digital transformation for Netflix involved leveraging technology to enhance

various aspects of their business. Netflix's digital transformation was a multifaceted
strategy that combined technological innovation, data-driven insights, and strategic
content decisions to stay ahead in the rapidly evolving digital entertainment
landscape.
THANKS
FOR LISTENING