June 2024

LIVE VIRTUAL CLASSES

BOARD OF STUDIES, ICAI

CA INTERMEDIATE
“PAPER 6B : STRATEGIC MANAGEMENT”
TOPIC NAME – STRATEGY IMPLEMENTATION AND
EVALUATION
Faculty Name: CA ARJIT SETHI
Let us understand the syllabus
flow of Strategic Management

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Welcome to the Fifth Chapter
What will we study in this Chapter?

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The process of Strategic Management

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The process of Strategic Management
Chapters 1 to 4
Growth
Strategy

Internal Growth External Growth

Mergers and Strategic

Intensification Diversification
Acquisitions Alliance

Market
Concentric Conglomerate Innovation Horizontal
Penetration

Market Vertical
Horizontal Vertical
Development Integration

Product
Forward Co-generic
Development

Diversification Backward Conglomerate

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Strategy Execution
Installing information
In most situations,
and operating systems
strategy-execution Motivating people to
that enable company
process includes the pursue the target
personnel to better carry
following principal objectives energetically.
out their strategic roles
aspects:
day in and day out.

Developing budgets Using the best-known Creating a company

that steer ample practices to perform core culture and work climate
resources into those business activities and conducive to successful
activities critical to pushing for continuous strategy implementation
strategic success improvement. and execution.

Exerting the internal

Ensuring that policies
Staffing the leadership needed to
and operating procedures
organisation with the drive implementation
facilitate rather than
needed skills and forward and keep
impede effective
expertise. improving strategy
execution.
execution.

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Strategy Evaluation
The final stage of strategic management process – evaluating the
company’s progress, assessing the impact of new external
developments, and making corrective adjustments – is the trigger
point for deciding whether to continue or change the company’s
vision, objectives, strategy, and/or strategy-execution methods.

So long as the company’s direction and strategy seem well

matched to industry and competitive conditions and performance
targets are being met, company executives may decide to stay the
course.

Simply fine-tuning the strategic plan and continuing with ongoing

efforts to improve strategy execution are sufficient

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We will deep dive into from Stage 3

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Stages 3 & 4
Formulation and Implementation
Strategic Planning

Operational
Strategic Management

FORMULATION
Planning
Strategic
Uncertainty

Relationship
Formulation vs
Implementation
Difference
IMPLEMENTATION
Forward
Linkages & Issues
Backward

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Stages 3 & 4
Formulation and Implementation

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 Stages 3 & 4
Formulation and Implementation
Strategic uncertainty and how Flexibility: Organizations can build flexibility into their strategies to quickly adapt to
to deal with it? changes in the environment.

Strategic uncertainty refers to Diversification: Diversifying the organization's product portfolio, markets, and
the unpredictability and customer base can reduce the impact of strategic uncertainty.
unpredictability of future events
and circumstances that can Monitoring and Scenario Planning: Organizations can regularly monitor key indicators
impact an organization's of change and conduct scenario planning to understand how different future scenarios
strategy and goals. It can be might impact their strategies.
driven by factors such as
changes in the market, Building Resilience: Organizations can invest in building internal resilience, such as
technology, competition, strengthening their operational processes, increasing their financial flexibility, and
regulation, and other external improving their risk management capabilities.
factors.
Collaboration and Partnerships: Collaborating with other organizations, suppliers,
customers, and partners can help organizations pool resources, share risk, and gain
access to new markets and technologies

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Stages 3 & 4
Formulation and Implementation

The correlation
between
Formulation &
Implementation,
makes or breaks a
strategy

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Stages 3 & 4
Formulation and Implementation
Square A is the situation where a company apparently has formulated a very
competitive strategy but is showing difficulties in implementing it successfully.
This can be due to various factors, such as the lack of experience (e.g. for
startups), the lack of resources, missing leadership and so on. In such a
situation the company will aim at moving from square A to square B, given they
realize their implementation difficulties.

Square B is the ideal situation where a company has succeeded in designing a

sound and competitive strategy and has been successful in implementing it.

Square C is denotes for companies that haven’t succeeded in coming up with a

sound strategy formulation and in addition are bad at implementing their
flawed strategic model. Their path to success also goes through business
model redesign and implementation/execution readjustment

Square D is the situation where the strategy formulation is flawed, but the
company is showing excellent implementation skills. When a company finds
itself in square D the first thing, they have to do is to redesign their strategy
before readjusting their implementation/execution skills.

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Stages 3 & 4
Formulation and Implementation
EFFICIENCY vs EFFECTIVENESS

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Stages 3 & 4
Formulation and Implementation
EFFICIENCY vs EFFECTIVENESS

Efficient = Doing the Thing Right

Effective = Doing the Right Thing

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Stages 3 & 4
Formulation Vs. Implementation

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 Linkages & Issues in Strategy Implementation
Noteworthy is the fact
that while strategy Forward Linkages: The different elements in strategy formulation starting with objective setting through
environmental and organizational appraisal, strategic alternatives and choice to the strategic plan determine
formulation is primarily the course that an organization adopts for itself. With the formulation of new strategies, or reformulation of
an entrepreneurial existing strategies, many changes have to be affected within the organization. For instance, the organizational
activity, based on structure has to undergo a change in the light of the requirements of the modified or new strategy. The style of
leadership has to be adapted to the needs of the modified or new strategies. In this way, the formulation of
strategic decision- strategies has forward linkages with their implementation.
making, the
implementation of
strategy is mainly an Backward Linkages: Just as implementation is determined by the formulation of strategies, the formulation
process is also affected by factors related with implementation. While dealing with strategic choice, remember
administrative task that past strategic actions also determine the choice of strategy. Organizations tend to adopt those strategies
based on strategic as which can be implemented with the help of the present structure of resources combined with some additional
well as operational efforts. Such incremental changes, over a period of time, take the organization from where it is to where it
wishes to be
decision-making.

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 Linkages & Issues in Strategy Implementation
Programmes lead to the
The different issues involved in formulation of projects. A
strategy implementation cover project is a highly specific
The strategic plan devised by
practically everything that is programme for which the time
the organization proposes the Strategies should lead to
schedule and costs are
included in the discipline of manner in which the strategies formulation of different kinds of
predetermined. It requires
management studies. A strategist, could be put into action. programmes. A programme is a
allocation of funds based on
therefore, has to bring a wide Strategies, by themselves, do broad term, which includes
capital budgeting by
not lead to action. They are, in a goals, policies, procedures,
range of knowledge, skills, sense, a statement of intent. rules, and steps to be taken in
organizations. Thus, research
attitudes, and abilities. The and development programme
Implementation tasks are putting a plan into action.
implementation tasks put to test may consist of several projects,
meant to realise the intent. Programmes are usually
each of which is intended to
the strategists’ abilities to allocate Strategies, therefore, have to supported by funds allocated
achieve a specific and limited
resources, design organizational be activated through for plan implementation.
objective, requires separate
structure, formulate functional implementation.
allocation of funds, and is to be
policies, and to provide strategic completed within a set time
leadership. schedule

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Strategic Change through
Digital Transformation
Kurt Lewin Model

Recognize the Create a • Unfreeze the Situation

need for shared vision
change of change • Change to New Situation

• Compliance – Reward &

Punishment
• Identification – Role Models
• Internalization – Mindset Shift

Institutionalize • Refreeze the Situation

the Change

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Strategic Change through
Digital Transformation
Defining the Change: This involves clearly outlining
the current state, the desired future state, and the
Digital transformation isn't just about specific changes needed to bridge the gap.
new tech. It's a strategic overhaul to
leverage technology for a competitive
edge. Assessing the gaps in current systems and
processes
Think: automating tasks, using data for
smarter decisions, and creating
customer-centric digital experiences.
Creation a road map of what needs to be changed
This requires rethinking strategy, and how. Develop a well-defined plan with
fostering innovation, and embracing milestones and timelines.
change to stay ahead in a rapidly
evolving digital landscape.
Implementation & Support: Provide training,
resources, and ongoing support to help people
adapt to the new way of working.

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Best Practices for Change Management
Begin at the Top
Leadership needs to be convinced and be able to convince

Ensure change is “both”

necessary and desired
Not just do it for being a cool org, do it when you really feel you need it

Reduce Disruption Time it properly, Give Staff Tools, Encourage idea flow, Empower change makers,
Ensure IT has a strong presence and knowledge

Encourage
Communication
2 Way, 3 Way Communication

Recognize that change is a

NORM not the EXCEPTION
Once started it has to happen – and business needs to adapt well in time

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Organizational Framework

McKinsey 7s Model
The McKinsey 7s Model is a framework used to analyze an
organization's overall health and ability to adapt. It focuses
on seven interconnected elements:

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McKinsey 7s Model
Organizational Framework
Hard S’s

•Strategy: The long-term goals and competitive advantage plan.

•Structure: The organizational hierarchy and reporting lines.
•Systems: The formal processes, workflows, and technology infrastructure.

Soft S’s

•Shared Values: The core beliefs, principles, and culture of the company.
•Skills: The capabilities and expertise of the workforce.
•Style: The leadership approach, decision-making style, and communication patterns.
•Staff: The human resources of the organization, including talent acquisition and development.

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 McKinsey 7s Model
Organizational Framework
Hard S’s

•Strategy: The long-term goals and competitive advantage plan.

The key idea is that all these elements are
•Structure: The organizational hierarchy and reporting lines.
interrelated. A change in one area (e.g.,
•Systems: The formal processes, workflows, and technology infrastructure. implementing new technology) will likely
necessitate adjustments in others (e.g.,
Soft S’s employee training, updated workflows). By
understanding these connections, companies
•Shared Values: The core beliefs, principles, and culture of the company. can manage change more effectively and
•Skills: The capabilities and expertise of the workforce. achieve sustainable success.
•Style: The leadership approach, decision-making style, and communication patterns.
•Staff: The human resources of the organization, including talent acquisition and
development.

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Organizational Structures
Org structure is the foundation of how work gets done. It defines
who does what, who reports to whom, and how teams collaborate.
A well-designed structure fosters clear communication, efficient
decision-making, and promotes accountability. The wrong
structure, however, can lead to confusion, duplication of effort, and
hinder overall performance.

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Organizational Structures
Chandler’s Org Strategy
Structure Relationship

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Organizational Structures
• Simple
• Functional
• Divisional
• Multi-Divisional
• SBU
• Matrix
• Network
• Hourglass

Types of Org
Structures

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 Organizational Structures - Simple
A simple organizational structure, also fostering a strong sense of ownership andauthority concentrated at the top can
known as a flat structure, is ideal for teamwork. create a bottleneck, hindering innovation
small businesses and startups. It features•Open Communication: Direct lines of and growth.
few levels of management, with communication between employees and •Lack of Specialization: Employees
employees reporting directly to a leader leadership allow for clear instructions wearing multiple hats might lack
or owner. It offers a culture of agility and
and unfiltered feedback. specialized skills needed for complex
flexibility, allowing for quick decision- tasks.
making and rapid adaptation. However, simplicity has its limits. As the
organization grows, a simple structure Despite these limitations, the simple
+Positives aspects of Simple Structure can become overloaded. Here are some structure offers a strong foundation for
Flat Hierarchy: Decision-making authority challenges to consider: startups and small businesses. It fosters
rests with the top leader, eliminating •Limited Scalability: Managing a large a dynamic and adaptable environment,
lengthy approval processes. workforce with few managers becomes perfect for navigating the uncertainties
•Cross-Functional Collaboration: difficult, potentially leading to employee of a new venture.
Employees wear multiple hats and burnout and a lack of direction.
collaborate directly across functions, •Knowledge Bottleneck: Decision-making

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Organizational Structures - Functional
A functional structure groups employees based on
their skills and expertise. Imagine departments
like marketing, finance, and human resources.
Each department focuses on a specific function,
allowing for specialization and efficiency.

This structure promotes clear lines of

communication within departments and facilitates
knowledge sharing among similar roles. However,
it can create silos between departments, making
collaboration across functions a challenge.

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Organizational Structures - Divisional

Geography

Product/Service

Based on
Customer

Process

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Organizational Structures - Divisional
Divisional vs SBU
Divisional vs Functional
Divisions: Internal Focus, Follows Orders
Functional: Groups by expertise (marketing,
finance, etc.), promoting efficiency within •Organized by product, customer segment, or region.
departments but potentially creating silos •Receive strategic direction from headquarters.
between them. •Limited autonomy in decision-making.
•Focuses on internal efficiency within its assigned area.
Divisional: Organizes by product, customer,
or region, fostering autonomy and market SBUs: Mini-Companies, Act Independent
focus but potentially leading to duplicated
functions and complex communication. •Function as self-contained businesses with their own strategy.
•Develop and implement their own plans to compete in their market.
•More control over resources and decision-making.
•Act with greater autonomy and a market-driven focus.

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Organizational Structures – Multi Divisional
A divisional structure and an SBU (Strategic Business
A multidivisional structure splits a large Unit) structure are similar, but with a key difference:
company into independent divisions, autonomy and strategic focus.
each focused on a specific product or
market. Think of it as a corporation Divisional: Focused on internal organization. Divisions
with mini-companies inside. Each are created based on functions (marketing, finance)
division has its own management team or product types (clothing, electronics). They have
and resources, allowing for faster limited autonomy and follow strategies set by HQ.
decision-making and market focus.
Corporate HQ provides oversight and SBU: Focused on the external market. SBUs are self-
shared services but gives divisions contained units operating like mini-companies. They
autonomy. This fosters specialization have their own strategies, profit & loss responsibility,
and flexibility but can create silos and and compete in specific markets.
duplication of effort. In short, SBUs are a more empowered version of
divisions, designed for a diversified company to
compete effectively in different markets.

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Organizational Structures – SBU

• It is a single business or a collection of related businesses

which offer scope for independent planning and which
might feasibly standalone from the rest of the organization.
The three most
important
• It has its own set of competitors.
characteristics of a
SBU are:
• It has a manager who has responsibility for strategic
planning and profit performance, and who has control of
profit-influencing factors

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Organizational Structures – SBU

A strategic business unit (SBU)

structure consists of at least three
levels, with a corporate headquarters
at the top, SBU groups at the second
level, and divisions grouped by
relatedness within each SBU at the
third level.

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The attributes of an SBU and the benefits a firm may derive by using the SBU Structure are as follows;

Organizational Structures – SBU

Grouping method: SBUs are a scientific way to group businesses within a large corporation for strategic planning.

Improvement: It's better than grouping by geographic location.

Independent planning: Each SBU can have its own distinct strategic plan.

Grouping criteria: Related businesses (products or services) are grouped together.

Benefits:
Removes confusion in strategic planning. Allows for better allocation of resources. Makes setting priorities easier.

SBU characteristics:
Separate mission, objectives, competitors, and strategy. Has its own CEO responsible for profit and planning.

Relatedness: SBUs can be related in different ways:

Similar technologies Similar products/services Similar target markets Similar marketing skills

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Organizational Structures – Matrix Structure
A matrix structure is complex due to its dual
reporting lines and communication channels.
This can lead to higher costs and require
more effort to manage effectively.

However, it is used in various industries

because it offers advantages like clear project
goals, better communication, and easier
project termination.

Matrix structures are becoming more popular

as companies diversify and require focus on
multiple areas like products, customers, and
technology. It works well when these areas
hold similar strategic importance.

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Organizational Structures – Network

OUTSOURCING

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Organizational Structures – Hourglass

Startups
&
Lean Organisations

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Organizational Culture
An organization's culture, the shared values To manage a problem culture, leaders must first
and behaviors of its employees, is crucial. It diagnose it.
impacts employee satisfaction, productivity,
and even customer perception. • Openly listen to employee concerns and conduct
surveys. Then, take concrete steps.
A positive culture fosters a sense of • Address toxic behaviors through clear policies and
belonging, purpose, and motivation, leading enforcements.
to higher engagement and lower turnover. • Promote communication through open forums and
encourage collaboration.
Conversely, a problem culture, marked by • Celebrate successes and recognize positive
negativity, blame, or poor communication, contributions.
can cripple morale and success. • Finally, lead by example – embody the desired culture
in your actions and decisions.
By ensuring a positive, healthy environment,
one can transform your organization's
culture from a burden to a powerful asset

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 A leader is best when people barely know he

Strategic Leadership exists, when his work is done, his aim

fulfilled, they will say: we did it ourselves.

Managers have five leadership roles to play in pushing for good strategy execution:

1. Staying on top of what is happening, closely monitoring progress, solving out issues, and learning what
obstacles lie in the path of good execution.

2. Promoting a culture of esprit de corps that mobilizes and energizes organizational members to execute strategy
in a competent fashion and perform at a high level.

3. Keeping the organization responsive to changing conditions, alert for new opportunities, bubbling with
innovative ideas, and ahead of rivals in developing competitively valuable competencies and capabilities.

4. Exercising ethical leadership and insisting that the company conduct its affairs like a model corporate citizen.

5. Pushing corrective actions to improve strategy execution and overall strategic performance

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 A leader is best when people barely know he

Strategic Leadership exists, when his work is done, his aim

fulfilled, they will say: we did it ourselves.

Transactional Leadership Style

Focus: Efficiency and meeting Focus: Inspiration and growth.
established goals. Leaders rely on Leaders inspire followers to reach
clear expectations, rewards, and their full potential and work towards
punishments to motivate followers. a shared vision that goes beyond

Transformational Leadership Style

just meeting basic goals.
Motivation: Appeals to self-interest.
Uses rewards and punishments to Motivation: Appeals to follower
ensure tasks are completed as values, ideals, and a desire for
expected. personal growth. Creates a sense of
purpose and meaning in the work.
Relationship: More transactional
and focused on task completion Relationship: Builds strong, trusting
rather than personal development. relationships with followers. Acts as
a mentor and coach, fostering
Outcomes: Effective for maintaining development.
stability and achieving short-term
goals. May limit innovation and Outcomes: Increased innovation,
employee growth. creativity, and employee
engagement. Drives long-term
organizational success and change.

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Strategic Control
The process of control has the following elements:

(a) Objectives of the business system which could be operationalized into measurable and controllable
standards.

(b) A mechanism for monitoring and measuring the performance of the system.

(c) A mechanism
(a) (i) for comparing the actual results with reference to the standards
(b) (ii) for detecting deviations from standards and
(c) (iii) for learning new insights on standards themselves.

(d) A mechanism for feeding back corrective and adaptive information and instructions to the system,
for effecting the desired changes to set right the system to keep it on course

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Strategic Control
Premise Control: This type focuses on the underlying assumptions behind the
organization's strategy. It involves regularly checking if these assumptions (about
market trends, competition, etc.) are still valid. If not, the strategy might need
adjustments to reflect the changed reality.

Strategic Surveillance Control: This type focuses on continuously scanning the

external environment for potential changes. It involves using information sources like
industry reports, conferences, and competitor analysis to identify emerging trends
and threats that could impact the organization's strategy.

Special Alert Control: This is a rapid response system used for unexpected and
significant events. It deals with situations that could drastically impact the
organization's performance or survival, requiring immediate action and potentially a
strategic shift.

Implementation Control: This control monitors the actual execution of the strategic
plan. It assesses if actions and projects are happening as planned, resources are
allocated properly, and if any adjustments are needed during the implementation
phase.

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Strategic Performance Measures
A company's performance depends heavily on execution of strategy.
Companies that continuously outperform their competitors are those who
execute well.

Executives in a variety of businesses should explore about utilizing strategic

performance measurement (SPM).

SPM is a method that increases line executives' understanding of an

organization's strategic goals and offers a continuous system for tracking
progress towards these objectives using clear-cut performance
measurements.

SPM helps to eliminate silos by establishing a common language among all

divisions of the organisation so they may communicate openly and
productively.

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Strategic Performance Measures
Financial Measures: Track Customer Satisfaction
profitability and ability to Measures: Gauge customer
generate income. happiness and loyalty.

Market Measures: Assess Employee Measures: Evaluate

competitiveness and employee satisfaction and
customer acquisition. retention.

Innovation Measures: Track Environmental Measures:

ability to develop new and Assess impact on environment
creative products. and sustainability efforts.

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Strategic Performance Measures – how to
choose the right ones?
Organizations should choose strategic performance measures that are aligned with their goals and objectives and
that provide relevant and actionable information. In selecting the right measures, organizations should consider the
following factors:

Relevance: The Data Timeliness: The

Data Availability: The
measure should be measure should be
measure should be Data Quality: The
relevant to the based on data that is
based on data that is measure should be
organization's goals and current and up-to-date,
readily available and based on high-quality
objectives and provide enabling organizations
can be collected and data that is accurate
information that is to make informed
analyzed in a timely and reliable.
actionable and decisions in a timely
manner.
meaningful. manner

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 THANK YOU

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