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Strategy implementation(chapter 7)

Strategy implementation involves putting strategies and policies into action through the development of programs, budgets, and procedures. It includes operationalizing strategy, designing organizational structure, and establishing management systems to ensure effective resource planning and allocation. Various organizational structures such as functional, multi-divisional, and matrix structures are discussed, each with its own advantages and challenges in facilitating strategy execution.

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2 views

Strategy implementation(chapter 7)

Strategy implementation involves putting strategies and policies into action through the development of programs, budgets, and procedures. It includes operationalizing strategy, designing organizational structure, and establishing management systems to ensure effective resource planning and allocation. Various organizational structures such as functional, multi-divisional, and matrix structures are discussed, each with its own advantages and challenges in facilitating strategy execution.

Uploaded by

Suman Shrestha
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Strategy implementation (Chapter 7 )

“ strategy implementation is the process by which strategies and policies are put into action through the development of
programs, budgets and procedures.

Figure 2Program

Figure 1 : Budget

Figure 3Procedure
Nature :
1) Wide range of actions and skills  integration process  Comprehensive scope

s.n. Strategy formulation Strategy implementatioin


Input Intellectual process Operational process
Judgement & analytical skills Requires management and leadership skills
What? Planning of Work + change Working of plan + making change
Selection of alternative Putting selected alternative to action
Focus Effectiveness Efficiency & effectiveness
Co- Among strategic managers Among divisional and functional managers.
ordination
Process of strategy implementation
1. Operationalize Strategy : into action, people needs to know what exactly needs to be done.
Figure 4: What specific actions to do??

a. Set annual objectives (specific, Measurable, acceptable,


Realistic, time bound)
b. Formulate functional strategies for each functional department. Short
term and specify specific activities. Facilitates co-ordinatioin
c. Formulate business policies : guides decision making (written or
unwritten), for routine problems, facilitates co-ordination, stability,
efficient utilization of resources
d. Develop Programmes , budgets and procedures : allocate
resources(Financial, human resource, technological) as per priorities &
annual objectives. Programmes Consists of projects and functional
activities integrated.

2. Designing Organization Structure : strategy determines structure in major way, it provides necessary
infrastructure and administrative mechanism that enable implementation of chosen strategy. It defines levels
and roles in an organization:

Figure 5: Administratition & reporting

Figure 6 : Infrastructure

It includes :
Figure 7: Grouping of Jobs
a. Job design : content of job to implement strategy, identify routine and critical jobs for strategy
b. Grouping of
jobs : in departments. Bases can be function, division, customer etc. assigned to peoples and positions
c. Establishing reporting Relationships : authority and responsibility are established. Establish hierarchy.
Integration of jobs done.

Types of Structure : should be strategy friendly.


Simple structure : personal control by individual, assited by assistants.

a. Direct control speedy decision making, motivated owner(low motivated subordinates), personal
relationships built.
b) Functional structure
a. Promotes full-utilization of most upto date technical skills, human resource and promotes efficiency.
Fine for single business entity , vertically integrated.

Clear defined authority and responsibility, direct Overburden with routine tasks
supervision, delegation allowed, career
development
functional expertise & efficiency Neglect strategic issues, functional
issues are emphasized.
Environmental change is difficult
Simple and inexpensive Functioinal rivalry, poor coordination

c) Multi –divisional Structure : For each product line; self contained divison based on customer, project, tech or
geo. Multi product entity makes customized product market strategy for each divisioin.

Tailored structure for each market, Independent business Poor


customer, products strategic coordination  Conflicts between
control is easy & possible divisions
management development is possible
Accountability, performance measure Costly due to duplication of activity
enabled
Flexible, related products , customers Head quarter driven control system
can be added.
Decentralized

d) Strategic Business Unit Structures (SBU) : grouping of business units based on some strategic elements
common to each (e.g. competitors, missioin, common need to compete globally, key success factors, tech
oppurtunities). It is for large business with many product lines. Each SBU represents a basket of business and
has following characteristics :
a. Distinct Market Segment
b. Separate competitors
c. Separate managers
Improves coordination between Creates extra layer of
divisions with similar product management  Extra cost
lines with common strategic
concerns facilitates strategic
planning and control
Accountability for performance Competition for resources among
SBU  conflict  low
coordination
Management development is
facilitated within SBU.

e) Holding co. structure : it is an investment company. It has shareholding in a variety of separate business.
Subsidiary are part of parent co. but operate independently. Relationship focus on financial issues.

Risk spread from holding co + Lacks synergistic effects. +


ease of divestment duplication of efforts and
resources
Operate flexibly and It has centralized control  lack
independently  quick response of communication and
to local problems coordination among subsidiaries.
Focused Financial control : Low Risk of divestment is high.
central level overheads + cheap
finance from local market
Ease of divestment for holdin co.

f) Project based structure : project is planned investment undertaken to deliver an output. Temporary (for only one
time, defined starting and ending point). Each projects has it’s own functional departments.

Focuses on project objectives Duplication of efforts and


resources
Clear authority and responsibility Lack of job security for
employees. Commitment of
employees can be clear.
Flexibility in operation, resources
can be availed when necessary.
Communication is effective with
in project.

g) Matrix structure(Project Structure):


It is combination of structures. superimpose project structure on functional structure. Integrates knowledge and skills. It
temporarily assign people from functional department to projects. It provides skills and resources where and when they
are most needed. Depends on vertical and horizontal flow of authority and communication.

Quick environmental adaptation. Two bosses : functional manager


+ project manager  Decision
making is slower. There is
confusion and contradictions 
conflicts
Flexibility organizationwide. Power struggle for resources
Accommodates Wide variety of takes place.
projects with clear objectives.
Effective , Efficiency in utilization Duplication of resources
of resources.
Management development by Costly and difficult to implement,
involvement in decisions  complex.
creativitiy is fostered.

h) Team based structure

Collective performance (Complementary skills)+ little /no supervision+ shared leadership roles Co-ordinated Individual
effors give synnergy . combines both horizontal and vertical co-ordination.

Members work collectively to


achieve team objective
No rigid hierarchy.--> Team has Team effectiveness is situational
authority to make decisions
Employee talents and skills are Team may work on island.-->
better utilized  Performance Conflict may arise with team and
evaluation is by members departments.--> Duplicate efforts
themselves  Productivity and of department.
satisfaction is high.

i) Networked structure : series of independent business units linked together with computers in an information
system that designs, produces and market products. It is composed of series of project groups or collaborations
linked by networks. Most activities are outsourced. Headquater acts as brokers electronically connected t
completely owned divisions, subsidiaries and independent companies.

Flexibility to adapt to changing Too many partners cause


environment. conflicts
Takes advantages of efficeiency Information sharing with
of expert firms through networked firms can create
outsourcing competitors.
Allows concentration in
distinctive competencies.

3. Establishing Management system


4. Exercising Strategic change

Resource planning: based on annual objectives & action plans

Action plans identify : Functional Activities + Time frame + Accountability + Outcomes.


Resource Planning at corporate Level

1. Assess Available resources :


2. Forecast Future resource needs : experience, forecaseting techniques, judgement
3. Identify resource Gap : Needed resources – Available resources
4. Determine and evaluate future sources : internal & external sources(bank, capital market)  evaluate risk ,
returns and cost of resources.
5. Select future sources
6. Formulate resources action plans : network Analysis technique, shows interrelationships among all activities of a
strategy.
7. Prepare budget : to allocate resources to activities. Detail of how resources will be used. Also works as standard
control of performances.

Resource planning at Business Level :

1. Top down approach : top management decides requirements and allocates resources to SBU.
2. Bottom up approach : Operating level at SBUs determine resource requirements. Resources may be overstated.
3. Mixed approach : mix of top down and bottom down , resources allocated on basis of strategic
budgeting.interactive form of decision making. Negotiations takes place.

Methods for resource allocation to SBUs.


1. Strategic budgeting

2. Capital budgeting

3. programme budgeting

Zero-based budgeting

BCG matrix

Product life cycle – based budgeting

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