Strategy Implementation Unit 11

UNIT 11: STRATEGY IMPLEMENTATION

UNIT STRUCTURE
11.1 Learning Objectives
11.2 Introduction
11.3 Concept of Strategy Implementation
11.3.1 Nature of strategy Implementation
11.3.2 Barriers to strategy Implementation
11.4 Model of Strategy implementation
11.5 Project Implementation: Project management and Strategy
Implementation
11.6 Procedural Implementation: Regulatory Mechanism in India
11.7 Resource Allocation
11.8 Let Us Sum Up
11.9 Further Reading
11.10 Answer to check Your Progress
11.11 Model Question

11.1 LEARNING OBJECTIVES

After going through this unit you will be able to:
• discuss the nature and concept of strategy implementation.
• describe the interrelationship between strategy formulation and
implementation.
• learn the role of project management in strategy implementation.
• describe the various factors that affects resource allocation.

11.2 INTRODUCTION
In the earlier units we have discussed about the various strategies at
corporate level and business level. In this unit we will go through the
implementation phase of the strategies, Implementation is the process that
turns strategies and plans into actions in order to accomplish strategic
objectives and goals. In this unit we are going to discuss the strategy

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implementation and its various aspects. Strategy implementation is the

transformation of chosen strategy into organizational action so as to achieve
strategic goals and objectives.
Let us now discuss the nature and barriers to strategy implementation,
model of strategy implementation, project implementation, procedural
implementation and resource allocation in the following sections.

11.3 CONCEPT OF STRATEGY IMPLEMENTATION

Strategy Implementation is described as a process or activity that ensures
the strategic planning. It is a dynamic , iterative and complex process which
comprises a series of decisions and activities by the mangers and
employees –affected by a number of interrelated internal and external factors
to turn strategic plans into reality in order to achieve strategic objectives.
Strategy implementation is a term used to describe the activities within an
organization to manage the execution of a strategic plan. Strategy
implementation is the manner in which an organization should develop,
utilize, and amalgamate organizational structure, control systems, and
culture to follow strategies that lead to competitive advantage and a better
performance.

Fig : 11.1 Strategy Implementation Process

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11.3.1 Nature of Strategy Implementation

Once the strategy is formulated the next practical stage is its
implementation. All the efforts of strategy formulation bear the fruits in
this phase.

Fig : 11.2 Strategy Implementation Setting

The real test of strategy is in its implementation. Only
implementation can determine the success or failure of a strategy. A
perfect strategy or plan may fail if it is not properly implemented. It is
rightly said that imperfect plan implemented effectively may deliver
better results. But there is close connection between strategy
formulation and its implementation.

Strategy formulation Strategy implementation

Strategy formulation to strategy Whereas strategy implementation to
implementation is forward linkage strategy formulation is backward
linkage.
It is an intellectual process It requires more practical and field
skills.
It involves organizing before action It involves managing during the action
It emphasizes on effectiveness It focuses on efficiency.

Strategy implementation depends on three sets of organizational

factors, namely, the structure of the organization, various functional
areas and operations and behavioural aspects. Strategic analysts
distinguish three types of implementation; structural implementation,

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functional or operational implementation and behavioural

implementation.
Strategy implementation is concerned with the managerial
exercise of putting a freshly chosen strategy into place. The
characteristics listed below highlights the nature of strategy
implementation:
• Action Orientation: Strategy implementation is essentially an
action oriented process. It involves putting the strategy into actual
use. While implementing strategy manager uses their skills,
intellectuals and knowledge and techniques of management process.
• Comprehensive: Implementation is wide in scope as it involves
everything that is included in the discipline of management.
• Demands skills: As implementation involves a wide range of
activities, a strategists has to have knowledge, skills, attitudes and
abilities of different kinds.
• Involvement: Strategy formulation involves top management
on the contrary strategy implementation requires the involvement of
middle level managers. For effective implementation of strategy the
plan must be properly communicated to and understood by the middle
level managers.
• Integrated Process: Implementation is not a process in
isolation. It requires a holistic approach. Each task and activity
performed is related to another, which creates interconnected network.

11.3.2 Barriers to Strategy Implementation

Research studies found that it is much difficult to implement
strategy than to formulate it. Majority of the time a good strategy fails.
Why it fails? There are many reasons behind it which can be treated
as barriers in effective strategy implementation.
A good strategy without proper implementation is like a poor
strategy or no strategy at all, however having a good strategic plan is
half the battle won, and the other half is won through effective strategy

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implementation. Effective implementation of strategies is important

to the success of every entity. In many of the studies, it is stated that
strategy implementation is much more difficult than strategy
formulation. A study in the Indian context done with 145 mangers
working in companies in and around Delhi attempted to uncover the
reasons why strategy implementation in unsuccessful. This study
listed 11 most frequently cited reasons of which the major ones are :
inadequate management skills, poor comprehension of roles,
inadequate leadership, ill defined tasks and lack of employee
commitment. Hrebiniak’s finding suggested that there are some
general and overarching issues that impede strategy implementation.
He stated that mangers are trained to plan and not to execute
strategies, thus the top mangers are reluctant to interfere in the task
of implementation .As formulation and implementation of strategies
are interdependent , they are being done by two other groups of people
in an organization. this makes the implementation phase takes a longer
time than formulation thus putting more pressure on the mangers to
show results. His findings pointed out the following major barriers :
• An inability to manage change
• Poor or vague strategy
• Not having proper guidelines
• Poor or inadequate information sharing
• Unclear responsibility and accountability
• Working against the organizational structure

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CHECK YOUR PROGRESS

Q1: Define Strategy Implementation

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Q2: Write the nature of strategy implementation
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11.4 MODEL OF STRATEGY IMPLEMENTATION

The following figure presents a model of strategy implementation that
attempts to capture the major themes in strategy implementation and the
activities that make each theme (discussed in the following paragraph).
The forward linkage from strategic plan guides the implementation process
and connects it to the proceeding phase of strategy formulation. The
feedback flowing in the reverse from the following step of strategy evaluation
and control moves through the implementation phase and goes back to
strategy formulation establishing the backward linkage.

Fig : 11.3 A model of strategy implementation

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Strategy implementation is the translation of chosen strategy into

organizational action so as to achieve strategic goals and objectives. Strategy
implementation is also defined as the manner in which an organization
should develop, utilize, and amalgamate organizational structure, control
systems, and culture to follow strategies. Such implementation leads to
competitive advantage and a better performance. Organizational structure
allocates special value developing tasks and roles to the employees. It also
indicates how these tasks and roles can be correlated so as maximize
efficiency, quality, and customer satisfaction-the pillars of competitive
advantage. But, organizational structure is not sufficient in itself to motivate
the employees.
An organizational control system is also required. This control system
equips managers with motivational incentives for employees as well as
feedback on employees and organizational performance. Organizational
culture refers to the specialized collection of values, attitudes, norms and
beliefs shared by organizational members and groups.
Excellently formulated strategies will fail if they are not properly implemented.
Also, it is essential to note that strategy implementation is not possible
unless there is stability between strategy and each organizational dimension
such as organizational structure, reward structure, resource-allocation
process, etc.
The major themes in strategy formulation are:
1. Activating Strategies: It serves to prepare the ground for managerial
tasks and activities of strategy implementation.
2. Managing change: Managing change is one of the core activity in
the strategy implementation. It deals with managing change in
complex situation.
3. Achieving effectiveness: The last theme in strategy implementation
is the outcome of the process. It covers functional and operational
implementation.

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11.5 PROJECT IMPLEMENTATION: PROJECT

MANAGEMENT AND STRATEGY
IMPLEMENTATION
To implement a project means to carry out activities proposed in the
application form with the aim toachieve project objectives and deliver results
and outputs. Its success depends on many internal andexternal factors.
Some of the most important factors are ; well organised project team and
effective monitoring of project progress and related expenditures.Overall
management has to be taken over by the project manager, who is
oftenemployed or engaged by the lead partner. The project management
has to have an efficient managementsystem and always has to be flexible
to current needs and changed situations, as the project is rarelyimplemented
exactly according to the initial plan.
Strategic planning is the act of creating short- and long-term plans to guide
an organization to continued and increasing success in the marketplace.
Project managers oversee specific projects ultimately designed to make
progress toward strategic planning objectives. Implementing projects —
putting planned projects into action — is important to both strategic planning
efforts and project managers in a number of ways. All managers can benefit
from understanding the importance of project implementation to strategic
planning and the project manager.
Project planning and implementation are two important aspects. Many
managers put all of their energy and efforts into ambitious planning. But
they do give enough thought to how goals actually will be achieved. Strategic
planning efforts essentially take place in a laboratory devoid of the range of
uncontrollable variables present in the real world. Certain things are beyond
control and everything will not go as per what organization thought it will be.
In this sense, even the best laid plans need correction and adjustment on-
the-fly, making project managers’ jobs that much more important.
Implementing projects is important for project managers and the strategic
planning process because it can reveal new issues and challenges that

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planner may not have anticipated, ultimately resulting in more refined

strategies, products and processes.
The fact is that the principles and techniques of project management have
a high relevance to the tasks of strategy implementation and it is actually a
techno-managerial function. The principles and techniques of project
management (knowledge of project formulation, implementation and
evaluation) can be applied to large scale as well as minor project within
organization.
Project management and strategy implementation:
Project management consist of five sequential processes which are:
initiating project, planning a project, executing, controlling and closing of
the project.
The alignment of project management and business strategy helps
organizations to focus on the right projects in order to achieve the desired
objectives. Project management is the key enabler of strategy
implementation within the organization.

Fig : 11.4 Strategy implementation though project management

Ref: Strategic Management Azhar Kazmi p 324

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When a firm links its project management process with strategy

implementation, it helps in creating a project oriented organization. But it
requires high level of coordination. Bigger project like creating a new
company, setting up a new factory or entering into foreign market requires
interacting with the regulatory authorities of the government. Many procedural
formalities needs to be carried out in these cases.

CHECK YOUR PROGRESS

Q3: What is Strategic Planning?

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Q4: What are the major themes in strategy formulation?
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11.6 PROCEDURAL IMPLEMENTATION:

REGULATORY MECHANISM IN INDIA
Though it’s your own company, you have contributed your fund, in spite of
that you have to abide by rules and regulations. Regulation cannot be avoided
by any firm irrespective of its area or scale of operations. Regulation is a
fact of life for business and industries. Though government has adopted
policy of liberalization and globalization, there are still many control in the
form of rules and regulations. The purpose of deregulating was to loosen
the control. Old regulations are replaced with newer ones. E.g. rules and
regulations regarding environmental preservation and protection imposed
world wide. The concern for environmental protection led to the Kyoto
Protocol, requiring the energy industry to be regulated and controlled for

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emission of carbon dioxide. Firm need to deal with increased cost of

emission control. It gave birth to new industries of trading carbon credit.
Regulatory Mechanism in India:
No firm can plan its strategies without giving due consideration to the
procedural framework prevailing in the country where its willing to operate.
Plans, programmes and project have to be prepared and need to be
approved by the government at the local, state and central levels. The
procedural framework consists of a number of legislative enactments and
administrative orders. Commerce and industry in India is governed by
Constitution of India, the Directive Principles, Central, State and General
Laws.

Act Purpose

Securities Contracts (Regulation) To prevent undesirable transac-

Act, 1956 tions in securities by regulating the
business

To facilitate external trade and pay-

The Foreign Exchange Manage-
ments and top romote the orderly
ment Act (FEMA),1999
development and maintenance of
the foreign exchange market.

The Foreign Trade (Development To provide for development and

and Regulation) regulation of foreign trade by facili-
tating imports into and augmenting
Act, 1992
exports from India and for matters
connected herewith

The Industries Act, 1951 To empower the Government to

take necessary steps for the devel-
opment of industries; to regulate the
pattern and direction of industrial
development; and to control the
activities, performance and results
of industrial undertakings in the pub-
lic interest
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The Indian Contract Act, 1872 Governing legislation for contracts,

which lays down the general prin-
ciples relating to formation, perfor-
mance and enforceability of con-
tracts and the rules relating to cer-
tain special types of contracts like
Indemnity and Guarantee; Bailment
and Pledge; as well as Agency

The Sale of Goods Act, 1930 To protect the interest of buyers and
sellers

Indian Patents Act, 2005 To grant significant economic ex-

clusiveness to manufacturers of
patented products with some in-
built mechanisms to check ex-
treme causes of competition re-
striction
The Company Act, 1956 To regulate setting up and opera-
tion of companies in India: it regu-
lates the formation, financing, func-
tioning and winding up of compa-
nies
Competition Act, 2002 To ensure a healthy and fair com-
petition in the market economy and
to protect the interests of consum-
ers: aims to prohibit the anti-com-
petitive business practices, abuse
of dominance by an enterprise as
well as regulate various business
combinations such as mergers
and acquisitions

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The Trade Marks Act, 1999 To amend and consolidate the law
relating to trademarks, to provide for
registration and better protection of
trade marks for goods and services
and for the prevention of the use of
fraudulent marks
The Information Technology Act, To provide legal recognition for
2000 transactions carried out by means
of electronic data interchange and
other means of electronic commu-
nication, commonly referred to as
“electronic commerce”, which in-
volve the use of alternatives to pa-
per-based methods of communi-
cation and storage of information;
to facilitate electronic filing of docu-
ments with Government agencies
The Consumer Protection Act, To protect consumer rights and pro-
1986 (amended viding a simple quasi-judicial dis-
1993, 2002) COPRA pute resolution system for resolv-
ing complaints with respect to un-
fair trade practices

The Industrial Disputes Act, 1947 To facilitate investigation and settle-

ment of all industrial disputes re-
lated to industrial employees and
employers

The Factories Act, 1948 Umbrella legislation to regulate the

working conditions in factories.

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The Indian Trade Unions Act, 1926 To facilitate the registration of trade
unions, their rights, liabilities and
responsibilities as well as ensure
that their funds are utilized properly:
it gives legal and corporate status
to registered trade unions and also
seeks to protect them from civil or
criminal prosecution so that these
could carry on their legitimate ac-
tivities for the benefit of the work-
ing-class

The Bureau of Indian Standards Act, To set standards (quality, safety

1986 etc) for various kinds of products
to protect consumer safety

Government policies, laws, rules and regulations and procedures are

constantly under change, especially under the dynamic conditions as India
is adapting to international environment.
Labour Legislation Requirements:
An essential part of procedural implementation in any project or in a going
concern is that of labour legislation. For a company labour act as one of the
major resource for the purpose of strategy implementation. It is the
responsibility of the government to protect the interest of the labour force.
More than 150 laws are prevailing in India which relates to labour. They are
mainly classified as:
 Labour laws related to the weaker sections such as women and
children.
 Labour laws related to specific industries
 Labour laws related to specific maters such as wages, social
security, bonus etc
 Labour laws related to trade unions

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Over and above there are many rules and regulations relating to :
1. Licensing procedures
2. Securities and Exchange Board of India requirements
3. MRTP requirements
4. Foreign Collborations procedures.
5. Import and Export Requirements.
6. Patenting and Trade Marks requirements.
7. Environmental Protection and Pollution Control requirement and so
on..

11.7 RESOURCE ALLOCATION

Strategic plan can be put effectively into action with project implementation.
They wait for procedural implementation green signal to go ahead. But
nothing is possible without availability of adequate and timely availability of
resources. Resource allocation deals with procurement, allotment and
optimum use. Resource allocation is both one time and a continuous
process. Every project requires adequate amount of resources. Strategy
implementation deals with resource allocation as well. Financial and physical
resources are allocated through budgeting.
A. Strategic Budgeting:
The main instrument for resource allocation is a budget. It is used as a
planning, coordination and control tool by the management. There are three
approaches to resource allocation through budgeting. The first type is a top
down approach where resources are distributed through a process of
segregation down to the operating levels. Top management decides the
amount of resource allocation. This approach is used in an entrepreneurial
mode of strategy implementation. The second approach is bottom-up
approach where resources are allocated after a process of aggregation
from the operating level. It is used in participative mode of strategy
implementation. A third approach is mix of these two approaches and
involves an iterative form of strategic decision making between different
levels of management. This approach has been termed as strategic
budgeting.
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Budgeting is the means through which resources ‘are allocated to various

organisational units. However, the traditional budgeting which focuses just
on the past resource allocation as the basis is not useful for resource
allocation in any way because of the conditions, both external as well internal,
change making the past practices of resource allocation meaningless.
Therefore, when budgeting is used as a tool for resource allocation, it has
to be oriented to the objectives of the organisation and the way each unit of
the organisation will contribute to the achievement of these objectives. From
this point of view, following types of budgeting are more relevant:
1. Capital budgeting
2. Performance budgeting
3. Zero-base budgeting
4. Strategic budgeting.

Fig 11.5 : Making of a strategy budget

Ref: Azhar Kazmi, Strategic Management and Business Policy P. 335
A. Factors affecting Resource Allocation:
The resource allocation cannot be done on uniform basis. There are many
factors which affect the resource allocation, which are:
1. Objectives of the Organization: Setting up of objectives is complex
process. Objectives can be either explicit or implicit. The importance

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of a particular goal / tasks or objectives is judged by the employees

on the basis amount of resources allocation made by the firm.
Operative objectives tend to affect the pattern of resource allocation.
2. Preference of Strategists: The resource allocation is majorly affected
by the attitude of the strategists. Their preferences determine the
amount of resource allocation.
3. Internal Politics: Resource allocation is always considered as
possession power. Those department or businesses which are
powerful may get extra resource allocation.
4. Internal policies: Resources area a symbol of power. Internal policies
based on negotiations and bargaining affects resources allocation.
5. External influences :The demands of stakeholders also affect resource
allocation. They can be owners, suppliers, customers, employees,
bankers and community. Legal requirements may require additional
resources allocation. For example pollution control,safety and labour
welfare requirement.
B. Difficulties in Resource Allocation:
Resource allocation is a central management activity that allows for strategy
execution. Strategists have the power to decide which divisions,
departments, or SBUs are to receive how much money, which facilities,
and which executives. The primary tool for making resource allocations is
the budget process. Functional strategies are derived from business strategy
and provide directions to key functional areas within the business in terms
of what must be done to implement strategy.
In economics, resource allocation is the assignment of available resources
to various uses. The resources can be allocated by various means, such
as markets or central planning. In project management, resource allocation
or resource management is the scheduling of activities and the resources
required by those activities while taking into consideration both the resource
availability and the project time.
After resource mobilisation, resource allocation activity is undertaken. This
involves allocation of different resources financial and human among various
organisational units and subunits. In order to understand the rationality of
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resource allocation, it is essential to understand commitment principle

because resource allocation is a kind of commitment.
1. The first problem of resource allocation arises with the major
question of what to produce and in what quantities. This involves
allocation of scarce resources in relation to the composition of total
output in the economy
2. Scarcity of Resources: The main difficulty in resource allocation is
its availability. The resources like finance, material, manpower and
finance are available in scarce. Even the finance is available the
cost of finance is the major constraint. Physical resources like land
machinery and equipment needs to be imported. Though there are
less burden or restrictions from the government but import may
increase the cost of the company. Though India has demographic
dividend but the problem is available labour is either not skilled or
appropriate to suit the requirement of the industry.
3. Internal Restrictions: When firm wants to allocate resources for new
businesses it becomes very difficult issue as the firm has to also
allocate resources to the existing SBUs or department. The usual
budgeting practices creates problem for new units.
4. Competitors: Many firm copy its competitors when it comes to
resource allocation. They never pay attention to the internal
capabilities. This is a imitation tactic adopted by the firm. This does
not really make a sense. This affects the capability to develop
competitive advantage.

11.8 LET US SUM UP

In this unit we have discussed the following:

• Strategy implementation is a term used to describe the activities
within an organization to manage the execution of a strategic plan.
Strategy implementation is the manner in which an organization
should develop, utilize, and amalgamate organizational structure,

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control systems, and culture to follow strategies that lead to

competitive advantage and a better performance.
• The characteristics listed below highlights the nature of strategy
implementation: Action Orientation, Comprehensive, Demands skills,
Involvement and Integrated Process
• Hrebiniak’s findings pointed out the following major barriers : An
inability to manage change, Poor or vague strategy, Not having proper
guidelines, Poor or inadequate information sharing, Unclear
responsibility and accountability, and working against the
organizational structure
• The model of strategy implementation attempts to capture the major
themes in strategy implementation. The major themes in strategy
formulation are: Activating Strategies, Managing change and
Achieving effectiveness
• Project planning and implementation are two important aspects.
• Many project management consist of five sequential processes
which are: initiating project, planning a project, executing, controlling
and closing of the project.
• We discussed the procedural implementation and regulatory
mechanism in India.
• An essential part of procedural implementation in any project is that
of labour legislation.
• The main instrument for resource allocation is a budget. it is used
as a planning, coordination and control tool by the management.

11.9 FURTHER READING

1. Cherunilam Francis (2015), Business Policy and Strategic

Management, Himalaya Publication House , New Delhi
2. C Appa Rao, B Parvathiswara Rao, K Sivaramakrishna (2008);
Strategic Management and Business Policy, Excel Books, New Delhi
3. Kazmi A (2008),Strategic Management and Business Policy, McGraw
Hill Education; 3 edition
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4. L. G Hrebiniak (2006), ‘Obstacles to Strategy Implementation,’

Organizational Dynamics, 35, no.1:12-31
5. Tandon A (2010); Business Policy and Strategic Management; Anmol
Publications Pvt.Ltd.
6. Rao Subba P(2014);Business Policy and Strategic Management:
Text and Cases; Himalaya Publication House , New Delhi

11.10 ANSWERS TO CHECK YOUR

PROGRESS

Ans to Q No.1: Strategy implementation is a term used to describe

the activities within an organization to manage the
execution of a strategic plan.
Ans to Q No.2: The characteristics listed below highlights the nature
of strategy implementation is: Action Orientation,
Comprehensive, Demands skills, Involvement and
Integrated Process.
Ans to Q No.3: Strategic planning is the act of creating short- and
long-term plans to guide an organization to continued
and increasing success in the marketplace.
Ans to Q No.4: The major themes in strategy formulation are:
Activating Strategies, Managing change and
Achieving effectiveness

11.11 MODEL QUESTIONS

1. Define Strategy Implementation

2. Discuss the barriers to Strategy Implementation
3. Write the interdependence between strategy formulation and strategy
implementation
4. Write the nature of strategy Implementation
5. What are the barriers to strategy implementation
6. Explain the model of strategy implementation
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