Strategy Implementation & Control

C HAPTER 8

S TRATEGY I MPLEMENTATION & C ONTROL

1. INTRODUCTION

▪ Strategic management process involves Strategy Formulation as well as strategy implementation.

▪ Strategic management process does not end with Firm selecting/ developing a strategy to pursue.
▪ It must be translated into strategic action. Even the most technically perfect plan will not be useful if not
implemented effectively.
▪ Change in an Organization comes through implementation and evaluation and not through plan.

2. S T R A T E G Y I M P L E M E N T A T I O N

▪ It refers to managerial exercise of putting a freshly chosen strategy into action.

▪ It translates strategic decisions into action, make it work.
▪ It involves making necessary changes in
➢ organizational structure
➢ corporate culture
➢ allocation of resources and
➢ training of personnel.
▪ Strategy implementation requires actions such as –
i) Building new facilities
ii) Adding new departments
iii) Hiring and training new employees
iv) Building better information system
v) Allocating of Resources
vi) Closing Facilities
vii) Establishing cost control measures
viii) Changing pricing structure.

3. D I S T I N G U I S H B E T W E E N S T R A T E G Y F O R M U L A T I O N A N D S T R A T E G Y I M P L E M E N T A T I O N

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 Strategy Implementation & Control

Basis Strategy Formulation Strategy Implementation

Process It is primarily an intellectual process. It is primarily an operational process.
Skills Required It requires conceptual and analytical skills. It requires motivation & leadership skills.
Co-ordination It requires co-ordination among employees It requires co-ordination at middle and
at top level. lower level.
Focus It focuses on effectiveness. It focuses on efficiency.
No. of employees Less employees are needed. More employees are needed.
Generally, strategy formulation concepts do It varies substantially for different types
not differ greatly for smaller, large, profit or of Organisations.
non-profit organizations.

4. RELATIONSHIP BETWEEN STRATEGY FORMULATION AND IMPLEMENTATION

Organization success is a function of good strategy & proper implementation.

As seen above, both processes are different and require very different skills.

Strategy Implementation
Weak Excellent
A B
S
t ▪ Square A represents a situation where ▪ Square B represents a situation where
r strategy formulation is sound and strategy formulation is sound and
a
t strategy implementation is weak. strategy implementation is excellent.
e
Sound
▪ It may be due to lack of resources, ▪ Ideal situation which every Firm wants to
g
y experience, leadership etc. achieve.

F ▪ Company should try to move from

o square A to B.
r
m C D
u
l ▪ Square C represents a situation where ▪ Square D represents a situation where
a strategy formulation is flawed and strategy formulation is flawed and
t Flawed strategy implementation is weak. strategy implementation is excellent.
i
o ▪ In this case, company needs to ▪ In this case, company needs to redesign
n redesign their strategy and adjust their strategy and adjust their
their implementation skills. implementation skills.

5. R E L A T I O N S H I P B E T W E E N S T R A T E G Y F O R M U L A T I O N A N D O P E R A T I O N A L M A N A G E M E N T

S. No. Effectiveness Efficiency

1. Concerned about “doing the right thing.” Concerned about “doing the thing right.”
2. Focuses on attainment of objectives & org. goals & Focuses on relationship between output and
achieving competitive position. input, usually for short period.
3. Externally focused and represents relationship It is internally focused.
between organization & environment.

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 Strategy Implementation & Control

4. Responsibility of top management. Responsibility of operational management.

Which is more crucial? → Effectiveness. An emphasis on efficiency rather than effectiveness is clearly wrong.

Strategy Formulation
Effective Ineffective
Efficient 1 - Thrive/ Grow 2 - Die slowly
▪ Cell 1 represents a situation where ▪ Cell 2 represents a situation where
strategy formulation is effective and strategy formulation is ineffective
operational management is efficient. and operational management is
efficient.
▪ Such company is well placed and
thrives as it is achieving what it wants ▪ Such company is doomed to fail
to achieve with efficient input-output unless there is change in strategic
Operational ratio. direction.
Management
Inefficient 3 - Survive 4 - Die quickly
▪ Cell 3 represents a situation where ▪ Cell 4 represents a situation where
strategy formulation is effective and strategy formulation is ineffective
operational management is inefficient. and operational management is
inefficient.
▪ Such company will survive as strategic
direction to ensure effectiveness is ▪ Such company is doomed to fail
there even if too much input is used to unless there is change in strategic
generate output. direction.

6. L I N K A G E B E T W E E N S T R A T E G Y F O R M U L A T I O N & S T R A T E G Y I M P L E M E N T A T I O N

Strategy being formulated at present is influenced by past strategic actions and it affects future.
Strategy formulation and Implementation are interlinked. There are two types of linkages:
Forward Linkage Backward Linkage
Formulation of strategy determines future of Strategy formulation process is also affected by factors
organization. related to implementation.
With formulation of new strategy, we may need to While deciding strategic choices, past strategic actions
make changes in organization to ensure its also affect our decision of selecting the strategic choice.
implementation. Organizations tend to adopt those strategies which can
Changes may be made in organizational be implemented with existing resources with some
structure, corporate cultures, policies etc. Thus, additional effort.
strategy formulation has forward linkage with
its implementation.

7. I S S U E S I N S T R A T E G Y I M P L E M E N T A T I O N

Strategies do not lead to action by itself. It is a statement of intent.

To realize the intent, implementation tasks are undertaken.
Strategies lead to various kinds of programmes. Programme refers to a broad term which includes goals,
policies, rules and steps to implement strategies.
Programmes are supported by funds.
Programmes lead to formation of projects which is highly specific. Time & costs are pre-determined. It
requires allocation of resources & needs to be completed within prescribed time.

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 Strategy Implementation & Control

Issues in strategy implementation to be considered are

a) Project implementation
b) Procedure implementation
c) Resource allocation
d) Structural implementation
e) Functional implementation
f) Behavioural implementation
The above activities need not be performed one after other. They can be done simultaneously as well.
Strategy implementation requires shift in responsibility from Strategist to divisional and functional
managers/ employees.
This shift in responsibility may create implementation problem if new strategy comes as surprise to them.
Hence, divisional & functional managers should be involved as much as possible in strategy formulation
process.
Similarly, strategists should also be involved in strategy implementation process.
Strategist’s genuine personal commitment to implementation is necessary and powerful motivation for
managers and employees.
Management issues w.r.t strategic implementation
a) Establishing Annual objectives
b) Devising policies
c) Change in organizational structure
d) Allocating resources
e) Hiring employees and training them
f) Building strategy supportive culture
g) Minimizing resistance to change.

8. STRATEGIC CHANGE

Changes in business environment requires business to make modification in their existing strategy and
develop new strategy.
Strategic change is a complex process that involves a corporate strategy which focuses on new product/
services, new market and new way of doing things.
Steps of initiating strategic change:
Create a shared vision to manage
Recognize the need for change Institutionalize the change
Change
First step is to diagnose which Objective of both organization & It is action stage that requires
aspects of current corporate individual should coincide and there implementation of change strategy.
culture & capabilities are should not be any conflict. Change process should be monitored
strategy supportive & which are This needs creation of shared vision & in case of any deviation,
not. b/w organization & management corrective action should be taken.
This involves SWOT analysis. which needs to be communicated.

8 .1. KURT LEWIN’S MODEL OF CHANGE

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Unfreezing the situation Changing to new station Refreezing

Lewin proposed that change Once unfreezing process is complete & members It occurs when new
should not come as surprise are prepared to change, their behavior pattern behavior pattern becomes
to organization members as needs to be redefined. way of life.
it lowers their morale. H.C. Kellman proposed 3 methods for redefining New behavior must replace
Process of unfreezing makes new behavior pattern: former behavior
individual aware of necessity a) Compliance – It is achieved by strictly permanently.
for change & help prepare for enforcing reward & punishment for good or Change process is not one
such change. bad behavior. Fear of punishment, actual time process but a
It involves breaking down old punishment or reward helps in changing continuous one.
attitude & behavior, custom behavior pattern.
& tradition so that they start b) Identification – In this, organization
clean slate. members are influenced psychologically to
identify themselves with some role model
whose behavior they like to adopt & become
like them.
c) Internalization – It involves internal changing
in individual’s thought process in order to
adjust to new circumstances.

9. S T R A T E G I C C O N T R O L

Controlling is one of important functions of Management & often regarded as core management.
It involves
➢ monitoring the activity,
➢ measuring results against predefined standards,
➢ analysing & correcting deviation as necessary &
➢ adapting the system.
It is a function intended to regulate & check and ensure that performance of planned activities achieve pre-
determined goals.
Elements of process of control
a) Objective of organization which can be expressed in measurable & comparable standard.
b) A mechanism for monitoring & measuring performance.
c) A mechanism for
➢ comparing Actual Result w.r.t standard,
➢ detecting deviation from standard &
➢ learning new insights.
d) A mechanism for feeding back information for taking corrective actions in order to ensure the strategy
is relevant & goals are achieved.

9.1. THREE TYPES OF ORGANIZATIONAL CONTROL

Operational Control Management Control Strategic Control

It is concerned with It is concerned with integrated It is a process of evaluating strategy
individual task or transaction activities of a complete department, as it is formulated & implemented
as against total

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 Strategy Implementation & Control

management functions. division or even organization. and making necessary adjustments.

One of the ways to identify It is more aggregative & inclusive than It focuses on dual question of
operational control area is operational control. whether
there should be clear cut & It is a process by which management a) Strategy is implemented as
measurable relationship b/w ensure that resources obtained are used planned or not
input & output. effectively and efficiently to achieve b) Result produced by strategy is
objectives. effective & intended or not.

9. 2. T Y P E S O F S T R A T E G I C C O N T R O L

Premise Control Strategic surveillance Special Alert Control Implementation Control

Strategies are based on It involves general Unexpected events like It assesses need for change
certain assumptions & monitoring of natural calamity, in overall strategy as per
premises w.r.t environment & various terrorist attack, change
➢ unfolding events &
environment in which sources of information in government & other
they operate. like such events may force ➢ results of strategy
Such premises may not an organization to
➢ financial newspaper It is not replacement of
remain valid over a period review & reconsider their
operational controls.
of time. ➢ business magazines strategy.
etc. Two basic forms of
Premise control is a tool To cope up with such
implementational controls
for systematically & to uncover information crisis, organizations
are:
continuously monitoring which may affect the form a crisis team to
strategy. handle the situation. a) Monitoring strategic
a) environmental factors threats - It helps
such as economic Known as loose form of managers to determine
(interest rate, ex strategic control. whether overall strategy
rate), technology, is progressing/
social and legal; and implemented in desired
b) industry factors such direction or not &
as competitors, whether there is need for
suppliers etc. adjustment,
to verify the validity & b) Milestone review - It
accuracy of the premise involves segregating
based on which strategy activities required for
was formed. strategy implementation
in terms of time &
resources in order to
review whether mile stone
is achieved or not.

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1 0. S T R A T E G Y A U D I T

Refers to review of existing strategy with intention of being implemented in future.

Strategy audit helps an organization to identify problem areas and correct the strategic approach that has
not been effective so far.
Company reviews their business strategies on regular basis to identify weaknesses and shortcomings.
Strategy Audit Includes 3 Basic Activities:
a) Examining underlying basis of a Firm’s strategy.
b) Comparing expected result with actual result.
c) Taking corrective action to ensure performance is as per plan.

Core of Strategy Audit lies in the following

Need for strategy Audit
questions
a) How well is current strategy working? It is needed in following cases:
b) How well will current strategy be working in a) when performance indicators reflect that strategy is
future? not working properly.
c) How can this be evaluated in present and b) When goals & objectives are not being accomplished.
future? c) When major changes take place in external
d) How urgent is there a need to change environment.
strategy? d) When top management plans to fine tune the existing
For this, periodic review and evaluation of strategy and introduce new strategies.
strategy is needed.

1 0.1. R I C H A R D R U M E L T ’ S C R I T E R I A F O R E V A L U A T I N G S T R A T E G Y

Consistency Consonance Feasibility Advantage

Strategy should not be Refers to need for Final broad test for Strategy must provide
inconsistent with goals & strategists to examine set strategy is feasibility creation or maintenance
objectives. of trends as well as i.e., whether it can be of competitive advantage.
3 guidelines to determine if individual trends in implemented within Competitive advantage is
organization problem is due auditing strategies. physical, financial & normally due to
to inconsistencies in Although single economic human resources of superiority in one of three
strategies: trend may appear steady organization. areas:
a) If managerial problems over the years, changes Strategy should neither a) Resource
continue despite may be happening at over tax available
interaction level. resources nor create b) Skill
change in personnel &
problem is issue based unsolvable problems. c) Position
& not people based. Good position enables
b) If success of one Org. to obtain advantage
department means or from policies that would
is interpreted to mean not benefit rivals.
failure of another While auditing a strategy,
department. nature of associated
c) If policy problems & positional advantage
issues continue to be should also be considered.
brought to top
management for
resolution.

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 Strategy Implementation & Control

1 0.2. R E A S O N S W H Y S T R A T E G Y E V A L U A T I O N / A U D I T I S M O R E D I F F I C U L T T O D A Y

a) Dramatic increase in environmental complexity.

b) Increasing difficulty in predicting future with accuracy.
c) Increase in no. of variables in environment.
d) Rapid rate of obsolescence of even the best plans.
e) Decreasing time span for which planning can be done with certainty.

1 1. B U S I N E S S P R O C E S S R E E N G I N E E R I N G - I N T R O D U C T I O N

Business process is a set of logically related tasks or activities for achieving an objective.
Generally, more than one department is involved in a business process.
E.g: Order fulfillment (order to cash); Procure to pay (procurement /accounts payable)
Performance of business is outcome of functioning of business processes.
Core process refers to those processes which are critical for success and survival of enterprise.
These are source of competitive advantage.
It needs to be identified and may not always be immediately visible.
Examples / Instances of Core Processes
Industry Core process
FMCG Marketing
Electronic & semi-conductors New product
Banking Activities to mobilize deposits & generate funds for advance to customers
Insurance Activities that create balance b/w premium for customers & profit after
claims for company

1 1.1. I S S U E S W . R . T N E E D F O R C H A N G E I N B U S I N E S S P R O C E S S

a) Operational excellence of a company is major source of competitive advantage.

b) Business strategy should focus on using/ leveraging its operational excellence in market place.
c) Customer focused organization needs to realign in terms of process orientation.
d) Process needs to be managed and not only its components.
e) Continuous improvement is lacking in company.
f) Dramatic improvement in performance is necessary for overcoming competition.

1 1.2. B U S I N E S S P R O C E S S R E E N G I N E E R I N G

BPR refers to analysis and radical redesign of

➢ work flow and process
➢ within and between organizations.
Radical redesign means it is total deconstruction and rethinking of business process in entirety.

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 Strategy Implementation & Control

It is unaffected by existing process/ workflow.

Objective of BPR is to obtain
➢ quantum improvement in performance of business process in terms of
➢ cost, quality, responsiveness to customer.
It seeks to ensure unusual improvements in operating effectiveness through redesigning of core business
process and supporting business process.

1 1.3. R A T I O N A L E O F BP R

Improving Business process is pre-requisite to stay competitive in today’s market.

a) With rapid change in information technology, organization needs to be updated to meet demand.
b) With opening of Indian economy, Companies have been forced to improve business processes due to
increased competition.
c) Customers are also demanding better goods/ services and are willing to try new suppliers to meet their
demands.

1 1.4. E L E M E N T S O F BP R

Reengineering begins with Reengineering involves Radical Reengineering aims at achieving

Fundamental Rethinking Redesigning of process dramatic improvement in process
Reengineering does not begin with Radical redesign means going to root Marginal improvements can be
any assumption. It is totally free of problem & not some superficial done by conventional methods.
from preconceived notion/ belief. change. Reengineering is meant for
It involves asking fundamental Reengineering is about reinvention of replacement of old business
questions about organization & business process & not improvement, process by new to achieve
business processes like enhancement or modification. dramatic improvements.
➢ Why we do what we do? It involves complete deconstruction
of existing business process &
➢ Why we do it the way we evolving new ways of doing things.
do it?

1 1.5. G E N E R I C B U S I N E S S P R O C E S S

Since not all business processes are equally important, BPR focuses on identifying generic business process
which significantly adds values for customers.
Generic Business processes needing BPR can be grouped in 3 broad categories:
Process w.r.t Development & Process involving Interface with Process comprising of Management
Delivery of product/ service Customers Activities
This may include This may include This includes
➢ Research ➢ Marketing ➢ Strategy formulation
➢ Redesigning products ➢ Advertisement ➢ Planning
➢ Engineering ➢ Order fulfillment ➢ HRM
➢ Manufacturing ➢ After sales service ➢ Budgeting etc.
➢ Logistics etc.

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 Strategy Implementation & Control

1 1.6. I M P L E M E N T I N G B PR

Formulate & Implement the

Determining Identify customer & Study the existing
redesign business redesigned
objective determine their needs. plan
process plan business process
Objectives are Process designers need This provides Information It involves joint
desired end result to understand important base for gathered through responsibility of
of redesigned process designers. earlier steps is management &
➢ customers
process which It gives and translated into ideal designer to
management wants ➢ their profile understanding of redesign process. operationalize
to achieve. ‘what’ and ‘why’ of Customer focused new business
➢ steps in acquiring, process.
using & disposing targeted process. redesign concepts
goods. are identified &
selected.
This is important to
redesign those business
processes that clearly
provide value to
customers.

1 1.7. R O L E O F IT R I N B PR

IT plays a significant role in changing business process.

A re-engineered business process, supported by IT, results in increased speed and accuracy.
It helps in meeting customer needs and expectation quickly and adequately, thereby increasing their
satisfaction level.
Impact of IT system Values provided by IT
a) Compression of time a) Efficiency: by way of increased productivity
b) Overcoming of restrictions of geography & b) Effectiveness: by achieving objectives & better
distance management
c) Restructuring of relationship c) Innovation: by way of better product service

All these can bring radical change in business process and goods/ services, thereby increasing competitive
advantage and customer satisfaction.

1 1.8. H O W I S BP R D I F F E R E N T F R O M O T H E R E F F O R T S O N I M P R O V I N G O R G A N I Z A T I O N A L E F F I C I E N C Y ?

Reengineering starts
BPR efforts involve massive
Discontinuous Thinking Use of IT with Process but does
organizational change
not end there
BPR focuses on radical BPR utilizes IT for It views process from Reengineering is not just
redesign of business evolving a new business cross dimensional changing the process.
process entirely. process instead of perspective. Thus it is Practically every aspect of
It does not have scope for automating existing multi-dimensional the organization changes
partial modification of process. approach. beyond recognition.
existing business process.
Due to massive changes involved, BPR must be supported by vision and commitment of top leaders of Org..

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1 1.9. P R O B L E M S I N BP R

a) BPR involves radical change in business process. Only limited no. of companies have enough courage for
having BPR due to challenges involved.
b) It disturbs established functional structure and hierarchy. This may create resistance form employees.
c) It involves significant time and expenses.
d) There can be loss of revenue during transition process.
e) Setting of targets is tricky and difficult. If target is not set properly, reengineering effort may turn out to
be failure.

1 1.10. C E N T R A L T H R U S T O F BP R

BPR aims at reducing the cycle time of business process by

a) eliminating unwanted/ redundant steps,
b) simplifying the process, and
c) eliminating waiting time as far as possible.

1 2. B E N C H M A R K I N G

Benchmark refers to
➢ standard or point of reference against which
➢ things may be compared, measured and judged.
It is broader concept than control and is widely used by commercial and non-commercial organizations to
improve processes.
Benchmarking is an approach of
➢ setting goals and
➢ measuring productivity
➢ based on industry best practice.
It provides standard against which performance can be measured.
It involves regularly comparing different aspects of performance with industry’s best practices, identifying
gap and finding out methods to not only reduce gap but improve the situation.

1 2.1. O B J E C T I V E S O F B E N C H M A R K I N G

Continuous Improvement for competitive advantage.

Various functions which can be improved using benchmarking
a) Product development
b) Product distribution
c) Assessment of manufacturing cost
d) Customer service
e) Plant utilization
Example of benchmarks:
Restaurant /Healthcare Industry Waiting time

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 Strategy Implementation & Control

Manufacturing company Manufacturing cost

E-Commerce Delivery time
Automobile Mileage

1 2.2. S T E P S I N B E N C H M A R K I N G

Benchmarking process is not standardized. However, common elements are as given below.
1. Identify the need for It involves defining the objective of benchmarking exercise and selecting
benchmarking benchmarking exercise.
2. Clearly understand It involves compiling information and data on performance by methods like
existing process interviews, visits and questionnaires.
3. Identify best process It may be within same organization or external to it.
4. Compare own process This helps in identification of gap in performance which is analysed to seek
with that of other’s explanation.
process
5. Prepare a report and Report of benchmarking containing recommendations and action plan is prepared
implement the steps and implemented.
necessary to reduce
performance gap
6. Evaluation Organization must evaluate result of benchmarking process in terms of
improvement vis-à-vis set objective.
Evaluation shall be periodic and benchmarking should be reset as per change in
conditions .

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