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Strategy Implementation
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
This allows organization to follow strategies that lead to
competitive advantage and a better performance.
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Organizational Structure,
Control System and Culture
Organizational structure allocates special value developing tasks
and roles to the employees and states 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.
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Operationalizing Strategy
If strategies set the general goal and course of action for
organizations, operational plans provide the details
needed to incorporate strategic plans into the
organization’s day to day operations.
Operational plans fall into two general classes.
1. Single use plans are designed to be dissolved once
they have achieved specific, nonrecurring goals.
2. Standing plans, in contrast, are standardized
approaches to handling recurrent and predictable
situations.
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Strategy into action
1. Identify short term objectives
2. Initiate specific functional tactics
3. Outsource non-essential functions
4. Communicate policies that empower people
in the organization
5. Design effective rewards
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Identify short term objectives
Short-term objectives are measurable outcomes
achievable in one year or less
– Discussion about short-term objectives helps raise
issues and potential conflicts within an organization
– Specificity
– Time frame for completion
– Who is responsible—Accountability
– assist strategy implementation by identifying
measurable outcomes of action plans or functional
activities, which can be used to make feedback,
correction, and evaluation more relevant and
acceptable
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Initiate specific functional tactics
Functional tactics are the key, routine activities that must be
undertaken in each functional area to provide the business’s
products and services
Every value chain activity in a company executes functional
tactics that support the business’s strategy and help
accomplish strategic objectives
Functional tactics in:
– OPERATIONS – facilities & equipment, sourcing, operation planning &
control
– MARKETING - product, price, place, promotion
– FINANCE – capital acquisition, capital allocation, dividend and working
capital management
– HRM – recruitment, selection & orientation, career development and
training, compensation, evaluation, discipline and control, labor
relations & equal opportunities requirements
– R&D – basic research vs. product and process development, time
horizon, organizational fit, basic R&D posture 6
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Outsourcing Functional Activities
Outsourcing is acquiring an activity, service, or
product necessary to provide a company’s
products or services from “outside” the
people or operations controlled by that
acquiring company
Outsourcing can save valuable time and
money for many organizations
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Empowering Operating Personnel: Policies
Empowerment is the act of allowing an individual or
team the right and flexibility to make decisions and
initiate action
Policies are directives designed to guide the thinking,
decisions, and actions of managers and their
subordinates in implementing a firm’s strategy
• Establish indirect control over independent action
• Promote uniform handling of similar activities
• Ensure quicker decisions by standardizing answers to
recurring questions
• Institutionalize basic aspects of organization behavior
• Reduce uncertainty in repetitive and day-to-day
decision making
• Policies counteract resistance 8
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Reward Systems
Rewards and incentives contribute to
strategy implementation by shaping
individual and group behaviour.
Well designed incentive plans are
consistent with an organization’s
objectives and structure.
They motivate employees to direct their
performance toward the organization’s
goals
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Institutionalizing Strategy
To emphasize systems, style, staff, skills, and super-ordinate goals,
we need to look at how strategy is institutionalized.
An institution is a collection of values, norms, roles and groups that
develops to accomplish a certain goal.
The institution of education, for example, developed to prepare
children to be productive members of society.
To institutionalize a business strategy, business leaders must also
develop a system of values, norms, roles and groups that will
support the accomplishment of strategic goals. So, strategy is
institutionalized if it is connected to the culture, the quality system,
and the other driving forces in the organization.
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Strategy Implementation
Structural implementation
Behavioral Implementation
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The Role of CEO
As chief executive officers (CEOs) spend most of their
time developing and guiding strategy, their personal
goals and values inevitably shape organizational
strategy.
Their role in strategy formulation makes CEOs especially
important to strategy implementation.
– First, they interpret strategy, acting as final judges
when managers disagree on implementation
– Second, CEOs enact through their words and actions
the seriousness of an organization’s commitment to a
strategy.
– Third, CEOs motivate, providing intangible incentives
beyond pay or bonuses. By appealing to members’
values, beliefs, and loyalties, CEOs can mobilize
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support for a strategy .
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Culture and Strategy
When an organization’s culture is consistent with its
strategy, the implementation of strategy is eased
considerably.
It is impossible to successfully implement a strategy that
contradicts the organization’s culture.
Firms must attempt to build organizational culture on a
foundation of paying attention to key stakeholders such
as employees, customers, and stockholders, thus
ensuring that the culture can change when the
organization’s strategy must change.
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STRUCTURE
Arrangement of tasks and sub tasks required to implement
a strategy.
Diagrammatic representation could be organizational chart
but administrative mechanism provides ‘Flesh and Blood’ to
an organization.
organizational strategy has 3 key components
1. Identifies Formal Relationships, including span of
control, no of levels in hierarchy.
2. It specifies grouping of individuals in departments.
3. Design of system to ensure effectiveness, coordination
and integration of efforts across Departments.
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KINDS OF STRUCTURE
Vertical Structure
Horizontal Structure
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VERTICAL STRUCTURE
Process of Differentiation
Involves Division of Labor and Specialization.
Dominates:
1.SPECIALISED TASKS
2.HIERACHY OF AUTHORITY
3.RULES AND REGULATION
4.VERTICAL COMMUNICATION
5.CENTRALISED DECISION MAKING
6.EMPHASIS ON EFFICIENCY
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Also called as Tall structure.
Best suited for standardized products and services in large
volumes.
Established technologies, wide market, seeking customer
on undifferentiated items.
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HORIZONTAL STRUCTURE
Process of Integration among members in an organization,
cross functional systems and teamwork.
Dominates:
1.SHARED TASKS.
2.FLEXIBLE RULES AND REGULATION.
3.HORIZONTIAL COMMUNICATION.
4.DECENTRAILISATION DECISION MAKING.
5.EMPHASIS ON LEARNING.
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Its also called lean and mean
organization or flat structure.
Liberal exchange of information
among different layers and across
departments.
On Negative side, such structure
has loss of control and high cost in
coordination.
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STRUCTURE AND STRATEGY
Research conducted by Chandler proposes
structure follows strategy for economic efficiency.
There is a 2 way relationship among the strategy
and structure.
Strategy determines how the organization structure
has to be formed.
And structure influences present strategy
implemented and in future
DETERMIN
STRATE ES STRUC
GY AFFECTS TURE
STAGES OF DEVELOPMENT Amity School of Business
OF ORGANISATION
STAGE I:
Organization owned by Small scale enterprise
CHARACTESTICS:-
1.Single Owner
2.Simplicity In Objective, Operations and Management.
3.Termed as Entrepreneurial
4.Strategy is generally Expansion type.
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STAGE II:
Organization bigger than Stage I
CHARACTERSTICS:-
1. Functional Specialization or Process Oriented.
2.Strategy ranges from stability to expansion
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STAGE III:
Organization is Large and widely scattered
CHARACTERSTICS:-
1.Units or Plants at different places.
2.Each units is linked to its Headquarters but functionally
Independent.
3.Divisions on functional forms for particular needs.
4.Strategy is much the same stability or expansion.
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STAGE IV:
Organization are most complex.
CHARACTERSTICS:
1.Generally Large, Multi-Plant, Multi-Product organization.
2.Cooperate Headquarters provided strategic directions and
policies
3.Division formulate business level strategies.
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Mc Kinsey 7’s Framework
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It is a management model that describes 7 factors to
organize a company in an holistic and effective way.
Together these factors determine the way in which a
corporation operates. Managers should take into account
all seven of these factors, to be sure of successful
implementation of a strategy. Large or small. They're all
interdependent, so if you fail to pay proper attention to
one of them, this may effect all others as well. On top of
that, the relative importance of each factor may vary over
time.
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HARD Ss SOFT Ss
Strategy Shared Values
Structure Skills
System Staff
Style
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Strategy:- It is the plan or course of action in allocating
resources to achieve identified goals over time.
Structure:- The way people & work/ tasks are organized.
Systems:- All the processes & information flows that
links the organization together.
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Shared Values:- These are the core values of the
company that are evidenced in the corporate culture &
the general work ethic.
Style:- The way the managers behave.
Staff:- The employees & their general capabilities.
Skills:- The actual skills & competencies of the
employees working for the company
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Advantage of the 7’s framework
Determines how best to implement a proposed strategy.
Guides organizational change.
Combines rational and hard elements with emotional and soft
elements.
Managers must act on all Ss in parallel and all Ss are interrelated.
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Disadvantage
The external environment is not mentioned
in the McKinsey 7S Framework.
The notion of performance or effectiveness
is not made explicit in the model.
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Establishing Strategic Controls
Strategic control is concerned with tracking a
strategy as it is being implemented,
detecting problems or changes in its
underlying premises, and making necessary
adjustments.
Types of Strategic Controls
– Premise control
– Strategic surveillance
– Special alert control
– Implementation control
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Four Types of Strategic Control
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Types of Control
Premise control is designed to check systematically and continuously
whether the premises on which the strategy is based are still valid.
– Planning Premises
• Environmental factors
• Industry factors
Strategic surveillance is designed to monitor a broad range of events inside
and outside the firm that are likely to affect the course of its strategy.
– Strategic surveillance must be kept as unfocused as possible
– Despite its looseness, strategic surveillance provides an ongoing, broad-based
vigilance in all daily operations .
A special alert control is the thorough, and often rapid, reconsideration of
the firm’s strategy because of a sudden, unexpected event.
– A drastic event should trigger an immediate and intense reassessment of the
firm’s strategy and its current strategic situation.
– Tools to manage
• Crisis teams
• Contingency plans
Implementation control is designed to assess whether the overall strategy
should be changed in light of the results associated with the incremental
actions that implement the overall strategy.
– Monitoring strategic thrusts
– Milestone reviews 35
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Characteristics of Strategic Control
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