IMPLEMENTING: REALIZATION OF
STRATEGY
Rodel C. Pomentil, MBA
Objectives
Discuss the three heirarchical levels of strategy in
the implementation stage
Define corporate governance and its significance in
the formulation and implementation of strategies
Understand strategic leadership and its impact in
the implementation stage
Determine the fit and alignment of functional
strategies to organizational objectives
Appreciate the tools under implementation stage
Elements of the Implementation Stage
Three Hierarchical Levels of Strategy
1. Corporate or Directional Level Strategy
Arelaid down to determine the direction of the business
on a broad or corporate level.
Three directions according to Wheelen and Hunger
(2010)
Growth Strategies-growth in sales, assets, profits
Stability Strategies-stay put or maintain current array of
businesses
Retrenchment Strategies- weak competitive position in some
or all of its product line
Four generic ways that a corporate strategy can
evolve
A. Exit-making some sacrifice by dropping some
product lines and services or business units deemed
unprofitable
B. Enhance-adding functionalities or improving the
product or services currently being offered
C. Extend- adopting a new business model or entering
new business
D. Expand-adding products and services within an
existing business
2. Business or Portfolio Level Strategy
Refers to a heirarchichal level of strategy where tactics are
mapped out to beat competition through its products and
strategic business units (SBU’s) such as competitive,
cooperative and integration among others.
The question “ How to compete?” is answered
3. Functional or Parenting Level Strategy
Operational methods and process are properly coordinated
and involve transferring of resources and cultivating
capabilities among product lines and business units.
“How do we maximize the productive use of internal
resources, capabilities and competencies?”
Good Corporate Governance
Refers to balancing of and relationships among
stakeholders that is used to determine and control the
strategic direction and performance of organizations.
Guiding Principle is FAT (fairness, accountability and
transparency)
Separation of powers
Ownership-belongs to shareholders
Governance- responsibility of the BOD
Management- delegated to CEO and his team of officers
The Role of the Board of Directors
(BOD)
Highest governing authority in the organization
Highest policy making body
BOD should comprise the following
Insiders,
Related Outsiders and Outsiders
Most important role
To make strategic decisions for the company
To protect the shareholders interest
To appoint senior management
BEST PRACTICES TO HAVE CGC
1. separate ownership with managerial control
2. increase diversity of board members
3. establish for formal evaluation of the BOD’s
4. promote democracy in the boardroom
5. receive compensation in accordance to the
capacity of the firm
Politics of Strategy Choice
Is politics good or bad for any organization?
Hidden agenda
Key people
decisions
The Role of the Top Management
Comprise of key officers who are responsible for
formulating and implementing the organizations
strategies
Also called strategic managers
CASH match with firms strategies
Composed of CEO ,President, VP, Chairman and
BOD
Role of CEO in Strategic Management
Must understand that strategic management is his responsibility; part
of this task, but certainly not all must be delegated
Responsible for establishing a climate in the organization that is
congenial to strategic management
Responsible for ensuring that the design of the process is
appropriate to the unique characteristics of the company
Responsible for determining whether there should be a corporate
planner
Must get involved in doing planning
Should have face to face meeting with the executives for making
plans and should ensure that there is a proper evaluation of the
plans and feedback to those making them
Responsible for reporting the results of the strategic management
process to the BOD
Four types of executives who use their
time badly
Online junkies
Stick to the office and spend less of their time managing and
motivating their employees ( 38% of their time is using
asynchronous messaging)
Schmoozers
Spend much time outside the office and can be elusive for direct
reports ( 29% of their time is spent on phone)
Cheerleaders
Are good with employees but spend little time with the outsiders (
55% of time spent is face to face)
Firefighters
Are invariably dealing with emergencies, micro-managing, and
operationally focused ( 39% of their time is spent alone)
Tips on how company can ensure that
executive time is used effectively
Create a budget for leaders time ( attention,
priority, delegate)
strip out redundancy and extra layers in the
decision making process
Encourage executives to measure how they use their
time, so they can align it with their company’s
priorities
Use a calendar not only as a scheduling tool, but
also to strip out time-wasting meetings
STRATEGIC LEADERSHIP
Involves the ability to anticipate, envision, maintain
flexibility, and empower others to create strategic
change
An effective strategic leadership shapes the
formulation of strategic intent and corporate
mission, which influences the strategic actions
heading to achieve competitiveness and above
average returns
FUNCTIONAL STRATEGY FITNESS AND
ALIGNMENT
Management and Operations
Influence the implementation of strategies in various ways
Product and service design
Cost
Location
Quality
Quick response
Flexibility
Inventory management
Supply chain management
Service after sale
Marketing and Sales
About creating demand and managing profitable customer relationship
Customer Relationship Management (CRM)
Finance/Accounting
Without access to money plans cannot be put into action
ANALYSIS OF REVENUE AND COST
a. total revenue and total cost are significantly less-asset reduction
strategy
b. Total revenue is lower than total cost- asset maximization-revenue boosting
strategy
c. Total revenue is slightly lower than total cost –asset reduction cum
maximization-revenue boosting strategy
d. Total revenue is the same as the total cost- asset maximization-revenue
boosting cum cost cutting strategy
Research and Development Engineering
Is about investing for the future given today’s knowledge
based world economy. It is expected that this functional
area will about innovation
Management Information System (MIS)
is an organize combination of people, hardware,
communication networks and data sources that collect,
transform, and distribute information to support managerial
functions
Human Resource
The right people with the right skills and competencies are
valuable employees who will spell a big difference in
achieving successful strategies
Tools in the Implementation Stage
1. Synergistic Strategy
It is a directional strategy where two independent firms
agree to combine their resources to establish a greater than
the value of the two firms prior to acquisition due to
economies of scale.
Horizontal integration
Action to strengthen the company’s position by way of acquisition,
merger, or takeover of a competitor in the same industry value chain
Advantages
Lower costs
Increased level of differentiation
Increased bargaining power
Reduced competition
Increased diversification
Disadvantages
Damaged value
Legal repercussion
Reduced flexibility
Vertical Integration
A synergistic strategic action where a firm usually expands to
strengthen the company’s position to the industry by way of
acquisition, merger, or takeover of another company along the
industry value chain
Two Kinds
Forward- the manufacturing company acquires the wholesaler or
retailer for the purpose of achieving higher economies of scale and
larger market share
Backward- the manufacturer acquires the supplier company to
streamline the supply chain process
2. Intensive Strategies
Market penetration is a strategy that seeks to increase
market share for existing product or services in existing
market through intensified marketing efforts such as
promotion and adverting
Market development is a strategy that seeks to increase
market share by introducing existing products or services
into new market or geographical area
Product development is a portfolio strategy that seeks to
increase market share and sales by innovating or improving
existing products or services to be sold in existing market
3. Diversified Strategy
Isa strategic action applied for a firm to expand
business operation that offers new products to new
markets whether related or not related in p/s
Two ways
Horizontal or related diversification
Offering new products to related products or services
Unrelated diversification
Offering new product not related to existing products or services
4. Defensive Strategies
Designed to achieve two purposes
To hold onto market leader position
To hedge or reduce the risk of loss or uncertainty specially when the market is shrinking
A. joint venture
Action occurs when two or more companies form a strategic alliance or partnership for the
purpose of capitalizing on some opportunity
B. retrenchment
Happens when an organization regroups through cost and asset reduction to reverse
declining sales and profits
C. divestiture
A strategy which sells a business unit or a division of a company for the purpose of
recovering from financial woes or raising capital for further strategic acquisitions or
investments
D. receivership and liquidation
Instead of putting the firm in bankruptcy, a firm can opt for the appointment of receiver to
safeguard the company’s assets for the best interest of its creditors
Liquidation occurs when it is better to cease the operation than to continue losing a large sum
of money
5. Generic Competitive Strategies
Cost Leadership
A business level action designed to produce or deliver goods or
services with features acceptable to many customers at the lowest
cost relative to that of the competitors
Differentiation
A business level action that distinguishes a product or offering
from competitors to make it more attractive to target market
A.. Unique product and feature performance
B. extra-ordinary services
C. new technologies or state of the art facilities
D. quality of input
E.. Excellent skill or experience
Focused leadership
A business level that produce or deliver goods or
services that serve the needs of a particular segment or
niche at the exclusion of others
Particular buyer group
Different segment of a product line
Different geographic market
