STRATEGIC MANAGEMENT

4.1 Organizational Structure and Corporate Development(1) 4.2 Evaluation of

organization structure(3) 4.3 Management of Change & Significance(4)

4.1 ORGANISATIONAL STRUCTURE AND CORPORATE DEVELOPMENT

Introduction:
Corporate culture refers to a companys values, benefits, business principles, traditions,
ways of operating, and internal works environment.
An organizations culture is bred from a complex combination of sociological forces
operating within its boundaries.
An organizations culture is either an important contributor or an obstacle to successful
strategy execution.

Developing corporate culture:

Building a strategy-supportive corporate culture is important to successful strategy execution
because it produces a work climate and organizational meeting performance targets and being
part of a winning effort. Over time, these values and practices become shared by company
employees and managers.

Adapting to changing environment:

The major focus of corporate strategy is to present a method by which any business can adapt to
a changing environment. The focus of corporate strategy is to enable a business to improve its
competitive advantage.
Corporate strategy theory presents us with the following questions:
Where are we now?
Where do we want to be?
How do we get there?

Corporate Self Analysis

Corporate self analysis is about answering the first question, where are we now?
The logic is to examine the current status of the business. Areas to look at within corporate self
analysis include:
Is the business aware of who its stakeholders are?
Does your business have a mission statement?
What are the long term objectives of your business?
What are your current business strategies? Are they simple to understand and
communicate to the workforce?, or Are they difficult to understand and communicate?

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What is the state of the marketplace? Is it in growth/decline?, Who are your biggest
competitors?
Review your business internally, look at your business Does it support growth and
adaptability to change? How effective are your production processes? How well do
Sales/Personnel/Marketing/Finance perform?
How well does the business control its internal reasons?

Formulating Strategy
When devising any business strategy, you need to consider:
The reasoning behind the strategy, what are your objectives? Achieve x amount of
growth/cost reduction?
What are all your options? does it have to be done in a certain manner?
Examine all options, when strategy is going to the most feasible in terms of acceptance?

Evaluating the different strategic direction a business can take there are several routes a business
can explore:
DO NOTHING In this scenario, the business does little in terms of reaching to changes in the
marketplace.
DEVELOPMENT Spend vast amounts of money on research, the developing new product
ranges.
INTEGRATION Integrate in a backward manner by going back and buying up your business
suppliers to achieve growth by getting lower priced raw materials. Integrate in a forward manner
by buying your product distributors, sell your product direct to the consumers, thereby
generating increased profits. Integrate in a horizontal manner, by buying your competitors to
gain increased market shares.
STRATEGIC ALLIANCES- join forces with one of your competitors to develop a stronger
position in your marketplace.
NEW MARKETS- the business decides to embark on positioning itself into new markets.
Implementing Strategy
There is no clear cut advice that can be given on how to implement a strategy. The only advice
we can give is to keep it simple, clear, detailed. But above all make sure everyone understands
what is expected of them.
4.2 Evaluation of organization structure
Functional Structure

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Functional structure is set up so that each portion of the organization is grouped according to its
purpose. In this type of organization, for example, there may be a marketing department, a sales
department and a production department. The functional structure works very well for small
businesses in which each department can rely on the talent and knowledge of its workers and
support itself.
Divisional Structure
Divisional structure typically is used in larger companies that operate in a wide geographic area
or that have separate smaller organizations within the umbrella group to cover different types of
products or market areas. The benefit of this structure is that needs can be met more rapidly and
more specifically; however, communication is inhibited because employees in different divisions
are not working together. Divisional structure is costly because of its size and scope. Small
businesses can use a divisional structure on a smaller scale, having different offices in different
parts of the city, for example, or assigning different sales teams to handle different geographic
areas.
Matrix
The third main type of organizational structure, called the matrix structure, is a hybrid of
divisional and functional structure. Typically used in large multinational companies, the matrix
structure allows for the benefits of functional and divisional structures to exist in one
organization. This can create power struggles because most areas of the company will have a
dual management--a functional manager and a product or divisional manager working at the
same level and covering some of the same managerial territory.
Developments in Line-Staff functions:
1. To be multi-functional
2. To be multi-disciplinary
3. To be multi-sector think-tank
4. To be disperse rapidly new knowledge
5. To be disperse rapidly new capabilities
6. To have distilled knowledge reservoir about place and people
To the coming age of the new technology worker, work cannot be organized if planning is
divorce form doing. The more planning a worker does and the more responsibilities he takes for
what he does, the more productive be can be.
A worker who does only as instructed can do only harm. One needs a management structure
which magnifies and indeed respects the roots of a person and yet a true team with diversities is

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made. Binding between employer and worker can be achieved either through life-time
employment (as in Japan) or through partnership in time of profit and loss.
Strategic for different levels:
Core Level
1. Be proactive instead of reactive
2. Integral Management approach contrary to fire fighting
3. To grow core areas.
Structural Level
1. De-staffing, staffing and re-staffing wherever required only for business strategy point of
view.
2. Matrix of Responsibility, Authority and Accountablity
3. Team of self-propelled managers (not those look busy, pensioner, type)
4. Scientific Monitoring
Implementation Level
1. To change mind-set
2. Awareness of objective and compare data at all levels
3. Clarity of customers, what they want for others
4. Ensuring shop-flow employees capable of implementing top decision

4.3 MANAGEMENT OF CHANGE & SIGNIFICANCE

Change is the Law of Nature. It is necessary way of life in most organization for their survival
and growth through there many may be some disapproval, during the early days of the change,
persons learn to meet the change and adopt themselves to the changing situation here resistance
to change would be short term phenomenon.
Change could be both reactive and proactive.
A Proactive change has necessarily to be planned to attempt to prepare for anticipated future
challenges.
A reactive change may be an automatic response or a planned response to change taking place in
the environment conditions change in Managerial personnel.
Deficiency in existing organizational pattern, Technological and Psychological reasons,
Government policy, size of the organization.

Types of Change
Changes can be broadly divided into

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Work change
Organisational change
Work change includes change in Machinery, working hours, Method of work, job enlargement
and enrichment, job redesign or re-engineering. Change may working hours and shift change.
a. Radical change
b. Fundamental change
c. Factors to be considered for the change management are:
i. Triggers for change
ii. Type of change needed
iii. Extent of resistance encountered
iv. Extent of Urgency created
v. Reasons for choice of change strategies
vi. Reason for resistance
vii. Factors which helped most in overcoming resistance
viii. Factors given most consideration during change
ix. Methods used most to activate people
x. Methods used most to support people during change
xi. Most important implementation actions taken.
Phases and level of organizational change:
First Stage : Denying :
Theme This does not affect India
It starts with a presentation of the date supporting a change into an organization. It centres on
processing information its value, relevance or timeliness.
The change agent may be anywhere in the organization and will meet the denial from above and
below:
Second Stage :Dodging:
Theme Ignore this. Dont get involved
It begins when the accumulated evidence shows that the change process is likely to take place. It
is agreed that a small amount of change is needed, but what is questioned is whether it is critical
to change or not.
As the change is coming from outside, dodging is the equivalent of organizational anger. This
anger is expressed in a passive aggressive non-participation.
Third Stage : Doing :
Theme This is very important. We have got to do it now.

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The difficult part of gaining consent and involvement is over to sit back and let it happen
This is dangerous for two reasons.
a) If the team labour is not divided well between teams and individuals this can were the
relationships and destroy the whole change process.
b) The dangers of overloading the change process with trying too may things.
At this stage the focus phones from change generators to the change implementers. There
needs to be bargaining as to what can or cannot be put into the change.
There are two outcomes to the issues of this stage
(i) One is death, where the whole thing collapses under its own weight.
(ii) The other is a focusing of energy.
Fourth Stage : Sustaining :
Theme We have a way of proceeding
This stage is less well defined but is a key stage of any change but is a key stage of any change
process. It is the focusing of energy to follow through a programmes and projects. This is the
refreezing stage and the change adopters come into prominence. The successful come
completion of this stage is the integration of the change into the habitual patterns of behaviour
and structure.

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5.1 Strategy Implementation(7) 5.2 Elements of Strategy(8) 5.3 Leadership and

Organisational Climate(10) 5.4 Strategy Evaluation and Control: Operational and Process
Control(11) 5.5 Strategic Control (12) 5.6 Control Techniques (13) 5.7 Evaluation
Techniques (14) 5.8 Strategy Surveillance(15)

5.1 Strategy Implementation

Strategy implementation is the translation of chosen strategy into organizational action so as to
achieve strategic goals and objectives.
The specific components of each of the six strategy-implementation tasks:
1. Building an organization capable of executing the strategy.
The organization must have the structure necessary to turn the strategy into reality. Furthermore,
the firm's personnel must possess the skill needed to execute the strategy successfully. Related to
this is the need to assign the responsibility for accomplish key implementation tasks to the right
individuals or groups.
2. Establishing a strategy-supportive budget.
If the firm is to accomplish strategic objectives, top management must provide the people,
equipment, facilities, and other resources to carry out its part of the strategic plan. The tasks
should be arranged in a sequence comprising a plan of action within targets to be achieved at
specific dates.
3. Installing internal administrative support systems.
Internal systems are policies and procedures to establish desired types of behavior, information
systems to provide strategy-critical information on a timely basis, and whatever inventory,
materials management, customer service, cost accounting, and other administrative systems are
needed to give the organization important strategy-executing capability.
4. Devising rewards and incentives that are tightly linked to objectives and strategy.
People and departments of the firm must be influenced, through incentives, constraints, control,
standards, and rewards, to accomplish the strategy.
5. Shaping the corporate culture to fit the strategy.
A strategy-supportive corporate culture causes the organization to work hard (and intelligently)
toward the accomplishment of the strategy.
6. Exercising strategic leadership.
Strategic leadership consists of obtaining commitment to the strategy and its accomplishment. It
also involves the constructive use of power and politics, and politics in building a consensus to
support the strategy.

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5.2 Elements of Strategy

Setting direction
Strategy can be identified in operational terms as setting the direction, as in: Where are we now?
Where do we want to get to? Once the direction is set, it becomes possible to take decisions in a
consistent manner with regard to strategy. With no direction, members may well allocate their
efforts and enthusiasm in random and conflicting directions with no prospect of building
coherence.
Concentrating resources
This element is the most often violated principle of effectiveness. When working for a goal, the
need is to make a commitment as an organisation to that direction. That means efforts within the
group must be concentrated on that direction, not always going in different directions.
One strategist, in trying to explain strategy, said: "You know you have strategy when you know
what you are not going to do." Concentration is about keeping to the goals set out by the
direction, and marshalling resources to make that happen.
Maintaining consistency
A third main purpose of strategy is to provide consistency. All that has been said of
concentration applies to consistency. Consistency is simply concentration over time. Like
concentration it applies to big, large decisions and it applies to the myriad mini-decisions which
determine how an individual's time, effort, and enthusiasm will be allocated.
Retaining flexibility
As an organisation with a direction learns to concentrate consistently, the established position
and effective culture of the organisation gradually becomes more deeply imprinted on the
organisation. Individual members become expert and make heavy personal and psychological
investments in their expertise. The organisation as a whole accumulates substantial commitment
to the existing and successful approach. This will tend gradually to render the organisation less
capable of noticing, let alone creating, change in its approach.
Strategy needs to set direction, concentrate effort and provide consistency, but at the same time,
it needs to ensure organisational flexibility. Direction, concentration, and consistency require
determined action for their achievement.
Eight elements that strategists must consider
1. Business definition
This is the classic Drucker question: What is my business and how is it positioned in the
competitive market? For non-profits and governments, the question might be, What is our
mandate?

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2. Financial management
This focuses on the sourcing, allocation and management of the financial capital the
organization has at its disposal. The strategists must consider performance and controls as they
develop a financial management strategy.
3. Growth
This concentrates on the type and rate of the organizations growth. This can involve not only
growing but also deciding to get smaller, perhaps by leaving certain markets. Some companies
want to stay the same size, which is the toughest, Alan Kennedy noted.
4. Marketing
This involves identifying and capturing customers, through value that will appeal to them.
Developing marketing strategy usually requires thinking through the balance between new and
old products, and between current products and new products. (In non-profits and governments,
where the term marketing might chafe, communications could substitute.)
5. Organizational management
This requires thinking through the sourcing, allocation, and management of the human resources
of the enterprise the HR strategy.
6. R&D/technology
This is the development and management of technology and intellectual property. You could use
it for competitive advantage (as in pharmaceuticals, for example), or for productivity (as when
introducing a new computer system). Research might be needed to develop the technology, or it
might be purchased.
7. Risk
This illuminates the possible occurrence of the unacceptable, which could include lost
opportunities as well as threats. Strategists can assemble the risks on a grid that indicates the
likelihood of it occurring (from high to low) and the severity of impact (again, high to low).
8. Service delivery
The organization must take its marketing promise and deliver to the intended audience (through
manufacturing, production or service). Key issues to consider are effectiveness and efficiency.
The authors note that each of these eight elements is actually a strategy in itself, and that
companies usually have a senior manager charged with each one (chief financial officer, chief
marketing officer, chief risk officer).

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5.3 Leadership and Organisational Climate

Organisational Climate
Organisational climate is a key factor in innovation implementation. Building up an innovative
climate or culture in an organisation is one of the important tasks of an innovative leadership. At
the same time, creative organisational climate is one of fundamental elements that leads to
success of innovation. Doing so successfully will certainly further secure and strengthen the
leadership, which initiates innovative climate in the first place. This success will also bind more
followers to the leadership because of its respective contributions for innovation, or in another
word future success.
A leadership should have a quality and skills to man work the internal environment of an
organisation to create a favourable climate for innovation.
We will look into the following aspects of climate for innovation and their interactions with
leadership contributions
1. Trust and openness in an organisation
2. Challenge and involvement
3. Support and space of ideas
4. Conflict and debate
5. Risk taking
6. Freedom
5.3.1 Trust and Openness
Trust and openness concern more about the emotional level. Trust can increase resource-
exchange and combination between business units, which contribute to produce innovation. To
provide a safety net for staff to freely express their ideas and comments, keeping certain degrees
of control over the commentary process of avoiding intentional or unintentional abuse of the
trust and openness between leadership and staff, or among fellow staff and their peers.
5.3.2 Challenge and Involvement
Challenge and involvement means the degree that people are involved in daily operations, long-
term goal and visions, which can emotionally influence the people's enthusiasm for their work
which can contribute to the success of the organisation. The role of employee is valued as a
strategic partner, everyone has the responsibility for leadership and can empowered to act on the
vision of the organisation, which have given the employees a sense of commitment that can, to a
great extent, stimulate the them to work hard and be more innovative too.

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5.3.3 Support and Space for Ideas

Idea time and space give the people amount of time to think, plan, discuss or even test before
having an action, which, to a great extent, foster new ideas within the working period. In a
supportive climate, people can gain enough resources such as people, time, and money for
innovative ideas. At the same time, they may realize there are values and respond to their
creative potential and contributions so that they may exhibit higher levels of creative
performance.
5.3.4 Conflict and Debate
Conflict concern more about the relationships between people in an organisation, and debate
focused on issues and ideas Adequate conflict and debate can help company to create new
capabilities by gathering diverse ideas that reflect multiple opinions to generate new options
which could help company out of the old practices.
5.3.5 Risk Taking
Risk taking refers to the tolerance of uncertainty and unknown situation in an organisation.
Risking-taking is one of the important ways to creative performance, because it can make good
use of the opportunities for creativity-relevant resources on experiments, without experimenting
things, there will be no inventions. In an organisation with high risk-taking culture, people will
be rather free to try their new ideas without fear of the possible failure and they are more willing
to express their new ideas freely in the first place.
5.3.6 Freedom
Freedom means allowing people to use their own consideration to evaluate and respond to
particular event and situation during the activities of product and process developments. The
freedom in an organisation, concerns whether an organisation can allow its people to decide the
process to achieve the specific objectives. Creativity is a result of people where they are free to
decide what technique they will use to reach the particular task. This will encourage a sense of
motivation to create an ownership of what has been created.

5.4 Strategy Evaluation and Control: Operational and Process Control

Process of Strategic Evaluation
1) Fixing benchmark of performance
While fixing the benchmark, strategists encounter questions such as - what benchmarks
to set, how to set them and how to express them.
In order to determine the benchmark performance to be set, it is essential to discover the
special requirements for performing the main task.
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The organization can use both quantitative and qualitative criteria for comprehensive
assessment of performance.
Quantitative criteria includes determination of net profit, ROI, earning per share, cost of
production, rate of employee turnover etc. Among the Qualitative factors are subjective
evaluation of factors such as - skills and competencies, risk taking potential, flexibility
etc.
2) Measurement of performance
The standard performance is a bench mark with which the actual performance is to be
compared.
The reporting and communication system help in measuring the performance.
For measuring the performance, financial statements like - balance sheet, profit and loss
account must be prepared on an annual basis.
3) Analyzing Variance
While measuring the actual performance and comparing it with standard performance
there may be variances which must be analyzed.
The strategists must mention the degree of tolerance limits between which the variance
between actual and standard performance may be accepted.
4)Taking Corrective Action
Once the deviation in performance is identified, it is essential to plan for a corrective
action.
If the performance is consistently less than the desired performance, the strategists must
carry a detailed analysis of the factors responsible for such performance.

5.5 Strategic Control

Strategic controls take into account the changing assumptions that determine a strategy,
continually evaluate the strategy as it is being implemented, and take the necessary steps to
adjust the strategy to the new requirements.
Most commentators would agree with the definition of strategic control offered by Schendel and
Hofer:
Strategic control focuses on the dual questions of whether: (1) the strategy is being
implemented as planned; and (2) the results produced by the strategy are those intended.

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5.6 Control Techniques

1) Premise Control
Every strategy is based on certain planning premises or predictions.
Premise control has been designed to check systematically and continuously whether or
not the premises set during the planning and implementation process are still valid.
It involves the checking of environmental conditions. Premises are primarily concerned
with two types of factors:
a. Environmental factors (for example, inflation, technology, interest rates, regulation, and
demographic/social changes).
b. Industry factors (for example, competitors, suppliers, substitutes, and barriers to entry)
2) Implementation Control
Implementing a strategy takes place as a series of steps, activities, investments and acts
that occur over a lengthy period.
The two basis types of implementation control are:
a. Monitoring strategic thrusts (new or key strategic programs): Two approaches are useful in
enacting implementation controls focused on monitoring strategic thrusts: (1) one way is to
agree early in the planning process on which thrusts are critical factors in the success of the
strategy or of that thrust; (2) the second approach is to use stop/go assessments linked to a series
of meaningful thresholds (time, costs, research and development, success, etc.) associated with
particular thrusts.
b. Milestone Reviews: Milestones are significant points in the development of a programme,
such as points where large commitments of resources must be made. A milestone review usually
involves a full-scale reassessment of the strategy and the advisability of continuing or refocusing
the direction of the company.
3) Strategic Surveillance
Strategic surveillance is designed to monitor a broad range of events inside and outside
the company that are likely to threaten the course of the firm's strategy.
The basic idea behind strategic surveillance is that some form of general monitoring of
multiple information sources should be encouraged, with the specific intent being the
opportunity to uncover important yet unanticipated information.
Strategic surveillance appears to be similar in some way to "environmental scanning."
Strategic surveillance is designed to safeguard the established strategy on a continuous
basis.

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4) Special Alert Control

Another type of strategic control is a special alert control.
"A special alert control is the need to thoroughly, and often rapidly, reconsider the firm's
basis strategy based on a sudden, unexpected event."
The analysts of recent corporate history are full of such potentially high impact surprises
(i.e., natural disasters, chemical spills, plane crashes, product defects, hostile takeovers
etc.).
An example of such event is the acquisition of your competitor by an outsider. Such an
event will trigger an immediate and intense reassessment of the firm's strategy. Form
crisis teams to handle your company's initial response to the unforeseen events.

5.7 Evaluation Techniques

1)Gap Analysis
The gap analysis is one strategic evaluation technique used to measure the gap between
the organizations current position and its desired position.
The gap analysis is used to evaluate a variety of aspects of business, from profit and
production to marketing, research and development and management information
systems.
Typically, a variety of financial data is analyzed and compared to other businesses within
the same industry to evaluate the gap between the organization and its strongest
competitors.
2) SWOT Analysis
The SWOT analysis is another common strategic evaluation technique used as a part of
the strategic management process. The SWOT analysis evaluates the organizations
strengths, weaknesses, opportunities and threats.
Strengths and weaknesses are internal factors, while opportunities and threats are
external factors.
This identification is essential in determining how best to focus resources to take
advantage of strengths and opportunities and combat weaknesses and threats.
3) PEST Analysis
Another common strategic evaluation technique is the PEST analysis, which identifies
the political, economic, social and technological factors that may impact the
organizations ability to achieve its objectives.

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Political factors might include such aspects as impending legislation regarding wages
and benefits, financial regulations, etc
Economic factors include all shifts in the economy, while social factors may include
demographics and changing attitudes. Technological pressures are also inevitable as
technology becomes more advanced each day.
These are all external factors, which are outside of the organizations control but which
must be considered throughout the decision making process.
4) Benchmarking
Benchmarking is a strategic evaluation technique thats often used to evaluate how close
the organization has come to its final objectives, as well as how far it has left to go.
Organizations may benchmark themselves against other organizations within the same
industry, or they may benchmark themselves against their own prior situation.
A variety of performance measures, as well as policies and procedures, may be evaluated
regularly to identify where adjustments are necessary to maintain the sustainable
competitive advantage.

5.8 Strategy Surveillance

The right information at the right time to make the right decision, involves the implementation
of a set of interrelated processes, conveniently organized and guided to achieve, ie the
implementation of strategic monitoring system.
The process or process monitoring involves the following activities: collecting the information
the company needs, transformation into knowledge, assessment and information distribution.
A strategic monitoring system has two main objectives:
1. Monitor the environment, which means:
Find relevant information.
Collect / capture useful information for the company.
Analyze and validate the information gathered.
2. Exploiting the information, which means:
Distribute information to those in need.
Use information.
Make strategic decisions.
Adapt business activity to detected changes.
There are several types of monitoring are as follows:
Customers.
Providers.

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The potential market entrants.

Replacement products.
Competitors in the industry.
From these factors the company can organize its strategic surveillance around four axes:
o The competitive intelligence: is the current information about competitors and / or
potential of the company and those with substitutes.
o The commercial surveillance: study data on customers and suppliers. Commercial
aspects need to be monitored are:
o The markets.
o The customers, the evolution of their needs, their solvency, etc..
o The suppliers, its strategy of launching new products, suppliers, etc..
o The workforce in the sector.
o Etc.
o Technological surveillance: addresses the available technology, emerging or which have
just appeared, to the extent they are able to intervene in new products or business
processes. The technological aspects that need to be monitored are:
o The scientific and technical progress.
o The products and services.
o The manufacturing processes.
o The materials and processing chain.
o The technologies and information systems. Etc.
o Monitoring the environment: those dealing with external events that may influence the
future in areas such as sociology, politics, environment, regulations, laws, etc.. Aspects
of the environment needs to be monitored are:
o The laws and regulations.
o The environment and evolution of their care.
o The culture, politics, sociology, economics. Etc.
The term includes strategic oversight to the various types of surveillance that need to run a
company.

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