STRATEGIC MANAGEMENT

CHAPTER-10

IMPLEMENTING STRATEGY, EVALUATION AND CONTROL

“Strategies are intellectually simple; their execution is not”

--- Lawrence A. Bossidy, CEO, Allied Signal Company.

1. Introduction. The leadership task is to convert the strategic plan into action and
get on with what needs to b done to achieve vision, mission and objectives.

“Company don’t implement – People do”

Managers have active role – employees are participants. The manager’s task is to
convert strategic plan into action to achieve vision, mission and objectives. People, not
the company execute the plan.

2. Principal Strategic Implementing Tasks:

a. Build Organization (Competent, capable, resource filled).

b. Develop Budget (Allocate resources to critical strategic activities).

c. Establish Strategy Supportive Policy, Procedures.

d. Institute Best Practices (Push for continuous improvement).

e. Install Good Communication System, Operating System to carry out better

strategic role.

f. Tying Reward and Incentive System (Achievement, performance oriented).

g. Create Strategy Supportive Environment or Shape the Environment and

Corporate Culture (Good work environment).

h. Develop Internal Leadership (Decentralization). Exert internal leadership, to

drive implementation and to keep improving on how the strategy being executed.

3. Building a Capable Organization. The three major organization building

activities are:

a. Staffing.

b. Building core competence.

c. Structuring the organization and work effort.

4. a. Develop/Strengthen organizational ability.

(1) First develop ability in the organization to work.

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 (2) Ability begins to translate to competency and capability.

(3) Polish into distinctive core competence.

b. “Core Competency. Bundles of skills and know how, growing out of

combined efforts of cross functional work groups, at different location in the firm
value chain.”

5. Developing and Building Core Competency. Four traits concerning core

competencies and competitive capabilities are important to organization building:

a. Rarely exist in narrow skills, work force of single department; skills grow out
of combined effort.

b. Senior management responsibility. Combine all effort to build core

competence.

c. Concentrate more efforts, more talents than rival in deepening, strengthen

these competencies.

d. Competence need to broadened and flexibilitized, because of uncertainty of

environment.

6. Organizations of the Future – Characteristics.

a. Fewer Barriers (between vertical ranks, functional/operational units,

geographical locations, supplier, distributors).

b. Capacity for Change and Rapid Learning (Flexible attitude).

c. Collaborative Effort (among people of different functional units).

d. Extensive use of Technology (e-commerce, flow of information etc).

7. The aim is to create series of fit:

Between strategy and organizational competency, structure,

Between strategy and budget and policy,
Between strategy and budget allocation,
Between strategy and internal support system,
Between strategy and reward structure system,
Between strategy and corporate culture.

“Tighter the fit, powerful strategy execution”

8. The Complexity of Organization Structure has Three Components:

a Horizontal Differentiation: extent to which the tasks required of the firm have
been divided into homogenous groups (Functional, production and Sale etc).

b. Vertical Differentiation: Number of level in the organizational hierarchy.

c. Spatial dispersion – overall geographical scope.

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9. Strategy Supportive Policy. Changes in strategy call for changes in internal
practice and operation. These are established by policies. Normal for small resistance.
However it helps in:

- Provide top down guidance.

- Help align actions and behaviour.
- Help enforce needed consistency.
- Helps to create new environment (work).
This helps to create “Commitment to continuous improvement.”

10. Difference Between TQM and Process Re-engineering. All aim at efficiency,
improvement, reduce cost. Re-engineering aim at quantum gain (3 to 50%) when TQM
stresses incremental progress, continuous improvement, inch by inch. Re-engineering
may be first to design new product – TQM is continuous process.

11. Match the Organizational Structure to Support Strategy:

a. Identify strategic critical activities.

b. Decide value chain activities – internal/out sourcing.
c. Internal activities - main building block of the firm.
d. Decide how much authority to centralize.
e. Provide cross unit coordination to strengthen internal activities.
f. Provide necessary coordination – collaboration with outsider.
Or
How do you Structure the Organization to Promote Successful Strategic Execution?

a. Identify strategy – critical value chain activity.

b. Decide value chain activities to perform internally and

which to out source from others.
An
c. Make internally performed strategy – critical value chain organization
activities the main building blocks in the organizational structure
structure. matched to the
requirements
d. Decide how much authority to centralize at the top and of successful
how much to delegate to down-the-line managers and strategy
employees. execution.

e. Provide for cross unit coordination and collaboration to

build/strengthen internal competencies and capabilities.

f. Provide for the necessary collaboration and coordination

with outsiders.

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12. Miscellaneous. Please remember:

a. Bench marking, discovery and adoption of new practices, continuous

improvements, re-engineering, TQM – all aim at improved efficiency, lower cost,
better product and greater customer satisfaction.

b. Bench marking provides real time tool/statistics for setting performance

target.

c. Good support system is needed to implement strategy (policy, shape the

environment).

d. Strategy support motivational practices (reward, incentive, promotion).