UNIT III : STRATEGY IMPLEMENTATION

Strategy implementation involves translating formulated strategies into action. It is

concerned with making decisions with regard to:

 Organizational structure developing to achieve the strategy.

 Effectively performing the activities necessary to accomplish the strategy.

In strategic implementation the strategic plan is put into action through various
activities like organization structure, effective leadership, allocation of
resources etc.

ISSUES IN IMPLEMENTATION:

1) Structural Implementation Issues

Organization structure deals with a major aspect of implementation. It is the

way in which the tasks required to implement a strategy are arranged.

Organization Structures are of several types:

 Functional (marketing, finance, HR, production)

 Divisional (division A, division B)

  Matrix Structure (finance, marketing, HR – project manager A, B,
C)

 Others - Product based, Consumer based, Geographic structure

While working on organizational structure and design, below elements have to be

taken into consideration:

a) Division of labour : Dividing work into the relatively specialised jobs

b) Departmentalization Process of grouping of activities into the

departments, divisions, and other homogeneous units :

c) Delegation of authority

Centralization: process of transferring and assigning the decision

making authority to higher levels in the organizational hierarchy.

Decentralization: process of transferring and assigning the decision

making authority to lower levels in the organizational hierarchy.

There must be a good balance between centralization &

decentralization of authority & power. Extreme centralization and
decentralization must me avoided.

d) Span of control: the number of subordinates that can be managed

efficiently and effectively by a superior in an organization.

Change in strategy may lead to change in organization structure

Matching Strategy with Structure:

New
administrative Organizational
New strategy is performance
formulated problems will
emerge may decline

Organizational
performance New structure
improves is established
2) Behavioral Issues

Those aspects of strategy that have an impact on the behaviour of

strategists/managers in implementing the strategy are:

 Issues of leadership
 Organization culture
 Politics & power in the organization
 Personal Values and Ethics &
 Social responsibility (responsibility of business to society)

a) Leadership :

Leadership styles: Autocratic, Democratic, Free Rein/Laissez Faire

Issues to address:

- Can a particular strategy creates a need for a specific leadership style?

- Do we have to change the leadership style to implement the strategy
- What leaders should be doing to make the strategy effective

b) Organization culture: Organizational culture refers to the collective

assumption and beliefs that pervade the organization about how business
should be conducted and how employees should behave and should be treated.
The organization culture is composed of
- Beliefs : assumptions about reality which are reinforced by experience &
- Values : assumptions about ideals that are desirable

When Beliefs & Values are shared in an organization, they create organization
culture e.g.,

shared things, like the way to dress,

shared sayings like let’s complete this task,

shared actions like service focused approach,

shared feelings like management takes good care of employees

Every organization has a culture which impacts the behavior of the employees
in the organization. The fact that distinguishes good organizations from the bad
ones can be described as organization culture. The well managed organizations
 have their unique cultures which makes them effective in implementing the
strategy.

Good organization culture facilitates communication, creates cooperation &

commitment whereas on the other hand it can obstruct the work, create
resistance to change if it is not good.

c) Corporate politics & use of power

All employees in the organization have their likes & dislikes, views and opinions
etc. and the way they behave in the organization is influenced by those notions.

Power is defined as “the ability to influence others” &

Politics is “carrying out the activities not prescribed in the policies for the
purpose of influencing the decisions within the organization”

We tend to view power & politics negatively as means for manipulation but
these can be viewed in a positive way also. Therefore, strategists should know
when to use it and when not to use it. The ultimate aim is to get the things done
and implement the strategy effectively.

Politics is very much a part of the organization culture and the strategists need
to use power and political considerations to create consensus, reduce
conflicts, manage teams and develop commitment.

d) Personal values & ethics : Personal values are the concepts or ideas that an
individual or group consider as desirable. It is very much part of a person’s
personality and a group’s morale. For example Service-mindedness is a value
which when adopted in an organization improves customer satisfaction.

All decisions in strategy implementation have subjectivity, therefore, purity of

mind is essential for strategists. Also moral component is to be given
importance. Ethics deals with moral issues (beliefs, values, norms etc.) arising
from the activities performed by the managers/strategists/employees of the
organization.

A major task of the leaders/managers is to inculcate personal values and impart

a sense of ethics to the employees.
 e) Social responsibility: Strategic decisions of a company have both social and
economic consequences. There is a constant interaction between business and
the social environment in which it exists. A balance between economic goals
and social performance of the organization is necessary. Businesses have an
obligation to act honorably and to enforce values that are consistent with that
of society. Strategists/managers have to align social responsiveness to the
process of strategy implementation. The organization is expected to provide
goods/services to the society at reasonable prices, be honest and transparent,
create jobs and pay due taxes, actively support charities and other public
interest issues.

Some examples of Ethical behaviour:

 Proper marketing techniques, telling truth about products and services,

 Respecting religious and social values of employees, customers and others,
 Eliminating unsafe working conditions,
 Producing safe products for customers,

3) Functional Issues

Functional strategies are derived from corporate and business strategies and are
implemented through functional & operational implementation.

Functional Plans & Policies

 Functional strategies are not implemented directly – they have to be defined in

terms of plans & policies

 So functional implementation takes place through functional plans & policies

 Plans are formulated to select a course of action

 Policies are required to act as guidelines to those actions

 Functional plans tell the functional managers what has to be done,

 Functional policies state how the plans are to be implemented

Functional Plans & Policies

 Financial plans & policies are set in terms of :

 Sources of funds,

 Usage of funds

 Management of funds

 Marketing plans & policies are made in terms of segmentation, targeting,

positioning and the below areas of marketing mix :

 Product

 Pricing

 Place

 Promotion

 Operations plans & policies take into account the:

 Production system

 Operations planning & control

 Research & Development

 Personnel Plans & policies are based on :

 Personnel system

 Organizational & employee characteristics

 Industrial Relations

Integration of Functional Plans & Policies

 All activities are performed to achieve the overall objectives of an organization

 Ensure integration

 Committees – top management & functional heads

 Coordination among the functional managers, like marketing, finance,

operations, HR etc.