strategy Lmplementation aout Valuation (Unit 4) Unit 4 Strategy Implementation and Evaluation Sey MENTATION All Meaning and Defini Strategy Implementation Strate: n oof implementation can be defined as turning strategy into action for attaining the atrateric objectives and goals, Since, implementing the strategy is more important than seleching ie hence is very important for the strategists. to consider various plementing, The strategy ; We strategy selected has to be well performed for the purpose of attaining the strategic objectives. Even a superior strategy tends to fail in the absence of efficient implementation, In other words, strategy implementation can be defined as a procedure which enables putting the chosen strategy into action. Implementing a strategy requires: carrying-out various actions, According to Me Carthy, “Strategy impleme may be said to consist of securing resources organising, these resource and directing the tise of these resources within and outside the organisation According to Steiner, “The implementation of policies and strategies is. concerned the design and management of systems to achieve the best integration of people, structures, processes, and resources, in reaching organisational purpose”. “Implementation involves ly executing strategic game plan. This includes setting policies, designing the organisation structure and developing a corporate culture to enable the attainment of organisational objectives". According to Glueck, “Strategic implementation is the assignment or reassignment of corporate and SBU Teaders to match the strategy. The leaders will communicate the strategy tthe _ employees. Implementation also involves the development of functional policies about the organisation structure and climate 10 support the strategy and help achieve organisational objectives”. 4.1.2. Nature of Strategy Implementation ‘The characters of strategy implementation can be described as follows: 1) Action-Oriented: Strategy implementation is actionoriented in the sense that it helps in materialising the things. The ability of management to bring about organisational changes is a part of it. It strives to attain enhancement in operations and business procedures on an ongoing basis. It progresses towards operational superiority. Strategy implementation helps in creating and nurturing a culture which supports the strategy. It seeks to meet the performance objectives. 2) Require Leadership: A proficient leadership is required for the implementation of a new strategy in order to persuade others in favour of it. It makes an effort to eliminate the probability of suspicion through motivation and encouragement. It can be regarded as the safe commitment of the parties involved. Harmony and zeal are established by skillful leadership only. It helps in organising and coordinating all the parts of the implementation. 3) Employee Involvement: The entire management group and official staff are included in implementation and execution of strategy. Just like every part of a clock has to perform in onler to function smoothly, all the parts of an organisation have to unite and work, in order to ensure proper execution of strategy, 4) Varied Contexts: Different environment is required for every implementation situation, each of which is affected by varied business practices and competitive scenarios, working culture and environment, incentives and compensations, policies, blend of personnel and the history of the organisation, ete. $) Challenging Management Job: Implementing strategy can be regarded as a difficult management task because of the following reasons: ive range of challenging managerial ies which have to be executed ii) Several ways for dealing with every activity. iii) Numerous problem causing issues which have tobe sorted out. @ scanned with OKEN Scanneriv) Calls for efficient experts, ¥) Need for introducing and managing a number of ideas all together, management skills by Vi) Difficulty in uniting the efforts of several teams in order to attain smooth functioning of the entire group as a whole. 4.1.3. Strategy Implementation Process Indeed, there is an essential relation between implementation and chosen strategy. Since, the chosen strategy has to be materialised, thus it raises an alarm for its ability to change previous resource obligations, structures of the organisation, policies involved and system of administration. If the changes in these arcas are required by the organisation, in such a case, strategy should be capable enough to plan out for bringing changes in them, In order to make the strategy process efficient, it should go along with the implementation process, Buaikting an Organisation which is hte to exectte the Statcpy z ablishmeat of a Suatery Soppontive Bipet r Tesla of Iteral Adimanistraive Support Systeme T ‘Rewards and Incentives 8 Coltue for Fiting it en the Steategy t ‘Enercising Suatepic Leadersip Following steps are involved in the procedure of strategy implementation: 1) Building an Organisation which is able (o execute the Strategy: The structure of an organisation should be such that it can tum the strategy into practical implementation. Moreover, the employees of the firm should be proficient enough in skillful execution of the strategy, For this purpose, the responsibility for ning the major implementation, job should be allotted to the suitable ‘candidates or teams only. 2). Establishment of a Strategy-Supportive Budget: For the purpose of attaining stratepic targets, the firm should have the employee, equipment, amenities and assets needed for the successful accomplishment of the strategic plan, Moreover, the decision about the strategy has to be followed by recognising the chief jobs to be done, the types of decisions to be taken, and the developinent of formal plans. BS} 4) 5) 6) MBA Thind Semester (Strategic Management) AUC The jubs to be done have ta be organised in an order which consists of action plans lying within the objectives to be attained till a particular date Instalment of Internal Administrative Support Systems: Internal systerns can he defined in terms of Policies and processes which are required to ascertain desirable behaviour, information systems, providing strategically critical information on time, and all the aspects which are required for 7 significant strategy-executing ability of the firm such as inventory, cost accounting, customer service, materials management, and other administrative ystems. These intemal systems shoutd Relp in supporting the management process, the manner in which the managers in a firm coordinate, along with monitoring strategic progress. Rewards and Incentives: The next step deals with the planning that helps in associating the rewards and incentive with strategy and objectives. The personnel of various departments should be motiveted to work towards accomplishing the strategy. The organisation should motivate its employees with the help of rewards, incentives, control, standards, constraints. etc. Giving Shape to the Corporate Culture for Fitting it in the Strategy: A corporate culture which suppons strategy is the major reason behind the diligence and intelligence of the organisations in attaining the strategy. Strategists should make an effort to focus on, the prevalent aspects that help in supporting the planned new strategies. It is desirable to recognise and Change the feature of the prevalent culture which oppose’ planned strategy. It has been found through extensive researches that new strategies are usually market-oriented and competitive forces mostly define thom, This is the main reason for which, altering the culture of the firm for making it suitable for a new strategy is generally more efficient than changing the strategy to suit it with the prevailing organisations! culture. There are a number of techniques availshle for changing the organisational culture, such as training, recruitment, wansfer, restructuring and re- modeling of organisational design along with positive motivation Exercising Strategic Leadership: Dedicating and accomplishing strategy ane the parts of strategic leadership. Constructive utilisation or politics ant power are involved in it, where politics help ia establishing consent for supporting the strategy Strong leadership skills are desirable in the managers in order to persuade the personnel to enthusiastically embrace the changes coming into the organisation and work for attaining the organisational objectives. [tis a common consent that change can bring about aticcess, in case the leaders have highly optimistic altitude towards its success. aa @ scanned with OKEN Scanner3) a sates Implementation and ky surateny Im and Evatuation (Unie ay 4.1.4. Aspects Implementation Strategy Those Organisations Which implementing the strategies. ap manage SiN Major 9 in are successful at e able to effi ei PPOTtiNng factors, Which are 1) Resources PanyResou: allocation can be defined ay qrettion: Resource tcoliee aut 38 a procedure whic! ives asnemng. org Osis which different departments, ‘Strategic Bune to (SBUs) and divisions. tt is mainly conccred cn securing and assuring cerned with vhysi financial 2 Te ‘inancial as well human Fesources as per the strategie tusks for ihe urpose of —attaini i [Allocetion of resource can be ee efficient device for the pr strategy as it gives the the people involved. It helps i face Of the operational strategy, If the shifting of resources is not in accordance with the official strategy. it would not come into practice. The decisions regarding the allotment of the resources are related to the organisational goals, involving many questions such as-what sources have to be explored for acquiring resources? Which facts affect the process of resource allocation? What are the different approaches, which could be adopted for allocating resources? Project Implementation: Project implementation (or project execution) can be regarded as the stage, which involves actualisation of visions and plans. It is a logical conclusion drawn after evaluation, decision making, visualising, scheduling. applying for the capital, and finally deciding about the financial resources for a project. The Project Management Institute of the U.S. has defined the project as, “a one-shot, time limited, goal-oriented, major undertaking, requiring the commitment of varied sl Is and resources”. This means that prior ‘about time scheduling and costs help in ing the project a specified activity. The projects help in creating the condition and facilities needed for implementation of the strategy, which is the part of project management. Procedural Implementation: For the purpose of strategy implementation, execution of the strategy is required on the basis of set rules, regulations and Procedures as directed by the government. Despite the simplification of process done by liberalisation, globalisation, and privatisation, many of the Procedures are yet applicable in the process of implementation of strategies. Hence, the study of the subsequent procedural features should be undertaken by the strategists before implementing the strategy. 133 4) Organisational Structure: The structures of the organisations are built on the basis of their strategies. Organisat can be structured: several ways or methods, The simple structure is required for the simple strategies, while flexible structure is required for the growth strategy and matrix structure is essentially built on the basis of complex strategies. Practically, to implement stable strategies, the organisation structure should be mechanistic in which the different parts work for the welfare of whole organisation. While to implement growth strategies. the organisation structure should be organic in which the ~whole organisation work towards its different parts. 5) Behavioural Implementation: The features of strategic implementation that affects the behaviour of the persons in organisation are dealt through behavioural implementation, The behaviour and activities of the personnel has to be directed in the desired directions as the human resources are a fundamental of the organisation. Formutating a strategy successfully does not assure its successful plementation, as practical execution is always a difficult task. Discipline, motivation, diligence and support on the part of the managers and personne! are some of the necessary elements required for successful implementation of strategy. 6) Functional Policies and Implementation: The development of a plan and policy related to various areas or functions undertaken by the organisation deals with functional implementation. Production, finance, marketing and personnel are some key functions of the organisation. The key functions of the firm include — production, marketing, finance. personnel. The guidelines to operational managers are given by functional policies, for the purpose of: i) Ensuring coordination across functional units. ‘The decision regarding the strategy of the firm has to be essentially followed by modification of functional policies in order to meet the growing demands emerging out of new business, ii) Handling of the similar situations unfailingly, iii) Execution of the strategies, and iv) Reducing the time taken by the mangers in decision-making, 4.1.5. Barriers to Implementation of Strategy ‘The following hey issues arise from implementation of the strategy and their relationship with empowering system; which should be kept in mind by the mangers: 1) Time Horizon: The organisation that believe in empowerment, is based both on long-term as well as short term dimensions. For example, the short term dimension can be in form of rewarding @ scanned with OKEN ScannerIss incenitives like bonus based on efficiency by measuring quantitative performance. Whereas, it is quite apt to relate long term rewards with qualitative performance as well as appropriate quantitative measures 2) Risk Conviderations: A qualitative measure of performance ean he more useful in case it is desirable to have risk prone Behaviour, €2 rewards in the forms of stock options or the bonuses. The reason for this is that quantitative measures tend to avoid the risk. in erder to ¢liminate the chances of failure, instead of taking the risk to attain the results. 3) Bases of Individual Rewards: The systems of rewards should be related to the ability, diligence and job satisfaction of the individual Accelerating the rewards to only onc part of the performance may adversely affect the other parts of the performance. 4) Bases of Group Rewards: One of the significant issue involve in the reward systems is the choice between individual and group reward. It would be quite tough to reward individuals for their performances and efforts if the structure of the organisation doesn't permit to segregate individual’s performance from that of the other people. For example, in case of contributions by the managers to enhance the performance of the organisation can be regarded as useful as well as suitable, because contribution by the individual is comparstively independent from thst of the others. Tn case the Contributions given by the individuals are dependent upon each other's performance, rewarding scheme formed on the basis of group performance would be more suitable. 5) Corporate and SBU Perspectives: In case of the organisations with several divisions, a system of rewards based on both corporate as welll as Strategic Business Units interests has to be formulated, giving more freedom and autonomy to the business units. Similarly, unit based rewarding system would be more useful in case SBUs are unlikely to affect performance of the organisation, But it is important to note here that, a balance authority scenario has to be formulated, if general managers and directors are shouldering the dual role of attaining corporate ay well as units” objectives 6). Vision Barrier: A large number of personnel fail to understand the strategy of the organisation. Such a scenario was quite suitable at the beginning of the 20” century, when the employees were mainly parts of the industrial mechanism and the value was drawn by efficient use of the organisational resources. On the other hand, in the present MBA Thurd Semester (Strategic Management) AUC scenario the knowledge of information basey values are created on the basis of non-materia} sesenrces such as organisational culture and int and intea relationship between employees and the higher authorities, Several organisations are following the age old tradition of authority ang control, which are otherwise inappropriate in the present scenario. 4.1.6. Guidelines for Overcoming Barriers in Strategy Implementation Following are the tools which can help to overcome the obstruction coming in the way of strategic implementation: 1) Focus: Having a lot of priorities implies lack of action as everything cannot be regarded as, of i Priority. Distraction is quite obvious in case there are several priorities, Hence, it is the duty of the Icadets to ascertain the point of focus for the organisation by limiting it to to or three major action plans which are agreeable to the objective of the organisation. 2) Clear Communication: It is essential for pan of the leaders to clearly define the objective of the organisation to the subordinates and they are also expected to explain them their roles in attaining the desired objectives. At every level of leadership, the tusks to be accomplished have to be recognised which should be followed by laying emphasis 02 the employees’ efforts towards the accomplishment of major actions, 3) Teamwork: The leaders at the senior level have to recognise the possible conflicts that might emerge while attaining the top organisational goals and they have to find-out the ways for resolving them. Tt might involve dealing with the situation by compensation of negotiation, which may involve conducting intense discussions regarding allocation of roles and what is expected from each personnel 4) Regular Check-[ns: Keeping an alarming deailine for a specific project acts as a great motivation for accomplishment of the task, Regularly examining the work done by the employce helps to ascentat the completion of assigned tasks within the stipulated time. 5) Accountabilit ‘or ensuring the implementatioe ‘of major objectives, it is essential to hold te ‘employees responsible for not accomplishing th works assigned to them. The staff should be awat about their responsibilities and the consequences which might emerge in case they are not fulfilling the desired duties.” @ scanned with OKEN ScannerSuategy Implementation and Evaluation (Unit 4) 4.1.7. Difference between Strategy Implementation & Strategy Formulation [fia tor Siratee Sirateny Comparison Formulation | tmplementation. 1) Meaning | Strategy formulation | Strategy refers tthe Preparation of a well thought strategy, that | the formulated helps in” the | strategy into achievement “of action cegaitiona eal By Concept | Placement of forse | Managing Toes before action ‘takes at the time of place Sstegy a gia Operational = fectveneee [Hens 5) Responsibility | Top Manageme] Functional ‘Orientation —| Pann session Activity Type_| Enirepreneadal [Admini ‘Type of Skil Analytical sills] Leaershp shils Required CST CoS Uo fo a Col 4.2.1. Introduction ‘The main activity of resource allocation is related to the procurement and commitment of physical, human resource and financial resources to various strategic activities in order to accomplish the goals of the organisation. It can be seen as an ongoing or a one-time process, The allocation of resources will be needed by the project when it is implemented. Similarly there will be continuous requirements of resource allocation by the ongoing projects, Both types of resource allocations should be handled by the strategy implementation. It can be seen as one of the critical activities which facilitate the implementation of strategies. The organisations in which strategic management approach is not utilised in decision making, quite commonly, the political and personal factors decide the allocation of resources, Various resources are allocated with the help of strategic management depending upon the priorities which are decided on the basis of annual objectives. If the resources are not allocated depending upon the priorities established by the annual objectives, this will cause a lot of damage to strategic management process and to the success of the organisation. 4.2.2. Factors Influencing Resource Allocation The various factors which have influence on the allocation of resources are as belo 1) Organisational Goal: The different tasks are given different priorities by the employees depending upon the significance given by the top management on the basis of the resource allocation, 155 2) Preference of Dominant Strategists: The process. of resource allocation is mainly Influenced by the dominant strategists i.e. the CEO. Resource allocation is a direct indication of these preferences. 3) Internal Politics: Resource allocation is somehow considered to be related to the power. More power is perceived to hold by those departments which have more allocation of resources. 4) External Influences: Resource allocati affected by the external factors along with the internal factors which could include government policies and stipulation, requirements of financial institution, community, external shareholders. and so on. also 4.2.3. Approaches to Resource Allocation There are mainly three main approaches of resources allocations which are as below 1) Using Analytical Conceptual Models: In this approach resources are allocated with the help of conceptual and analytical models like growth share matrix, stop-light and Directional Policy Matrix, etc. This approach is mostly used by multi-SBUs firms, ‘The factors related to market share, competitive capabilities and business strength along with industry attractiveness of business segments ‘and growth prospects are the main reasons for the resource allocation. 2) Product Life System of Budgeting: According to this approach there must be a balance between the stage of product life cycle and resource allocation. As every stage in PLC is associated with different traits and implications, thus different resource allocation should be taken place in proportion to the resource requirements of different stage of the life cycle, For example, “Zero based” budgeting can be implemented in the firm when it wants to implement a retrenchment strategy in the product division which basically signifies that the budget requests for resource allocation are genuine from the very beginning without taking reference from the previous year. Apart from this method, traditional capital budgeting and performance budgeting can also be used. 3) Strategic Budgeting: Businesses and organisations are controlled by the budgets, Budgets are responsible for keeping a record of spending and Fevenues as well as putting financial limitations. The activity of changing the budgets so that different objectives can be accomplished and establishing the balance between the expenditures and the earnings so asto avoid both short term and long term deficit, is called Strategic budget management. It may not resolve all financial issues but it is quite significant for smooth operations of the firm. @ scanned with OKEN ScannerASA. bit Antreduetion such as allotment of work, establishing ny, and ditecting are the pasts of an organisational . which culleetively a inment of cctives. The structure of an organisation = the outlook ahout the organisation to the people. The cooinaiion between an organisation's. various works tokes a formal approach. The structure of an organisation helps in ing the officis} reporting relationships. The »w of an organisation takes place at various levels ain of command, pening strategy through structure requires the structure and interconnecting the nal units with each other. The organisation sieseture depicts the fashion in which various parts of on are interlinked, Henge, the issues like Civision and allotment of the work in an organisation, ‘ferent departments, groups, teams, positions, with the coordination needed to attain the of the organisation are pant of an pisation structure, Hence, imtegration and jon are the two important features ecgansational assign on which the focus of the m should be based. This means that the ofjuitisation should design ils structure and should aid ips and harmony among its ‘components. Role Following are trcture 1) Specialisation: The division and sub-division of the work into tiny, hand le tasks help in the eres lisation structure. The allo! ‘of tasks to different people in the organisation is carried depending upon the guulification and experience of the people and such a division helps in enhancing the operational of the organisation. ‘arly Designed Tasks: There is a clear discription and differentiation regarding the tasks ied to different people in the organisation. This helps in finding and choosing the right person for the right job. 3) WellDefined Power and Accountability: This arification regarding power assigned and countability of the manager facilitates in ances of ehaos and argument which might emerge regarding the authority and rights f Organisation Structure significance of organisational MBA Third Semester (Strategie Management} ALG Replication of Job; Hel, in Avoiding ‘ 9) Gtemnsation structure helps in proper allotment of particular tasks, I prevents replication ang Uverlapping of the responsibilities by allocating the jobs among different personnel and teams. nd Security: The structure tps in giving security. and rs and personnel for the accomplishment of the allotted tasks. It helps in recognising and comparing the roles of the managers and personnel towards attainment of organisational objectives. This also helps in further allotment of assets and efforts on the basis, of contributions made by the respective departments. 6) Basis of Coordination: It helps in uniting and y coorlinating the work done by the personnel. The managers in authority coordinate the tasks of those under thern by exercising authority over them. 7) Growth and Diversification: An organisation con evolve and develop under an effective organisational structure. Directing the prevalent functions help the managers in assuming more responsibilities, Moreover, the structure of the organisation aids in transformation of jobs coming ‘out of changing technical, economic, political and external scenario. 4.3.3. Types of Organisational Structure Acconling to the complexities of processes of organisation, they can be classified in two types: 1) Basic Organisational Structure 2) Advanced Type of Organisational Structures 43.3.1. Basic Organisational Structures ‘There are several basic organisational structures which aire explained as below: 1) Simple Structure: The first basic form of ‘organisational structure is the simple structure, Itis mostly adopted during the initial entrepreneurial phase when the organisation is ready to portrait its objectives and personality. The main characteristics of a simple structure include centralised authority, limited ules, horizontal hierarchy and low work specialisation, 5) Source of Support of an organisation he supports the manager Under this structure, the top management has a wide span of controt and a low level of differentiation between the —sub-activities. A centralised authority system is followed in such structures by a single person, who is often the organisation's owner. There is a direct control and supervision over the work with low authorisation. ‘The structure has only 2 or 3 vertical levels having rigid workers who are unable to perform different types of activities. @ scanned with OKEN ScannerIntreduction vies such as allotment of work, establishing ul dreeting are the parts of an organisational structare, Which collectively aim at the attainment of snisations! objectives. The structure of an organisation the outlook about the organisation to the people, The Lnation between an_ organisation's. various works formal approach, The structure of an organisation in assigning the official reporting relationships, The flow of an organisation takes place at various levels ‘ona chain of command, 31, Difterent I:aptementing through structure requires ¢ the structure and interconnecting the sational units with each other. The organisation stracture depicts the fashion in which arious parts of nnisation are interlinked. Hence, the issues like on and allotment of the work in an organisation, among different departmeats, groups, teams, positions, strategy an are part of an integration and important features of seanisational aesign on which the focus of the crganisation should be based, This means that the objectives of the organisation organisation structure. Hence, entiation ane the two isation shoutd design its structure and should aid establishing relationships and harmony among its clements and components. Role of Organisation Structure Following are the significance of organisational structure Lb yeciafisation: The division and sub-division of ‘c work into tiny, handy and suitable tasks help in ¢ creation of organisation structure. The alloument of tasks to different people in the ‘crgunisation is carried depending upon the islification and experience of the people and such a division helps in enhancing the operational iency of the organisation. Clearly Designed ‘Tasks: There is a clear description and differentiation regarding the tasks assigned to different people in the organisation.’ ‘This helps in finding and choosing the right person for the right job, 3) Well-Defined Power and Accountability: This clarification regarding power assigned and accountability of the manager facilitates in minimising chances of chaos and argument which might emerge regarding the authority and rights: assigned to various people. 4.3.2, “Thind Semester (Strategic Management) AUC plication of Job: MBA Re Helps in Avoiding ef 4) Helps ation structure helps in proper allotment of cular Tasks. It prevents replication and Patanning of the responsibilities Py sllocating the Jats among different personnel and teams 5) Source of Support and Security: The structure of an organisation helps Supports. the ~managets accomplishment of the recognising and comp: uring the roles of the an: sonnel towards attainment of manager mal bjectives. THis also helps in further allotment of assets and efforts on the basis. of contributions made by the respective departments. 6) Basis of Coordination: It helps in uniting and coordinating the work done by the personnel. The managers in authority coordinate the tasks of those under them by exercising authority over them. 7) Growth and Diversification: An organisation can evolve and develop under an effective organisational structure. Directing the prevalent functions help the managers in assuming more responsibilities. Moreover, the structure of the organisation aids in transformation of jobs coming ‘out of changing technical, economic, political and external scenario. 4.3.3. Types of Organisational Structure According to the complexities of processes of organisation, they can be classified in two types: 1) Basic Organisational Structure 2). Advanced Type of Organisational Structures 4.33.1. Basic Organisational Structures ‘There are several basic organisational structures which are explained as below: 1) Simple The first basic form of organisational structure is the simple structure. Itis mostly adopted during the initial entrepreneurial phase when the organisation is ready to portrait objectives and personality. The main characteristics of a simple structure include centralised authority, timited rules, horizontal hierarchy and low work specialisation. Under this structure, the top management has & wide span of control and a low level of differentiation between the sub-activities, A centralised authority system is followed in such structures by a single person, who is often the organisation's owner. There is a direct control and supervision over the work with Low authorisation. ‘The structure has only 2 or 3 vertical levels having rigid workers who are unable to perform different types of activities, @ scanned with OKEN Scannersqsery Implementation and Evaluation (ini 4) This (ype of structure j firms where a less number St ble for ‘small systematically coordinated by evan can be They can effectually any