MBA 3rd Sem

RTMNU SYLLABUS

STRATEGIC MANAGEMENT

MODULE NUMBER 5

[FUNCTIONAL & OPERATIONAL IMPLEMENTATION]

Q1 Mention the need for functional strategies in an organization
Ans

INTRODUCTION TO FUNCTIONAL STRATEGY

• Functional Strategy = the manner in which a particular function is going to be managed in a company.

• If firm has to achieve its strategic objectives, all functional areas need to be managed.

• Organization thus needs to have a strategy in place for all functional areas like Production, Marketing, Finance,
R&D etc.

• The individual functional strategies are extensions of the main business strategy.

• Respective heads of the functional areas in the org are responsible for successful formulation & execution of
functional strategies.

• These strategies are formed keeping in mind the business strategies of the org.

• Functional managers translate functional strategy into performance objectives & ensure achievement of the
same.
NEED / SIGNIFICANCE OF FUNCTIONAL STRATEGY

 Supports Business Strategy

Helps strategic business units in making strategic decisions regarding diff operational areas of business unit.
[Production, Finance, Marketing, HR, R&D]

 Allocating Responsibilities
Helps in successful allocation of resources. Assign tasks to the employees as per their area of interests and
expertise. An employee with excellent convincing skills is given marketing department rather than HR
department.

 Facilitates Integration of Activities

Help in integrating the operations of diff departments- procurement, shipping of product, co-ordinating
advertising activities, conducting marketing research, allocating funds etc

 Outlines Action Plan

Helps in outlining action plan for achieving departmental objectives. Leads to fulfilment of corporate strategy
objectives.

 Provides Information
Provides info regarding capabilities & resources of various functional areas of org. Helps in forming business &
corporate strategies.
Q2 What is strategy implementation?
Ans

INTRODUCTION TO STRATEGY IMPLEMENTATION

MEANING

• Strategy implementation is turning strategy into action for attaining the strategic objectives and goals.
• Implementing the strategy is more imp than selecting it.
• The strategy selected has to be well performed for the purpose of attaining the strategic objectives.
• Even Superior strategy tends to fail in absense of efficient implementation.
• In short, Strategy Implementation is a procedure which enables putting the chosen strategy into action.

DEFINITION

Mc Carthy- “Strategy implementation may be said to consist of securing resources, organising these resources,
and directing the use of these resources within & outside the org”

Steiner- “The implementation of policies & strategies is concerned with design & management of systems to
achieve the best integration of people, structures, processes and resources in reaching org purpose.”
 STRATEGY IMPLEMENTATION PROCESS

1. Building an org that can execute Strategy

2. Establishing Strategy supportive Budget

3. Instalment of Internal Administrative

Support System

4. Rewards and Incentives

5. Giving shape to corporate culture for fitting

in the strategy

6. Exercising Strategic Leadership

 Q3. How far strategic implementation is Diff from Strategy Formulation?
Ans

STRATEGY FORMULATION STRATEGY IMPLEMENTATION

• Means preparation of a well thought strategy, • Means to bring the formulated strategy into
that helps in achievement of org goals. action.

• Concept is placement of forces brfore action • Concept is managing focuses at the time of
takes place strategy execution.

• Logical Process • Operational Process

• Focuses on effectiveness • Focuses on efficiency

• Top Management takes responsibility • Functional Management takes responsibility

• Planning oriented • Execution oriented

• Enterpreneurial Activity • Administrative activity

• Analytical Skills required • Leadership skills required

Q4 What is Value Chain Analysis?
Ans
• Porter introduced Value Chain Analysis.
• A method which evaluates the capabilities and resources of the company & determines its strengths &
weaknesses.
• It helps to find out activities which provide value addition to a product or service.
• Higher the diff between organization’s revenue & its cost, higher is the value added.
• If the company wants to raise the value delivered by it to the consumers, the company must know the degree
of value added by each activity
• And moreover how this value can be enhanced further by re-engineering entire process of the value chain.
• Organization’s own value chain interacts with the value chain of other organizations.

• 2 categories of value chain activities-

1. PRIMARY ACTIVITIES 2. SECENDORY ACTIVITIES
i. Inbound logistics i. Procurement
ii. Operations ii. Technology development
iii. Outbound logistics iii. HR Management
iv. Marketing & sales iv. Firm infrastructure
v. After sales service
 CONDUCTING VALUE CHAIN ANALYSIS
STEP 1
IDENTIFICATION OF SUBACTIVITIES
FOR EACH PRIMARY ACTIVITY
3 SUBACTIVITIES
A. Direct Activities- add value
directly by themselves to the
firm
B. Indirect Activities- support
direct activities for proper
functioning
C. Quality Assurance- assures that
direct & indirect activities are
meeting necessary quality.
STEP 2
IDENTIFICATION OF SUB ACTIVITIES
FOR EACH SUPPORT ACTIVITY
Technology development, HRM,
Procurement determines the sub-
activities which create value for
each primary activity.
Determines the value by creating
sub-activities in the company’s
framework
Cross-functional in nature
 CONDUCTING VALUE CHAIN ANALYSIS

STEP 3
STEP 4
IDENTIFY & ESTABLISH LINKS
LOOK FOR OPPORTUNITIES TO
ENHANCE VALUE
After finding out the value
activities, identify relation with
the links.
All the sub-activities and links
Links help to increase competitive
should be reviewed & determine
advantage
several ways to enhance value that
A link can be notified between
company is offering to its
developing the sales force &
customers.
increasing the sales volume.
Q5 Explain various functional strategies used in global business.
Ans

1. FINANCIAL STRATEGY- Gathering & utilising funds for business. Source from which the fund must be raised-
equity or debt. How much should be long term & short term borrowings. Firm should buy the assets or lease
them.

2. MARKETING STRATEGY- 4Ps Product, Place, Pricing, Promotion [marketing mix]

3. HR STRATEGY- Recruitment, Selection, Motivation, Training, Reward, Job Analysis, Compensation, etc

4. PRODUCTION STRATEGY- Capacity utilization, Machine run time & down time, Breakdown & preventive
maintenance, scheduling production & materials management.

5. R & D STRATEGY- launching a new product it has to undertake basic & applied research. If seeking to
expand in same product line then look for scope of improvement in product.

6. OPERATIONS STRATEGY- method & place for production of a product, supply chain activities, logistic
activities, best possible technology for production process
7. PURCHASING STRATEGY- procurement of raw material, supplies, spare parts, sole, parallel or
multiple purchasing

8. LOGISTICS STRATEGY- flow of goods and services from manufacturing process to customer, 3
main trends- outsourcing, centralization and growing use of internet

9. INFORMATION SYSTEMS STRATEGY- fine tuning IT strategy to gain competitive advantage

over the peers.
 Q7 Write about ADL Matrix
Ans
• Also known as Life Cycle Matrix given by a consulting company Arthur D.
Little in late 1970s
• This is a 5*4 matrix
• Components-
1. INDUSTRY MATURITY
2. COMPETITIVE POSITION

Industry Maturity

Embryonic Growing Mature Aging

Dominant Invest Hold

Strong Improve
Competitive Favourable
Selective Harvest
position
Tenable Niche
Weak Abandon Divest

ADL MATRIX
1.INDUSTRY MATURITY [POSITION OF INDUSTRY IN LIFECYCLE]
I. Embronic- introduction stage, high market growth, new technologies, high investments, high prices low
competition.

II. Growth- strong market, improved sales, low competition, benefits received by firm due to new product
development

III. Mature- stability in market, customer base increases, stability in market share, increased competition,
attempts to be diff from others are made.

IV. Aging- decrease in demand, firms will exit market, lot of money soent to capture great share in market,
firms will leave or consolidate.

2. COMPETITIVE POSITION [HOW STRONGLY FIRM IS STRATEGICALLY POSITIONED]

I. Dominant- strong market hold, entrants rare, short termed position

II. Strong- strong stable market share

III. Favourable- Competitive advantage gained, many competitors in market

IV. Tenable- smaller position in overall market, strong competitors capture major market

V. Weak- depletion of market share, not remain profitable to run business

BENEFITS OF ADL MATRX

 Appropriate for All Conditions

 Applicable to fragmented industries

 High Degree of Adaptability

LIMITATIONS OF ADL MATRIX

 Varied Life Cycle Duration

 Inconsistent Industry Behaviour

 Inconsistent Lifecycle

 Variable Competition