Chapter - 5

STRATEGY IMPLEMENTATION AND EVALUATION

1. INTRODUCTION
⇢ Strategy implementation and evaluation are critical phases of strategic management.
⇢ Implementation involves putting plans and initiatives into action, while evaluation assesses their effectiveness.
⇢ Various methods exist for implementation and evaluation, helping organizations assess strategy success and identify
areas for improvement.
⇢ This chapter provides a comprehensive overview of implementation and evaluation processes.
⇢ It equips readers with the knowledge and skills needed to execute and assess organizational strategies effectively.
⇢ The next section provides an overview of the strategic management process.

2. STRATEGIC MANAGEMENT PROCESS

⇢ The process of developing an organization's strategy begins with establishing a clear vision, mission, values, and
goals.
⇢ Analysis of various themes helps determine promising options for the organization.
⇢ These components are integrated into a strategic plan, which includes the vision, mission, values, goals, strategic
themes, implementation plan, and key performance measures.
⇢ Key performance measures link strategic themes to organizational goals and measure strategy success post-
implementation.
⇢ The strategic management process is dynamic and continuous, with changes in one component often necessitating
changes in others.
⇢ For example, shifts in the economy may require changes in long-term objectives and strategies, while failure to meet
annual objectives may necessitate policy changes.
⇢ Strategy formulation, implementation, and evaluation activities should be ongoing, not just performed annually or
semi-annually.
⇢ The strategic management process never truly ends, as organizations must continually adapt to changes in their
environment and refine their strategies accordingly.

⇢ The strategic management process is best studied and applied using a model, such as the Strategic Management
Model by Fred R. David.
⇢ This model provides a comprehensive approach for formulating, implementing, and evaluating strategies.
⇢ It does not guarantee success but offers a practical framework for strategic management.
⇢ Relationships among major components of the process are illustrated in the model.
⇢ In practice, the process is not strictly sequential, and there is interaction among hierarchical levels of the
organization.
⇢ The process is iterative and involves back-and-forth considerations across different stages.
⇢ Many organizations hold semi-annual meetings to discuss and update the firm's vision, mission, opportunities,
threats, strengths, weaknesses, strategies, objectives, policies, and performance.
⇢ Creativity is encouraged in these meetings, and good communication and feedback are essential throughout the
strategic management process.
➱ Stages in Strategic Management : - (Refer Old Module)
￫ Crafting and executing strategy are essential aspects of managing a business enterprise. Strategic management
involves several stages:
1. Developing a strategic vision and formulating a statement of mission, goals, and objectives.
2. Conducting environmental and organizational analysis.
3. Formulating strategy based on the analysis.
4. Implementing the formulated strategy.
5. Evaluating and controlling the strategy's effectiveness.

➱ Strategy Formulation
⇝ Corporate Strategy: -
￫ Planning involves selecting future actions and creating action plans, essential
for effective management.
￫ Corporate strategy, a game plan directing the company towards success, is a
vital component of planning.
￫ Planning may be operational or strategic.
￫ Strategic plans are developed by senior management for the entire
organization, considering strengths, weaknesses, opportunities, and threats.
￫ Strategic plans involve gathering and allocating resources to achieve
organizational goals.
￫ Operational plans are made by middle and lower-level management, providing
specifics on resource utilization
• Strategic Planning:
￫ Corporate strategy is the game plan directing a company towards success, and its effectiveness determines the
company's success.
￫ Strategic planning is the process of forming corporate strategy.
 ￫ It involves determining the firm's objectives, required resources, and formulating policies for resource acquisition,
use, and disposition.
￫ Strategic planning entails interactive and overlapping decisions to develop an effective strategy.
￫ It determines the organization's direction over the next year or more and the means to get there.
￫ The process may be organization-wide or focused on a major function such as a division.
• Strategic uncertainty and how to deal with it?
￫ Strategic uncertainty refers to the unpredictability of future events and circumstances impacting an organization's
strategy and goals.
￫ It can be driven by changes in the market, technology, competition, regulation, and other external factors.
￫ Organizations need flexibility, resilience, and agility to respond quickly to changes and minimize the impact of
uncertainty.
￫ Strategies for managing strategic uncertainty include:
1. Building flexibility into strategies to adapt quickly.
2. Diversifying product portfolio, markets, and customer base.
3. Monitoring key indicators of change and conducting scenario planning.
4. Investing in internal resilience by strengthening operational processes, financial flexibility, and risk management.
5. Collaborating with other organizations, suppliers, customers, and partners to pool resources and share risk.

➱ Strategy Implementation
￫ Strategy implementation puts a chosen strategy into action.
￫ It supervises ongoing pursuit and aims for measurable progress.
￫ Implementation translates strategic decisions into action.
￫ It considers feasibility and acceptability.
￫ Resources are allocated to new actions.
￫ Organizational structure may need adaptation.
￫ Personnel training and system devising are involved.
• Relationship with strategy formulation
￫ Managers often overlook the distinction between strategy formulation and implementation.
￫ Understanding the difference is crucial as they require different skills.
￫ A company succeeds when strategy formulation is sound and implementation is excellent.
￫ Successful strategic design relies on both formulation and implementation.
￫ Blaming the strategy model for failure may overlook implementation issues.
￫ Organizational success depends on both good strategy and proper implementation.
￫ The below-mentioned figure depicts the distinction between sound/flawed strategy formulation and excellent/
weak strategy implementation.

A B
Sound
Formulation
Strategy

Flawed C D
Weak Excellent

A B
1. Company has a competitive strategy but struggles 1. Ideal situation where a company has successfully
with implementation due to factors like lack of designed and implemented a competitive strategy.
experience, resources, or leadership.
2. Aim is to move from Square A to Square B upon
realizing implementation difficulties.
C D
1. Company demonstrates excellent implementation 1. Companies lack a sound strategy formulation and
skills but has a flawed strategy formulation. face challenges in implementation.
2. Priority is to redesign the strategy before adjusting 2. Path to success involves business model redesign
implementation/execution skills. and readjustment of implementation/execution.
 ￫ Strategy is not merely a long-term plan but involves adapting competitive position to reach a preferred future state
amid changing circumstances.
￫ Strategic moves must be modified in response to competitors' actions.
￫ In contrast, some organizations focus inwardly during times of stress, emphasizing cost cutting and shedding
unprofitable divisions rather than strategic direction.
￫ This efficiency-focused approach prioritizes the relationship between inputs and outputs over the attainment of
organizational goals.
￫ Efficiency is managed by operational managers, while top management is responsible for the organization's
strategic orientation and effectiveness in achieving desired competitive positions.

1. Organizations in Cell 1 thrive with efficient output/input ratios, achieving their

goals.
2. Those in Cell 2 or 4 are doomed without strategic direction.
3. Cell 2 is worse than Cell 3 , where strategic direction ensures effectiveness
despite excessive input.
4. Survival relies on effectiveness rather than efficiency alone.

￫ Effectiveness means doing the right thing, while efficiency means doing things right.
￫ Emphasizing efficiency over effectiveness is misguided.
￫ Effectiveness is determined by various interest groups within an organization, each seeking different advantages.
￫ A technically perfect strategic plan is useless if not effectively implemented.
￫ Organizations often focus excessively on developing plans rather than on implementation.
￫ Change occurs through implementation and evaluation, not just through planning.
￫ A well-implemented imperfect plan achieves more than a perfect plan that remains on paper.
￫ Successful strategy formulation doesn't guarantee successful implementation.
￫ Implementation is more challenging than formulating strategy.
➱ Difference between Strategy Formulation and Implementation

￫ Strategy formulation concepts and tools are generally similar across different types and sizes of organizations.
￫ However, strategy implementation varies significantly based on organization type and size.
￫ Implementation involves various actions like altering sales territories, hiring, pricing strategy changes, etc.
 ￫ Activities differ greatly among manufacturing, service, and governmental organizations.
￫ In reality, formulation and implementation processes are intertwined.
￫ Forward linkages deal with the impact of formulation on implementation, while backward linkages deal with the
impact in the opposite direction.

➱ Linkages and Issues in Strategy Implementation

￫ Formulation: Entrepreneurial activity; involves strategic decision-making.
￫ Implementation: Administrative task; involves both strategic and operational decision-making.
⇝ Forward Linkages:
∙ Strategy formulation involves:
⁃ Objective setting
⁃ Environmental and organizational appraisal
⁃ Identifying strategic alternatives
⁃ Making strategic choices
⁃ Creating a strategic plan
∙ Formulation affects implementation:
⁃ Requires organizational changes like adjusting structure and leadership style
⁃ New or modified strategies lead to organizational adjustments

⇝ Backward Linkages:
∙ Implementation influenced by formulation:
⁃ Past strategic actions impact current choices
∙ Strategy choice considers:
⁃ Feasibility with present resources
⁃ Incremental changes over time
 ◦ Issues in Strategy Implementation
⁃ Broad scope covering various management disciplines
⁃ Requires diverse knowledge, skills, attitudes, and abilities from strategists
⁃ Tests abilities in resource allocation, organizational design, policy formulation, and strategic leadership
1. Activation of Strategies:
⁃ Strategies are statements of intent; implementation is necessary to realize them
⁃ Strategic plan outlines how strategies will be put into action
2. Programme Formulation:
⁃ Programmes encompass goals, policies, procedures, rules, and action steps
⁃ Supported by allocated funds for implementation
3. Project Development:
⁃ Projects are specific programmes with predetermined time schedules and costs
⁃ Requires capital budgeting for fund allocation
⁃ Research and development programmes consist of multiple projects with specific objectives, funding, and timelines

⁃ Strategy implementation involves more than just formulating plans, programs, and projects.
⁃ It encompasses various stages and considerations:
1. Project implementation
2. Procedural implementation
3. Resource allocation
4. Structural implementation
5. Functional implementation
6. Behavioural implementation

⁃ Implementation activities may not occur strictly in sequence; they can overlap or occur simultaneously.
⁃ The transition from strategy formulation to implementation involves a shift in responsibility from strategists to
divisional and functional managers.
⁃ Problems may arise due to this shift, especially if strategic decisions surprise middle and lower-level managers.
⁃ Managers and employees are motivated more by perceived self-interests, necessitating alignment with
organizational interests.
⁃ Involving divisional and functional managers in strategy formulation and strategists in implementation is crucial.
⁃ Management issues central to strategy implementation include:
↦ Establishing annual objectives
↦ Devising policies
↦ Resource allocation
↦ Organizational structure adjustments
↦ Restructuring and reengineering
↦ Reward and incentive plan revisions
↦ Resistance to change minimization
↦ Cultivating a strategy-supportive culture
↦ Adapting production/operations processes
↦ Developing effective human resource systems
↦ Downsizing if necessary
↦ Extensive management changes are required when implementing strategies leading the firm in a new
direction.
⁃ Managers and employees should actively participate in strategy implementation from the outset.
⁃ Their involvement should stem from prior engagement in strategy formulation.
⁃ Genuine commitment from strategists is a powerful motivator for managers and employees.
⁃ Lack of strategist involvement can hinder organizational success.
⁃ Clear understanding of objectives and strategies is essential throughout the organization.
⁃ Awareness of competitors' achievements, products, plans, actions, and performance is crucial.
⁃ External opportunities and threats should be transparent, with satisfactory answers to questions from managers
and employees.
⁃ Top-down communication facilitates bottom-up support.
 ⁃ Developing a competitor focus at all levels involves gathering and disseminating competitive intelligence widely.
⁃ Every employee should benchmark their efforts against best-in-class competitors.
⁃ Training for managers and employees ensures they possess and maintain necessary skills for excellence.

3. STRATEGIC CHANGE THROUGH DIGITAL TRANSFORMATION

➱ Strategic Change
￫ Strategic change is a complex process that involves a corporate strategy focused on new markets, products, services
and new ways of doing business
￫ Steps to Initiate Strategic Change: [ Recognise - a shared vision - and Institutionalize ]
1. Recognize the need for change:
∙ Diagnose the current corporate culture's alignment with the strategy.
∙ Conduct environmental scanning, including SWOT analysis.
∙ Identify areas requiring change and scope for improvement.
2. Create a shared vision to manage change:
∙ Align individual and organizational objectives.
∙ Establish a shared vision to eliminate conflicts.
∙ Senior managers must consistently communicate the vision to all members.
∙ Demonstrate credibility and seriousness through visible actions.

3. Institutionalize the change:

∙ Implement the changed strategy.
∙ Foster a lasting attitude towards change.
∙ Ensure the firm maintains a capacity for self-renewal.
∙ Monitor and review the change process regularly.
∙ Address discrepancies and deviations promptly.
∙ Allow time for the new culture to take hold.
✧ Kurt Lewin's Model of Change:
1. Unfreezing the situation:
∙ Make individuals aware of the need for change.
∙ Avoid surprising or sudden changes.
∙ "Unfreeze" old attitudes and behaviors by breaking down existing customs and traditions.
∙ Use announcements, meetings, and promotion of new ideas to facilitate unfreezing.

2. Changing to the new situation:

∙ Redefine behavior patterns after unfreezing.
∙ Three methods for reassigning new behavior patterns:
◦ Compliance: Enforce rewards and punishments to influence behavior.
◦ Identification: Encourage individuals to identify with role models and adopt their behavior.
◦ Internalization: Encourage internal changes in thought processes to adjust to new circumstances.

3. Refreezing:
∙ New behavior becomes a normal way of life.
∙ Ensure the new behavior replaces the old behavior completely.
∙ Continuously reinforce the new behavior to maintain its permanence.
∙ Refreezing is necessary for successful and lasting change.

➱ How does digital transformation work?

￫ Digital transformation involves using digital technologies to improve or create new company procedures, goods, or
services.
￫ It's a fundamental shift that can be challenging to identify and implement.
￫ Change management helps organizations plan, prepare for, and execute changes, including digital transformations.
￫ When implemented correctly, change management helps overcome obstacles and maximize investment rewards.
￫ Change management in digital transformation comprises four key elements:
1. Defining transformation goals and objectives.
2. Assessing the current state of the organization and identifying gaps.
3. Creating a change roadmap outlining necessary steps.
4. Implementing and managing change across all organizational levels.

⇾ How does change management work?

￫ Change management is a process or set of tools and best practices used to manage changes in an organization.
￫ It facilitates making changes in a safe and regulated manner, minimizing negative impacts on the company.
￫ Change management can be utilized by any type of organization, including enterprises, organizations, governmental
bodies, and even families.
￫ Various change management models and methods exist, but they share common elements:
- Creating a clear vision for the change.
- Involving stakeholders in the change process.
- Developing a plan for implementing the change.
- Monitoring and evaluating the results of the change.
￫ Despite being perceived as difficult and complex, change management is crucial for the success of digital
transformation projects.

⇾ The role of change management in digital transformation

￫ Change management plays a crucial role in digital transformation, which is the process of organizational change
using technology to create new value.
￫ A robust change management strategy is essential for successful digital transformation.
￫ Change management involves planning, implementing, and monitoring changes to achieve organizational objectives
while minimizing risks and disruptions.
￫ For organizations undergoing digital transition, change management is vital.
 ￫ A well-executed change management strategy can help an organization:
∙ Define parameters and goals of the digital transformation.
∙ Identify procedures and tools needing modification.
∙ Develop a plan for implementing improvements.
∙ Engage staff members and stakeholders in the transformation process.
∙ Monitor progress and make necessary adjustments.
￫ Change management is particularly important in current times as organizations can enhance their success chances
by approaching change proactively and systematically.

➱ Change Management Strategies for Digital Transformation

￫ Change management is a crucial area of focus for ensuring successful transformation.
￫ Modern businesses face responsibilities beyond managing staff, clients, and products.
￫ They must also navigate the introduction of new technology, emerging market opportunities, and shifts in customer
preferences.
￫ Successful firms adapt their management techniques to effectively manage change
￫ The five best practices for managing change in small and medium-sized businesses are:
1. Begin at the top:
- Leadership alignment and commitment are essential.
- A united leadership sets the tone for organizational change.
- Cultivating a culture that embraces change starts with leadership.
2. Ensure change is necessary and desired:
- Decision-makers should understand the implications of digital transformation.
- Lack of strategy can lead to challenges in managing change effectively.
- Introducing change too rapidly without a solid strategy can lead to issues later on.
3. Reduce Disruption:
- Employee perceptions of change can vary based on department, rank, or past experiences.
 - It's vital to minimize disruptions caused by changes.
- Strategies to reduce workplace disruption include:
a. Early communication and preparation for potential interruptions.
b. Providing employees with necessary knowledge and tools to adapt.
c. Cultivating an environment that fosters change acceptance.
d. Empowering change agents, like project managers or team leaders, to provide clarity and context.
e. Ensuring the IT department is aware of technological changes and prepared to support them.
4. Encourage communication:
- Establish channels for employees to voice questions or concerns.
- Foster departmental collaboration to share ideas and innovations.
- Effective communication enhances efficiency and influences organizational culture.
- Reassure employees about changes through transparent communication, keeping everyone informed and aligned.
5. Recognize change as the norm:
- Change readiness is vital for continuous adaptation and performance.
- Businesses must anticipate and prepare for ongoing changes to meet customer needs.
- Change is not a one-time project but an ongoing process, requiring proactive preparation and adaptability.

➱ How to manage change during digital transformation?

￫ Any organisation may find the work of digital transformation challenging and overwhelming.
￫ To ensure that a digital transition is effective, change management is essential.
￫ Here are some pointers for navigating change during the digital transformation:
1. Specify aims and objectives:
- Clearly define the intended outcomes and precise objectives of the digital transformation.
- Ensure alignment and understanding among stakeholders to pursue common goals.
2. Prioritize communication:
- Regularly and transparently communicate the objectives and impacts of the digital transformation to all stakeholders.
- Address concerns and uncertainties to facilitate acceptance and adjustment to change.
 3. Prepare for resistance:
- Anticipate potential resistance to change, even when beneficial, and develop strategies to address it effectively.
4. Implement changes gradually:
- Gradually introduce changes instead of overwhelming individuals with sudden transformations.
- Allow time for adaptation to the new processes and technologies.
5. Provide assistance and training:
- Offer guidance and training to employees on new procedures, software, and tools.

4. ORGRANISATIONAL FRAMEWORK
⇢ The McKinsey 7S Model analyzes a company's
organizational design.
⇢ It aims to illustrate how effectiveness is achieved
through interactions of hard and soft elements.
⇢ The model focuses on "Soft Ss" and "Hard Ss".
⇢ It highlights the interrelatedness of these elements,
suggesting that changes in one aspect may impact
others, necessitating a balance for effectiveness.

➙ Hard elements (directly controlled by the management)

Elements Description
Strategy - Direction of the organization
- Blueprint for leveraging core competencies and achieving competitive advantage
- Drives margins and leads industry
Structure - Determines organizational design based on resource availability and desired level of
centralization or decentralization
Systems - Development of daily tasks, operations, and teams to efficiently and effectively execute goals and
objectives
➙ Soft elements (governed by the culture)
Elements Description
Shared - Core values reflected in organizational culture
Values - Influence code of ethics
Style - Leadership style influencing strategic decisions - Impacts motivation and goal achievement
Staff - Talent pool of the organization
Skills - Core competencies and key skills of employees
- Crucial for organizational success

⇢ Limitations of the McKinsey 7S Model:

∙ Ignores the importance of the external environment, focusing solely on internal elements.
∙ Lacks clarity in defining organizational effectiveness or performance.
∙ Considered static and less flexible for decision-making.
∙ Criticized for gaps in conceptualization and execution of strategy.

➱ Organization Structure
￫ Changes in corporate strategy often require changes in the way an organization is structured for two major reasons.

Structure largely dictates how operational objectives and Structure dictates how resources will be
policies will be established to achieve the strategic allocated to achieve strategic objectives.
objectives.

· Product-based organizational structure : Objectives and ∙ Structure based on customer groups :

policies primarily focused on product groups. Resources allocated accordingly.
· Geographic organizational structure : Objectives and ∙ Structure based on functional business lines :
policies primarily expressed in geographic terms. Resources allocated by functional areas
￫ According to Chandler, strategy changes necessitate changes in organizational structure.
￫ Structure should be designed to support strategic pursuits.
￫ Structure should follow strategy.
￫ Chandler identified a common structure sequence in growing and evolving organizations.
￫ No universally optimal organizational design for a specific strategy.
￫ Appropriate design varies across organizations.
￫ As companies grow, their structures evolve. Consumer goods firms adopt divisional structures. Small firms are
centralized, medium-sized firms are decentralized, and large firms use SBUs or matrix structures. Growing
organizations become more complex by combining strategies.

￫ External and internal forces influence every firm, but changing the structure for each force would lead to chaos.
￫ When a firm changes its strategy, the existing organizational structure may become ineffective.
￫ Symptoms of an ineffective organizational structure include:
‣ Too many levels of management
‣ Too many meetings with too many participants
‣ Excessive attention on resolving interdepartmental conflicts
‣ Too large span of control
‣ Unachieved objectives
￫ Structural changes can support strategy implementation, but cannot fix a bad strategy, managers, or products.
￫ Structure can also influence the choice of strategy, as massive structural changes may not be attractive.
 ￫ Different types of organizational structures include:
‣ Functional
‣ Divisional by geographic area
‣ Divisional by product
‣ Divisional by customer
‣ Divisional process
‣ Strategic business unit (SBU)
‣ Matrix
￫ Companies need appropriate organizational structures to implement and manage formulated strategies.
￫ Organizational structure reflects the company's intended roles, procedures, authority, and decision-making
processes.
￫ The structure must align with the company's strategy for effectiveness.

➲ Types of Organization Structure

➥ Simple Structure :-
↠ Suitable for single-business strategy and single geographic market.
↠ Appropriate for focused cost leadership or focused differentiation strategies.
↠ Owner-manager makes major decisions and monitors activities.
↠ Little specialization, few rules, and little formalization.
↠ Direct involvement of owner-manager in day-to-day operations.
↠ Frequent and direct communication, quick introduction of new products.
↠ Few coordination problems compared to larger organizations.

➣ Competitive advantages of simple structure for small companies:

∙ Broad-based openness to innovation
∙ Greater structural flexibility
∙ Ability to respond rapidly to environmental changes
➣ Limitations of simple structure as company grows:
∙ Increased need for processing competitively relevant information
∙ Pressure on owner-managers due to lack of skills or time

➥ Functional Structure :-
↠ Widely used in business organizations
↠ Simple and low-cost
↠ Groups tasks by business function
↠ Promotes specialization of labor
↠ Encourages efficiency and rapid decision-making
↠ Minimizes the need for elaborate control systems

➣ Components of functional structure:

∙ Chief executive officer/Managing director
∙ Corporate staff and functional line managers
∙ Dominant functions: Production, finance/accounting, marketing, R&D, engineering, human resources

➣ Advantages of functional structure:

∙ Overcomes growth-related constraints
∙ Facilitates communication and coordination

➣ Potential problems of functional structure:

∙ Differences in specialization may impede communication
∙ Need for integration and coordination by CEO
∙ Risk of functional specialists losing sight of strategic vision
⤷ Solution: Multidivisional structure to overcome problems
➥ Divisional Structure :-
↠ Firm growth necessitates managing diverse products and services in different markets.
↠ Divisional structure becomes necessary for motivation, control, and competitiveness.
↠ Divisional structure options: geographic, product/service, customer, or process.

➣ Advantages of divisional structure:

∙ Clear accountability for divisional managers.
∙ Visible performance results leading to higher employee morale.
∙ Career development opportunities, local control, competitive climate.
∙ Ease of adding new businesses and products.

➣ Limitations of divisional structure:

∙ Costly due to functional specialists, duplication, qualified managers.
∙ Requires elaborate control system.
∙ Challenges in maintaining consistent practices.

∙ Suits organizations tailoring strategies to meet diverse customer needs

Divisional structure by
geographic area
Divisional structure by
product or services
across different regions.
∙ Ideal for organizations with branch facilities dispersed across wide
geographic areas.
∙ Facilitates local decision-making and enhances coordination within each
region.
∙ Suitable for emphasizing specific products or services.
∙ Used when an organization offers a few distinct products or services.
∙ Allows strict control and attention to product lines.
∙ May require skilled management and reduced top management control.
∙ Examples: General Motors, DuPont, Procter & Gamble.

Divisional structure by
customer
Divisional structure by
process
∙ Effective for organizations with a few important customers and diverse
services.
∙ Enables catering to specific customer groups.
∙ Examples: Book-publishing companies, airline companies.
∙ Resembles functional structure but with accountability for profits or
revenues.
∙ Organized based on the actual performance of work.
∙ Examples: Banking divisions like personal banking, corporate banking.

➥ Multi Divisional (M-Form) Structure :-

↠ Composed of separate operating divisions, each representing a distinct business.
↠ Division managers are delegated responsibility for day-to-day operations and business unit strategy.
↠ Corporate office focuses on overall corporate strategy and manages divisions through controls.
↠ Developed in the 1920s to address coordination and control issues in large firms.
➣ Challenges addressed by M-form structure:
∙ Difficulty of functional departments in dealing with diverse product lines and markets.
∙ Coordination of conflicting priorities among products.
∙ Lack of cost allocation to assess individual product profitability.
∙ Loss of control and suboptimal resource allocation between products.
∙ Over-involvement of top managers in short-term problems, neglecting long-term strategic issues.
↠ Multidivisional structure calls for :
♦ Creating separate divisions, each representing a distinct business
♦ Each division would house its functional hierarchy
♦ Division managers have responsibility for day-to-day operations.
♦ Corporate office determines long-term strategic direction and exercises financial control.
⤷ Benefits include improved performance monitoring, control, resource allocation, and motivation for
improvement.
↠ Strategic controls for less diversified firms
↠ Financial controls for increased diversification
⁃ Corporate officers understand strategies implemented in
separate business units.
⁃ Corporate officers manage divisions through budgets and profit
focus.
⁃ Each division's performance largely independent of others.

➥ Strategic Business Unit (SBU) Structure :-

↠ Strategic Business Units (SBU) are relevant for multi-product, multi-business enterprises.
↠ They group related businesses together for composite strategic planning.
↠ Large enterprises need to organize their numerous businesses into manageable units for effective planning.
↠ SBUs allow for focused strategic planning treatment for each product/business within the group.
↠ The grouping of businesses into SBUs is done scientifically to ensure effective planning and management.
↠ Characteristics of an SBU:
∙ Single business or related businesses with independent planning potential.
∙ Has its own competitors.
∙ Managed by a responsible individual for strategic planning and profit performance.
↠ Historically, large, multi-business firms handled business planning territorially due to their territorial structure, often
based on manufacturing or distribution logistics.
↠ However, using territories as units for strategic planning led to difficulties:
1. Variation in strategic planning treatment for the same product across different territorial units.
2. Identical strategic planning treatment for products with dissimilar characteristics within the same territorial
unit.
↠ The concept of Strategic Business Units (SBU) addresses these issues.
↠ SBUs recognize that territorial units don't necessarily equate to separate businesses.
↠ The goal is to group businesses into appropriate SBUs before undertaking strategy formulation.
↠ SBU structure delegates responsibility for day-to-day operations and strategy to managers within each unit.
↠ Corporate office oversees overall strategy and manages SBUs through strategic and financial controls.
↠ SBUs group similar products and empower senior executives to report directly to the CEO.
↠ This structure enhances strategy implementation by improving coordination and accountability within distinct
business units.

↠ A strategic business unit (SBU) structure comprises three levels: corporate headquarters, SBU groups, and divisions
grouped by relatedness within each SBU.
↠ This structure allows for more accurate monitoring of individual businesses, simplifying control problems.
↠ Comparisons between divisions are facilitated, improving resource allocation.
↠ Poorly performing divisions are incentivized to improve their performance.
↠ Divisions within each SBU are related, while SBU groups are unrelated to each other.
↠ Divisions producing similar products or using similar technologies are organized within each SBU to achieve synergy.
↠ SBUs are treated as profit centers, controlled by corporate headquarters focusing on strategic planning.
↠ This setup enables individual divisions to react quickly to environmental changes.
↠ The principle guiding SBU grouping is to place all related products under one SBU based on their functional
standpoint.
↠ This concept assists multi-business corporations in scientifically organizing their businesses into distinct units.
↠ Grouping businesses into SBUs aids in enhancing strategic management efforts.
↠ SBU concept provides clarity and direction to strategic planning, reducing ambiguity and confusion in multi-business
enterprises regarding business grouping.
 ➙ Attributes and Benefits of an SBU Structure:
1. Scientific method of grouping businesses in a multi-business corporation for strategic planning.
2. Improvement over territorial grouping, focusing on functional relationships.
3. SBUs are groupings of related businesses for distinct strategic planning.
4. Analyses and segregates businesses into well-defined, scientifically demarcated units.
5. Separates unrelated products/businesses and assigns them to appropriate SBUs.
6. Removes vagueness and confusion in business grouping, facilitating correct strategic planning.
7. Each SBU is treated as a separate business with distinct mission, objectives, competition, and strategy.
8. Each SBU has its own set of competitors and strategy.
9. Each SBU has a CEO responsible for strategic planning and profit performance.
10. Relatedness of SBUs can stem from similar technologies, products, markets, or competencies.
11. Relatedness influences decisions about diversification strategies and resource allocation.

➥ Matrix Structure :-
↠ The matrix structure is appropriate when functional and divisional structures are not suitable for strategy
implementation.
↠ In a matrix structure, functional and product forms are combined at the same level, with employees having two
superiors.
↠ Involves both vertical and horizontal flows of authority and communication.
↠ Matrix structure can result in higher overhead and complexity due to dual lines of authority, dual reporting
channels, and the need for effective communication.
↠ Despite its complexity, the matrix structure is widely used in industries such as construction, healthcare, research,
and defense.
↠ Effective implementation of a matrix structure requires planning, training, clear roles and responsibilities, internal
communication, and trust.
↠ Matrix structure is suitable for businesses pursuing strategies involving new products, customer groups, and
technology.
↠ It combines the stability of the functional structure with the flexibility of the product form.
↠ The matrix structure is useful when the external environment is complex and changeable, but conflicts around
duties, authority, and resource allocation can arise.
↠ Matrix structure is found in organizations or SBUs when :
1) Ideas need to be cross-fertilised across projects or products
2) Resources are scarce
3) Abilities to process information and to make decisions need to be improved.
↠ Advantages of a matrix structure :-
∙ clear project objectives ∙ visible results
∙ multiple communication channels ∙ ease of shutting down projects
↠ Matrix structure development proposed by Davis and Lawrence consists of three phases:
Phase 1 Cross-functional task forces: Temporary teams with a project manager as the key link.
Product/brand management: Task forces become more permanent, project manager becomes a
Phase 2
product or brand manager.
Phase 3 Mature matrix: True dual-authority structure with permanent functional and product structures.

➥ Network Structure :-
↠ The network structure is a radical organizational design that eliminates in-house functions and relies heavily on
outsourcing.
↠ It is characterized by project groups or collaborations linked through non-hierarchical, cobweb-like networks.
↠ A virtual organization composed of independent firms or business units connected by a common system.
↠ The network structure is useful in unstable environments that require innovation and quick response.
↠ It relies on contracting for specific projects or time periods instead of employing salaried workers.
↠ Long-term contracts with suppliers and distributors replace vertical integration.
↠ Business functions are scattered geographically, and the organization acts as a shell with a small headquarters
connecting different entities.
➣ Advantages of the network structure:
∙ Increased flexibility and adaptability to rapid technological change and shifting competition.
∙ Concentration on core competencies while benefiting from the expertise of other firms.
∙ Ability to subcontract functions to low-cost providers, reducing costs.
∙ Access to a network of independent firms or business units for designing, producing, and marketing
products/services.
➣ Disadvantages of the network structure:
∙ Potential challenges in finding suitable partners and managing multiple relationships.
∙ Missed synergies that could arise from combining activities in-house.
∙ Risks of overspecialization if certain functions are outsourced excessively, leading to reduced
competitiveness.
➣ Implications of the network structure:
∙ Requires a learning organization where employees become self-motivated, continuous learners.
∙ Employees may lack confidence to actively participate in organization-sponsored learning experiences.
∙ Flatter organizational structures demand more intense and personal interactions with internal and external
stakeholders.
∙ The combination of these factors can create stress for many employees.
➥ Hourglass Structure :-

↠ Information technology and communications have significantly changed organizational functioning.

↠ Middle management's role is diminishing due to tasks being replaced by technological tools.
↠ The hourglass organization structure consists of three layers, with a constricted middle layer.
↠ Information technology links the top and bottom levels, reducing tasks performed by middle managers.
↠ Middle managers in the hourglass structure are generalists, handling cross-functional issues.
↠ Benefits of the hourglass structure include reduced costs and enhanced responsiveness.
↠ Decision-making authority is shifted closer to the source of information for faster decisions.
↠ However, reduced middle management size leads to diminished promotion opportunities and potential monotony
for lower-level employees.
↠ Organizations address these issues by assigning challenging tasks, lateral transfers, and implementing performance-
based rewards.

➱ Organization Culture
➡ Where Does Corporate Culture Come From?
￫ Sources and elements of corporate culture:
∙ Values and business principles preached and practiced by management.
∙ Ethical standards and official policies.
∙ Stakeholder relationships, including interactions with employees, unions, stockholders, vendors, and communities.
 ∙ Traditions and rituals maintained by the organization.
∙ Supervisory practices and leadership styles.
∙ Attitudes and behavior of employees.
∙ Legends and stories shared within the organization.
∙ Peer pressures and social dynamics in the work environment.
∙ Organizational politics and power dynamics.

￫ Origins of cultural beliefs and practices :

∙ Influential individuals, work groups, departments, or divisions.
∙ Any level of the organizational hierarchy, from top to bottom.

￫ Importance of stories in shaping culture :

∙ Stories are often used to illustrate the significance of certain values, beliefs, and ways of operating.
∙ Stories contribute to the transmission of cultural norms and practices.
∙ They help newcomers understand and internalize the organization's culture.

➡ Culture: ally or obstacle to strategy execution?

￫ Culture can either be an ally or an obstacle to strategy execution.
￫ When the culture is compatible with the strategy, it becomes a valuable ally in execution.
￫ Incompatible culture creates conflicts and hinders successful strategy implementation.
￫ A supportive culture fosters employee engagement and alignment with strategic goals.
￫ Misaligned culture can lead to resistance, lack of motivation, and difficulty in changing practices.
￫ Organizations need to assess cultural alignment and bridge any gaps through change initiatives.
￫ Culture plays a significant role in strategy execution and should be managed accordingly.

➡ Role of culture in strategy execution

￫ Strong culture promotes good strategy execution when there's fit and hinders execution when there's negligible fit.
 ￫ Culture grounded in values, practices, and behavioral norms that align with strategy execution energizes employees
and enhances its effectiveness.
E.g.:- 1) Frugality and thrift as shared values facilitate successful execution of a low-cost leadership strategy.
2) Creativity, embracing change, and challenging the status quo as pervasive themes foster successful
execution of a product innovation and technological leadership strategy.
3) Business principles like listening to customers, encouraging pride in work, and granting decision-making
authority facilitate successful execution of a strategy focused on delivering superior customer value.
￫ A work environment with a culture that matches the conditions for good strategy execution provides informal rules
and peer pressure for conducting business and performing job tasks.
￫ Strategy-supportive cultures influence the mood, temperament, and motivation of the workforce, impacting
organizational energy, work habits, cooperation between units, and customer treatment.
￫ A strong strategy-supportive culture:
⁃ Nurtures and motivates employees to work in ways conducive to effective strategy execution.
⁃ Provides structure, standards, and a value system to operate within.
⁃ Promotes strong employee identification with the company's vision, performance targets, and strategy.
⁃ Enhances job satisfaction and enthusiasm among employees.
⁃ Stimulates employees to take on the challenge of realizing the company's vision, perform competently and
collaboratively, and bring the strategy to fruition.

➡ Perils of Strategy-Culture Conflict

￫ When a company's culture is not aligned with strategic requirements, rapid changes are necessary, assuming the
culture is the mismatched element rather than the strategy.
￫ Resolving strategy-culture conflicts typically involves revamping the mismatched cultural features to achieve
strategy fit, rather than altering the strategy itself.
￫ The degree of difficulty in implementing new strategies increases with the level of entrenched mismatched cultural
aspects.
￫ A significant and prolonged strategy-culture conflict undermines managerial efforts and can potentially lead to the
failure of the strategy.
 ￫ Strategy-culture conflicts must be addressed to ensure effective strategy execution and organizational success.

➡ Creating a strong fit between strategy and culture

￫ Strategy makers should choose a strategy compatible with the prevailing corporate culture.
￫ Strategy implementers must modify culture to overcome hindrances to effective execution.
￫ Addressing cultural barriers enhances strategy execution and desired outcomes.

➡ Changing a problem culture

￫ Changing a company's culture to align it with strategy is a challenging task that requires concerted management
action over time.
￫ The emotional attachment to old values and habits makes changing a problem culture difficult.
￫ The first step is diagnosing which aspects of the culture are supportive or not supportive of the strategy.
￫ Open and honest communication is necessary to discuss the aspects of the culture that need to be changed.
￫ Visible and aggressive actions must follow the discussion to modify the culture and establish a new one aligned with
the strategy.
￫ Actions may include revising policies, adjusting incentive compensation, recognizing and praising individuals
exhibiting the desired cultural traits, recruiting employees with the desired cultural values, replacing executives
associated with the old culture, and consistently communicating the basis and benefits of cultural change.
￫ The chief executive's commitment and persistence in reinforcing the culture through words and deeds are crucial
for implanting the needed culture-building values and behavior.
￫ Culture change requires involvement from the entire management team, with senior managers, department heads,
and middle managers emphasizing values and translating them into practice.
￫ Enlisting the support of first-line supervisors and employee opinion leaders is important for successful cultural
enforcement throughout the organization.
￫ It takes time for a new culture to emerge and prevail, and the timeframe for significant cultural change can range
from two to five years in large organizations.
￫ Reshaping an entrenched, non-supportive culture is typically more challenging than establishing a supportive
culture in a new organization.
5. STRATEGIC LEADERSHIP
⇢ Strategic leadership defines the firm's direction by:
∙ Developing and communicating a vision of the future.
∙ Formulating strategies considering internal and external environments.
∙ Implementing necessary changes to execute strategies.
∙ Inspiring staff to contribute to strategy execution.
⇢ A manager as a strategic leader fulfills various roles, including:
- Visionary - Spokesperson
- Chief entrepreneur and strategist - Negotiator
- Chief administrator - Motivator
- Culture builder - Arbitrator
- Resource acquirer and allocator - Policy maker
- Capabilities builder - Crisis manager
- Process integrator - Head cheerleader
⇢ Different leadership styles are employed based on the situation:
◦ Strongly participative ◦ Authoritarian when necessary
◦ Coach and adviser ◦ Perceptive listener and compromising decision maker

⇢ Managers have five leadership roles to play in pushing for good strategy execution:
1. Staying on top of what is happening (closely monitoring progress, solving out issues, and learning what obstacles lie in the path of good execution)
2. Promoting a culture of esprit de corps (mobilizes and energizes organizational members to execute strategy in a competent fashion)
3. Keeping the organization responsive to changing conditions (alert for new opportunities, developing competitively valuable competencies
and capabilities)

4. Exercising ethical leadership (company conduct its affairs like a model corporate citizen)
5. Pushing corrective actions for improvement (overall strategic performance)
⇢ Leadership role in implementation:
⁃ Strategic leaders must effectively use the strategic management process.
⁃ Guide the company in forming strategic intent and mission.
⁃ Facilitate the development and implementation of strategic plans.
⁃ Provide guidance to employees for achieving strategic goals.

⇢ Characteristics of strategic leadership:

⁃ Anticipating and envisioning changes in the external environment.
⁃ Maintaining flexibility to adapt to rapid and complex changes.
⁃ Empowering others to create strategic change.
⁃ Influencing the behavior, thoughts, and feelings of coworkers.

⇢ Adapting frames of reference:

∙ Strategic leaders need to adapt their mindset to deal with complex changes.
∙ A manager's frame of reference shapes their understanding of the company, industry, and core
competencies.
∙ Competitive battles are between mindsets or managerial frames.

Responsibilities of a strategic leader

Making strategic Formulating policies and Ensuring effective Managing human

decisions. action plans for communication within capital
implementation. the organization

Managing change in the Creating and sustaining a Sustaining high

organization strong corporate culture performance over time
 ⇢ Strategic leadership skills of managers impact company performance which are needed to be developed for future
benefit.
⇢ Strategic leadership vs. managerial leadership :-
∙ Strategic leadership sets the firm's direction and inspires organizational members.
∙ Managerial leadership focuses on short-term, day-to-day activities.

Transformational leadership style Transactional leadership style

Uses charisma and enthusiasm to inspire others.
Appropriate in turbulent environments, industries at
the start or end of their life-cycles, and poorly
performing organizations.
Offers vision, intellectual stimulation, and personal
satisfaction.
Motivates followers to exceed expectations and
promotes innovation.
Uses authority to exchange rewards or penalties for
achievement or non-achievement.
Appropriate in static environments, mature industries,
and well-performing organizations.
"Focuses on designing systems, controlling
organizational activities, and building on existing
culture to enhance current practices."
Persuades people to work efficiently and ensures
smooth operations.

6. STRATEGIC CONTROL
⇢ Control is a vital function of management and is considered the core of the management process.
⇢ Its purpose is to ensure the performance of planned activities and achieve predetermined goals.
⇢ Control regulates and checks:
∙ Structures and conditions behavior of events and people
∙ Places restraints on undesirable tendencies
∙ Ensures conformity to norms and standards
∙ Measures progress to keep the system on track
⇢ It ensures planned actions translate into results, monitors resource use, and safeguards assets.
⇢ The controlling function involves:
- Monitoring activities
- Measuring results against standards
- Analyzing and correcting deviations
- Maintaining/adapting the system
⇢ It facilitates continuous organizational learning and improvement to cope with growth and development demands.
⇢ The process of control consists of the following elements:
(a) Objectives of the business system, which are operationalized into measurable and controllable standards.
(b) A mechanism for monitoring and measuring the performance of the system.
(c) A mechanism for:
(i) Comparing actual results with standards.
(ii) Detecting deviations from standards.
(iii) Learning new insights on standards themselves.
(d) A mechanism for feedingback:
- Corrective and adaptive information
- Instructions to the system to effect desired changes
- Keeping the system on course.

⇢ Primarily there are three types of Organizational Control : -

Operation Control Management Control Strategic Control

-
↬ Operational Control:
⁃ Operational Control focuses on individual tasks or transactions rather than total management functions.
⁃ For example, procuring specific items for inventory versus inventory management as a whole.
⁃ Operational control areas are identifiable by a clear and measurable relationship between inputs and outputs.
⁃ Many organizational control systems are operational and mechanistic.
⁃ Control involves regulating processes within tolerances, regardless of external conditions.
⁃ Examples of operational controls include:
◦ Stock control (maintaining stocks within set limits)
◦ Production control (following set production schedules)
◦ Quality control (ensuring product quality within agreed limits)
◦ Cost control (maintaining expenditure as per standards)
◦ Budgetary control (keeping performance within budget)

↬ Management Control:
⁃ Management Control encompasses broader and more integrated activities of departments, divisions, or the entire
organization compared to operational control.
⁃ It focuses on achieving enterprise goals, both short-term and long-term, in the most effective and efficient manner.
⁃ Robert Anthony defines management control as "the process by which managers assure that resources are obtained
and used effectively and efficiently in the accomplishment of the organization's objectives."
⁃ Controls are essential to influence the behavior of events and ensure conformity to plans.

↬ Operational Control:
⁃ Strategic Control, as defined by Schendel and Hofer, focuses on two key questions:
1. Whether the strategy is being implemented as planned?
2. Whether the results produced by the strategy align with the intended outcomes?
⁃ There is often a time gap between strategy formulation and implementation, during which internal and external
changes can impact the strategy.
 ⁃ Warning systems are needed to track strategy implementation and identify any deviations or challenges.
⁃ Strategic control involves evaluating the strategy as it is formulated and implemented.
⁃ Its aim is to identify problems, changes in premises, and make necessary adjustments to ensure strategy
effectiveness.

➥ Types of Strategic Control:

1. Premise Control :-
∙ Premise control is a tool for monitoring the validity and accuracy of the assumptions or premises on which a
strategy is built.
∙ It involves systematic and continuous monitoring of the complex and turbulent organizational environment.
∙ Two types of factors are monitored in premise control:
1) Environmental factors: Economic, technological, social, and legal-regulatory aspects.
2) Industry factors: Competitors, suppliers, substitutes.
∙ Managers need to select and prioritize the premises that are likely to change and have a significant impact on the
organization and its strategy.
∙ Different premises may require different levels of control based on their potential impact and likelihood of change.

2. Strategic Survelliance :-
∙ General monitoring of various information sources to uncover unexpected information relevant to the
organizational strategy.
∙ Unfocused approach to gathering insights and developments.
∙ Involves casual environmental browsing, reading publications, attending meetings, conferences, and
discussions.
∙ Less structured than other forms of strategic control but effective in uncovering relevant information.
3. Special Alert Control :-
∙ Special alert control is activated in response to unexpected events that require organizations to reassess their
strategy.
∙ Events such as sudden government changes, natural calamities, terrorist attacks, competitor mergers/acquisitions,
and industrial disasters can trigger a rapid review of strategy.
∙ Crisis management teams are formed to handle these situations effectively.
∙ The purpose of special alert control is to address and manage crises or unexpected events that impact the
organization's strategy.

4. Implementation control :-
∙ Managers convert plans into concrete actions to implement the strategy.
∙ Implementation control assesses the need for strategic adjustments based on unfolding events and incremental
steps.
∙ It complements operational control but focuses on the overall strategic direction.
∙ Ensures the strategy remains on track and aligned with organizational goals.
∙ Monitors the implementation process and makes necessary changes.
∙ Two Basic Forms of Implementation Control:
1. Monitoring Strategic Thrusts:
⁃ Helps managers determine if the strategy is moving in the desired direction or if adjustments are needed.
⁃ Keeps a close watch on strategic initiatives and their outcomes.
2. Milestone Reviews:
⁃ Key activities required for strategy implementation are divided into specific timeframes, events, or resource
allocations.
⁃ Involves comprehensive reassessment of the strategy.
⁃ Evaluates the need to continue or modify the strategy based on milestones achieved.
7. STRATEGIC PERFORMANCE MEASURES
⇢ Successful companies excel in strategy execution, which heavily influences their performance compared to
competitors.
⇢ Strategic Performance Measurement (SPM) enhances executives' understanding of organizational goals and
provides a system for tracking progress using clear performance measurements.
⇢ SPM fosters communication among divisions, breaking down silos and promoting open collaboration.
⇢ Strategic performance measures are crucial indicators used to track strategy effectiveness and inform resource
allocation decisions.
⇢ These measures offer a snapshot of organizational performance, allowing leaders to assess alignment with goals
and make necessary adjustments.
⇢ Key performance measures must:
1. Establish clear cause-and-effect relationships with strategic outcomes.
2. Be carefully chosen, as they influence organizational behavior.
⇢ Managers should avoid "paralysis by over-analysis" and focus on actionable insights derived from selected KPIs.

⇝ Managing the political aspects of implementing a strategy

⇢ Individuals involved in planning strategy implementation may face two sets of forces:
∙ Rational forces include openness, communication, and self-analysis.
∙ Political forces involve preserving empires, fostering internal rivalry, and urging knowledge retention,
selective communication, and caution.
⇢ Conflicts between these forces may lead to:
∙ Politically acceptable aspects becoming part of the explicit strategy.
∙ Sensitive elements forming an unspoken plan, constituting the implicit strategy.
⇝ Types of Strategic Performance Measures
1. Financial Measures:
- Provide insight into financial performance and profitability.
- Examples: Revenue growth, return on investment (ROI), profit margins.

2. Customer Satisfaction Measures:

- Indicate the organization's ability to meet customer needs and deliver high-quality products/services.
- Examples: Customer satisfaction, retention, loyalty.

3. Market Measures:
- Reflect competitiveness and ability to attract/retain customers.
- Examples: Market share, customer acquisition, referrals.

4. Employee Measures:
- Gauge ability to attract/retain talent and create a positive work environment.
- Examples: Employee satisfaction, turnover rate, engagement.

5. Innovation Measures:
- Assess innovation capability and ability to meet customer needs with new products/services.
- Examples: Research and Development (R&D) spending, patent applications, new product launches.

6. Environmental Measures:
- Evaluate environmental impact and efforts toward sustainability.
- Examples: Energy consumption, waste reduction, carbon emissions.