STRATEGIC MANAGEMENT

AND BUSINESS POLICY

THIRD EDITION

AZHAR KAZMI
Characteristics of strategy
implementation
 Action orientation
 Comprehensive in scope
 Demanding varied skills
 Wide-ranging involvement
 Integrated process

(c) Dr. Azhar Kazmi 2008 2

Barriers to strategy implementation
and overcoming them
 An inability to manage change
 Poor or vague strategy
 Not having guidelines or a model to guide
implementation efforts
 Poor or inadequate information sharing
 Unclear responsibility and accountability
 Working against the organizational power
structure
 Overcoming barriers
• Adopting a clear model of strategy implementation
• Effective management of change in complex situations

(c) Dr. Azhar Kazmi 2008 3

Two-way linkage between formulation
and implementation of strategy

STRATEGY STRATEGY
FORMULATION IMPLEMENTATION
(THOUGHT) (ACTION)

(c) Dr. Azhar Kazmi 2008 4

A model of strategy implementation
ACTIVATING MANAGING ACHIEVING
STRATEGIES CHANGE EFFECTIVENESS
---------------------------------------------------------------------------------------------
PROJECT
IMPLEMENTATION
STRUCTURAL FUNCTIONAL
IMPLEMENTATION IMPLEMENTATION

PROCEDURAL LEADERSHIP
STRATEGIC IMPLEMENTATION IMPLEMENTATION EVALUATION
PLAN & CONTROL
BEHAVIOURAL OPERATIONAL
IMPLEMENTATION IMPLEMENTATION
RESOURCE
ALLOCATION

FEEDBACK

(c) Dr. Azhar Kazmi 2008 5

Vertical and horizontal fit
Corporate-level strategies

Business-level strategies

Functional-level strategies

Human Information
Marketing Financial Operations resource management
plans and plans and plans and management plans and
policies policies policies plans and policies
policies

Vertical fit Horizontal fit

(c) Dr. Azhar Kazmi 2008 6

Resource allocation
 Resource allocation deals with the
procurement, commitment, and
distribution of financial, human,
informational, and physical resources
to strategic tasks for the achievement
of organisational objectives.
 Strategic budgeting
 Aligning resource allocation to strategy
 Factors affecting resource allocation
 Difficulties in resource allocation
(c) Dr. Azhar Kazmi 2008 7
Major themes in strategy
implementation
 Activating strategies
 Managing change
 Achieving effectiveness

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The pyramid of strategy activation

STRATEGY

PLANS

PROGRAMMES

PROJECTS

BUDGETS

POLICIES,
PROCEDURES, RULES
AND REGULATIONS

(c) Dr. Azhar Kazmi 2008 9

Project implementation
 A project is the basic unit of a
programme. A programme is a
portfolio of projects that may be
interrelated and interdependent in
complex ways. Several programmes
are required to implement a plan. A
number of plans are involved in
implementing a strategy.

(c) Dr. Azhar Kazmi 2008 10

The process of project
management
 Initiating
 Planning
 Executing
 Controlling
 Closing

(c) Dr. Azhar Kazmi 2008 11

Strategy implementation through
project management

STRATEGIC MANAGEMENT PROCESS

STRATEGY IMPLEMENTATION STRATEGY EVALUATION AND

CONTROL

PROJECT CONTROL
OBJECTIVES MEASURES

INITIATING PLANNING EXECUTING CONTROLLING CLOSING

PROJECT MANAGEMENT PROCESS

(c) Dr. Azhar Kazmi 2008 12

 Strategy Implementation
Strategy Implementation:
It is the sum total of the activities and choices required for the
execution of a strategic plan.
Strategy Implementation is a detailed process by which strategies and
policies are put into action through programs, budgets, and
procedures.

Strategy Implementation Process Questions:

Who are the people to carry out the strategic plan?
What must be done to align operations with new direction?
How is the work going to be coordinated?
Nature of Strategy Implementation

Strategy implementation problems can arise because of the shift in

responsibility, especially if Strategy formulation decisions come as a surprise
to middle and lower level managers. Therefore, it is essential to involve
divisional and functional managers in Strategy formulation.
•Shift in responsibility

Divisional or
Strategists Functional
Managers
STRATEGY FORMULATION AND
IMPLEMENTATION

1 Many managers fail to distinguish between strategy formulation & implementation

2 Both requires different skills

3 A company will be sucessful only when the strategy formulation is sound

4 Strategy Implementation should be excellent

5 Often the managers blame the strategy model for the failure

6 While the main flaw lies in strategy implemetation

Nature of strategic evaluation and
control
 Strategic evaluation and control is the process of
determining the effectiveness of a given strategy in
achieving the organisational objectives and taking
corrective action wherever required
 Two sets of questions are relevant in strategy
evaluation and control:
 Are the premises made during strategy formulation proving to
be correct? Is the strategy guiding the organisation towards its
intended objectives? Are the organisation and its managers
doing things which ought to be done? Is there a need to
change and reformulate the strategy?
 How is the organisation performing? Are the time schedules
being adhered to? Are the resources being utilised properly?
What needs to be done to ensure that resources are utilised
properly and objectives are met?

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Importance of strategic evaluation
 Ability to coordinate the tasks performed by
individual managers
 Need for feedback, appraisal and reward
 Check on the validity of strategic choice
 Congruence between decisions and
intended strategy
 Successful culmination of the strategic
management process
 Creating inputs for new strategic planning

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Participants in strategic evaluation
 Shareholders
 Board of directors
 Chief executives
 SBU or profit centre heads
 Financial controllers, company secretaries,
and external and internal auditors
 Audit and executive committees
 Corporate planning staff or department
 Middle-level managers
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Barriers in evaluation
 Limits of control
 Difficulties in measurement
 Resistance to evaluation
 Short-termism
 Relying on efficiency versus
effectiveness

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Requirements for effective
evaluation
 Control should involve only the minimum
amount of information
 Control should monitor only managerial
activities and results
 Controls should be timely
 Long-term and short-term controls should
be used
 Controls should aim at pinpointing
exceptions
 Reward of meeting or exceeding standards
should be emphasised

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Four types of strategic controls
1. Premise control
2. Implementation control
3. Strategic surveillance
4. Special alert control

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How do strategic control and
operational control differ?
---------------------------------------------------------------------------------------------------------
Attribute Strategic control Operational control
---------------------------------------------------------------------------------------------------------

1. Basic question "Are we moving in the right direction"? "How are we performing?

2. Aim Proactive, continuous questioning Allocation and use of the

basic direction of strategy organisational resources

3. Main concern ‘Steering’ the organisation’s future direction Action control

4. Focus External environment Internal organisation

5. Time horizon Long-term Short-term

6. Exercise of control Exclusively by top management, Mainly by executive or

middle
may be through lower-level support level management on the
direction of the top
management
7. Main techniques Environmental scanning, information Budgets, schedules and MBO
gathering, questioning and review
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Based on J. A. Pearce III and R. B. Robinson, Jr.: Strategic Management: Strategy Formulation and
Implementation (3rd edn.), (Homewood, Ill.: Richard D. Irwin, 1988), pp.404-419.

(c) Dr. Azhar Kazmi 2008 22

Process of evaluation
 The process of evaluation basically
deals with four steps:
 Setting standards of performance
 Measurement of performance
 Analysing variances
 Taking corrective action

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The evaluation process for
operational control

Strategy / plan / objectives Setting standards of Actual

Actual performance
performance Management
Management of
of
performance performance

Check performance
Check standards
Reformulation

Analysing
Analysing variance
variance

Feedback

(c) Dr. Azhar Kazmi 2008 24

Evaluation techniques for strategic
control
 Strategic momentum control
 Responsibility control centres
 The underlying success factors
 Generic strategies
 Strategic leap control
 Strategic issue management
 Strategic field analysis
 Systems’ modelling

(c) Dr. Azhar Kazmi 2008 25

Evaluation techniques for
operational control
 Internal analysis  Special purpose
 VRIO framework techniques
 Value chain analysis  Network techniques
 Quantitative analysis  Management by objectives
 Qualitative analysis  Parta system
 Comparative analysis  Memorandum of association
 Historical analysis  Auditing techniques
 Industry norms  Corporate social audit
 Benchmarking  Environmental audit
 Comprehensive
analysis
 Key factor rating
 Business intelligence
systems
 Balanced scorecard

(c) Dr. Azhar Kazmi 2008 26

Role of organisational systems in
evaluation
 Role of information system
 Role of control system
 Role of reward system

(c) Dr. Azhar Kazmi 2008 27