Session 01

Strategy Implementation

1
2
3
4
5
Lahore Declaration, 1998

6
Kargil War, 1999

7
8
9
10
11
Strategy Formulation

12
Short-Term Objectives
• Short-term objectives
• measurable outcomes achievable or intended to be achieved in one
year or less.

13
Short-Term Objectives (contd.)

• Short-term objectives “operationalize” long-term objectives.

• Discussion about and agreement on short-term objectives help raise
issues and potential conflicts within an organization
• Short-term objectives assist strategy implementation by identifying
measurable outcomes of action plans or functional activities, which
can be used to make feedback, correction, and evaluation more
relevant and acceptable

14
Ex. 10.2 Potential Conflicting Objectives and Priorities

15
Short-Term Objectives

Short-Term Objectives provide:

• Specificity

• Time frame for completion

• Who is responsible—Accountability

16
Qualities of Effective Short-Term Objectives

• Measurable
• Priorities
• Cascading: From long-term objectives to short-term objectives

17
Qualities of Effective Short-Term Objectives
(contd.)

• Measurable
• Measurable activity
• Measurable outcomes
• Priorities
• Simple ranking
• Relative priority / Weights
• Linked to Long-Term Objectives
• Cascading effect

18
Ex. 10.3 Creating Measurable Objectives

19
Ex. 10.4 Milliken Global Environmental Objectives

20
Functional Tactics

• Detailed statements of the “means” or activities

that will be used by a company to achieve short-
term objectives and establish competitive
advantage.

21
Functional Tactics (contd.)

• In a sense, functional tactics translate thought into

action 

• Every value chain activity in a company executes

functional tactics that support the business’s
strategy and help accomplish strategic objectives

22
Functional Tactics (contd.)

• Functional tactics are different from business or corporate strategies

in three fundamental ways:
• Specificity
• Time horizon
• Participants who develop them

23
Ex. 10.5 Specificity in Functional Tactics vs. Business
Strategy

24
Outsourcing Functional Activities

• Outsourcing is obtaining work previously done by employees inside

the company from sources outside the company

25
Ex. 10.7 Outsourcing is Increasing

26
Empowering Operating Personnel: Policies

• Empowerment is the act of allowing an individual or team the right

and flexibility to make decisions and initiate action

27
Empowering Operating Personnel: Policies
(contd.)

• Policies are broad, precedent-setting decisions that guide or

substitute for repetitive or time-sensitive managerial decision
making.

28
Creating Policies That Empower
• Policies establish indirect control over independent
action
• Policies promote uniform handling of similar
activities
• Policies ensure quicker decisions by standardizing
answers to recurring questions
• Policies institutionalize basic aspects of organization
behavior

29
Creating Policies That Empower (contd.)

• Policies reduce uncertainty in repetitive and day-to-

day decision making
• Policies counteract resistance
• Policies offer predetermined answers to routine
problems
• Policies afford managers a mechanism for avoiding
hasty decisions

30
Innovation Time Out Policy

• Refers to what is usually an official company

guideline, or policy, establishing an amount of time
during each work week an employee, or specific
types of employees (e.g., engineers) can at their
choice set aside from their regular assignment to
work on innovative, new ideas they are thinking
about.

31
Advantages of Formal, Written Policies
1. They require managers to think through the policy’s meaning,
content, and intended use
2. They reduce misunderstanding
3. They make equitable and consistent treatment of problems more
likely
4. They ensure unalterable transmission of policies
5. They communicate the authorization or sanction of policies more
clearly
6. They supply a convenient and authoritative reference
7. They systematically enhance indirect control and organization
wide coordination of the key purposes of policies

32
Bonus Compensation Plans

• Company shareholders typically believe that the goal of a bonus

compensation plan is to motivate executives and key employees to
achieve maximization of shareholder wealth.
• However, the goal of shareholder wealth maximization is not the only
goal that executives may pursue.
• An executive compensation plan that contains a bonus component
can be used to orient management’s decision making toward the
owners’ goals.

33
Types of Bonus Compensation Plans
• Stock options
 The right, or “option” to purchase
company stock at a fixed price at
some future

34
Bonus Compensation Plans (contd.)

• Restricted stock
 Stock given to an employee who is
prohibited or “restricted” from selling
the stock for a certain time period and
not at all if they leave the company
before that time period.

35
Bonus Compensation Plans (contd.)

• Golden handcuffs
 A form of executive compensation
where compensation is deferred (either
a restricted stock plan or bonus income
deferred in a series of annual
installments).

36
Bonus Compensation Plans (contd.)

• Golden parachutes
• A form of bonus compensation that
guarantees a substantial cash payment if
the executive quits, is fired, or simply
retires.

37
Bonus Compensation Plans (contd.)

• Cash bonuses
• Payment of periodic (quarterly or
annual) cash bonuses.

38
“Structure follows Strategy”

40
Organizational Structure

41
Organizational Structure
• Organizational structure refers to the formalized arrangement of
interaction between and responsibility for the tasks, people, and
resources in an organization

42
Simple Organizational Structure

• A simple organizational structure is one where there

is an owner and a few employees and where the
arrangement of tasks, responsibilities, and
communication is highly informal and accomplished
through direct supervision
• This type of structure can be very demanding on the
owner-manager
• Most businesses in this country and around the world
are of this type

43
Functional Organizational Structure
• A functional organizational structure is one on
which the tasks, people, and technologies
necessary to do the work of the business are
divided into separate “functional” groups (such
as marketing, operations, and finance) with
increasingly formal procedures for coordinating
and integrating their activities to provide the
business’s products and services.

44
Ex. 11.3 Functional Organization Structures

45
Divisional Structure

• A divisional organizational structure is one in which

a set of relatively autonomous units, or divisions,
are governed by a central corporate office but
where each operating division has its own
functional specialists who provide products or
services different from those of other divisions

46
Divisional Structure (contd.)

• This structure expedites decision making in response to varied

competitive environments
• The division usually is given profit responsibility

47
Ex. 11.4 Divisional Organization Structure

48
Strategic Business Unit
• The strategic business unit (SBU) is an
adaptation of the divisional structure whereby
various divisions or parts of divisions are
grouped together based on some common
strategic elements, usually linked to distinct
product/market differences
• The advantages and disadvantages of the SBU
form are very similar to those identified for
divisional structures

49
Holding Company Structure
• A final form of the divisional organization is the
holding company structure, where the
corporate entity is a broad collection of often
unrelated businesses and divisions such that it
(the corporate entity) acts as financial overseer
“holding” the ownership interest in the various
parts of the company but has little direct
managerial involvement

50
Matrix Organizational Structure
• The matrix organizational structure is one
in which functional and staff personnel are
assigned to both a basic functional area
and to a project or product manager
• The matrix form is intended to make the
best use of talented people within a firm by
combining the advantages of functional
specialization and product-project
specialization

51
Ex. 11.5 Matrix Organizational Structure

52
Ex. 11.5 (adapted) Matrix Organizational Structure
(contd.)

53
Product-Team Structure
• The product-team structure seeks to simplify
and amplify the focus of resources on a narrow
but strategically important product, project,
market, customer, or innovation
• The product-team structure assigns functional
managers and specialists to a new product,
project, or process team that is empowered to
make major decisions about their product

54
Ex. 11.7 The Product-Team Structure

55
 Trends Affecting Organizations in the 21st Century

• Globalization

• The Internet

• Speed

56
Ex. 11.9 What a Difference a Century can Make

57
Efforts to Improve Traditional Structures
• Redefine the role of corporate headquarters
from control to support and coordination
• Balance the demands for control/differentiation
with the need for coordination/integration
• Restructure to emphasize and support
strategically critical activities
• Reengineer strategic business processes
• Downsize and self-manage

58
Restructure to Emphasize and Support
Strategically Critical Activities
• Restructuring: Redesigning an organizational structure with the
intent of emphasizing and enabling activities most critical to a firm’s
strategy to function at maximum effectiveness.
• Business Process Reengineering: A customer-centric restructuring
approach. It involves fundamental rethinking and radical redesigning
of a business process so that a company can best create value for the
customer by eliminating barriers that create distance between
employees and customers.

59
Restructure to Emphasize and Support
Strategically Critical Activities (contd.)
• Downsizing: Eliminating the number of employees, particularly
middle management, in a company.
• Self-management: Allowing work groups or work teams to supervise
and administer their work as a group or team without a direct
supervisor exercising the supervisory role. These teams set
parameters of their work, make decisions about work-related
matters, and perform most of the managerial functions previously
done by their direct supervisor.

60
Creating Agile, Virtual Organizations
• Virtual organization: a temporary network of
independent companies—suppliers, customers,
subcontractors, even competitors—linked primarily
by information technology to share skills, access to
markets, and costs
• An agile organization is one that identifies a set of
business capabilities central to high-profitability
operations and then builds a virtual organization
around those capabilities

61
Outsourcing—Creating
a Modular Organization
• Outsourcing is simply obtaining work previously
done by employees inside the companies from
sources outside the company
• A modular organization provides products or
services using different, self-contained specialists or
companies brought together—outsourced—to
contribute their primary or support activity to result
in a successful outcome
• Business process outsourcing (BPO) is the most
rapidly growing segment of the outsourcing
services industry worldwide

62
Strategic Alliances

• Alliances with suppliers, partners, contractors, and

other providers that allow partners in the alliance to
focus on what they do best, farm out everything
else, and quickly provide value to the customer.

63
Types of Boundaries
• Horizontal boundaries—between different
departments or functions in a firm.
• Vertical boundaries—between operations and
management, and levels of management, between
“corporate” and “division”
• Geographic boundaries—between different physical
locations; between different countries or regions of
the world and between cultures
• External interface boundaries—between a company
and its customers, suppliers, partners, regulators,
and competitors

64
Becoming Boundaryless
• Jack Welch coined the term “boundaryless” to
illustrate his vision for GE
• Outsourcing, strategic alliances, product-team
structures, reengineering, restructuring—all are
ways to move toward boundaryless organization
• Technology, particularly driven by the Internet,
has and will be a major driver of the
boundaryless organization

65
Ex. 11.14 From Traditional Structure to B-Web Structure

66
Ambidextrous Learning Organization
• The evolution of the virtual organizational structure
as an integral mechanism managers use has
brought with it recognition of the central role
knowledge plays in implementation
• The shift from exploitation to exploration (Rangan)
indicates the growing importance of organizational
structures that enable a learning organization to
allow global companies the chance to build
competitive advantage
• An ambidextrous organization emphasizes
coordination over control as well as flexibility

67
Thank You

68