 Strategy Implementation

cont.

 Lecture
8
 Learning Objectives
8.1 Explain the role of production/operation in strategy
implementation.
8.2 Explain the role of marketing in strategy implementation.
8.3 Explain the role of finance/accounting in strategy
implementation.
8.4 Explain the role of human resource management in strategy
implementation.
8.5 Explain the role of management information systems (M IS) in
strategy implementation.
8.6 Explain the role of research and development (R&D) in
strategy implementation.
 Production/Operation Concerns
• Production and operations capabilities, limitations and policies can
significantly enhance or inhibit the attainment of objectives.
• Production processes typically constitute more than 70 percent of a firm’s
total assets.
• A major part fo the strategy implementation process takes place at the
production site.
• Production-related decisions (e.g plant size, location, size of inventory) can
have a dramatic impact on the success of failure of strategy implementation
efforts.
 Production/Operation Concerns
• Production related decisions on plant size, plant location, product design,
kind of tooling, size of inventory, inventory control, quality control, cost
control, choice of equipment , use of standards, job specialization,
equipment utilization, shipping and packaging, and technological
innovation can have a major impact on the success or failure of strategy
implementation efforts.
• For example, Mr DIY with its cost leadership strategy. To implement the
strategy, MR. D.I.Y. made a greater effort to improve operational efficiency
and lower operating costs. For example, MR. D.I.Y. has experimented with
inverter air conditioning systems in stores and is looking at alternative
energy sources at their warehouses to boost energy efficiency.
Production Management and Strategy Implementation
 Production Management and Strategy
Implementation
• As strategies shift over time, so must production policies
covering the location and scale of manufacturing facilities,
the choice of manufacturing process, the use of R&D
units etc.
• JIT production approaches are found to have provided
benefits for strategy implementation.
• For high tech companies, productions costs may not be
as important as production flexibility because major
product changes can be needed often.
 Human Resources Concerns
• Human resource affects the ability to achieve organization’s objectives.
• The strategic resonsibilities o the HR manager include assessing the
staffing needs and costs for alternative strategies proposed during
strategy formulation and a staffing plan for implementings strategies.
• The other main concerns include health, safety and security of
the workers, how to motivate employees and managers during a
time when layoffs are common and workloads are high.
• The human resource department must develop performance incentives 
that clearly link performance and pay to strategies. 
 Strategic Human Resource Issues

Seven human resource issues:

1. Linking performance and pay to strategy
2. Balancing work life with home life
3. Developing a diverse work force
4. Using caution in hiring a rival’s employees
5. Creating a strategy-supportive culture
6. Using caution in monitoring employees’ social media
7. Developing a corporate wellness program
Linking Performance and Pay to Strategies

• Linking company and personal benefits is a
major strategic responsibility
of human resource managers. 
• Decisions on salary increases, promotions, merit pay,
and bonuses need to support the long-term and annual
objectives of the firm
• Gain sharing and bonus systems can be used
 Human Resources Concerns
• Human resource problems that arise when
businesses implement strategies can usually be
traced to on of three causes.
– (1) Disruption of social and political structures,
– (2) Failure to match individuals’ aptitudes with
implementation tasks
– (3) Inadequate top management support for 
implementation activities
• Strategists' formal statements about the importance
of strategic management must be consistent with 
actual suppport and rewards given for activities
completed and objectives reached. 
 Marketing Concerns
• When implementing strategies, many areas of concern must be
considered by companies. For example, in terms of marketing. Firms
must focus upon:
– 1.Choosing the target market
– 2.Gathering the marketing mix - Various decisions have to be made such as -
• What is the most appropriate mix of the four P’s in a given situation
• What distribution channels are available and which one should be used
• What developmental strategy should be used in the target market
• How should the price structure be designed
 Marketing
• To make sure strategy implementation goes well,
 Marketing should helps in discovering the areas affected by organizational
growth and thereby helps in creating suitable actions to cater to the customer
needs.
 Fix the right price for organization’s goods and services based on information
collected by market research.
 Ensures effective departmental co-ordination.
 Helps an organization to make optimum utilization of its resources so as to
provide a sales message to its target market.
 A marketing strategy helps to fix the advertising budget in advance, and it also
develops a method which determines the scope of the plan, i.e., it determines
the revenue generated by the advertising plan.
 Market Segmentation and Product
Positioning
• Two variables are of central importance to strategy implementation: market
segmentation and product positioning.

• Market segmentation - subdividing of a market into distinct subsets of

customers according to needs and buying habits.
• New and improved market segmentation approaches are required for
strategies such as market development, product development,
diversification and market penetration.
• Allow firm to operate with limited resources.
• Directly affects marketing mix variables.
 Market Segmentation and Product
Positioning
• Product positioning - decide how to meet the needs and wants
of particular consumer groups
• Product positioning is a strategic exercise that defines where
the product or service fits in the marketplace and why it is better
than alternative solutions.
• The goal is to distill who the audience is, what they need, and
how companies’ product can uniquely help.
Product Positioning
 Product Positioning
• 1. Select key criteria that differentiate products/services in the industry
• 2. Diagram a two-dimensional product-postioning map with specified criterion
each axis
• 3. Plot major competitors’ products or services in the resultant four-quadrant
matrix
• 4. Identify areas in the positioning map where the company’s
products/services could be most competitive in the given market
• 5. Develop a marketing plan to position the company’s products and services
appropriately.
 Finance/Accounting Concerns
• Finance helps to establish and monitor specific and measurable
strategic goals on a coordinated, integrated basis, thus enabling
the firm to operate efficiently and effectively.
• Finance helps to monitor expenses, pay the bills, and stick to a
budget. It also helps a business to generate more money and be
profitable.
• Financial information helps to dictate things like if a business can
afford to hire new positions, give raises or bonuses, offer new
employee benefits, or offer customer sales on products. Finance,
then, plays a truly huge role in the strategic management.
 Finance/Accounting Concerns
• Finance/accounting concepts which are central to
strategy implementation include:
– 1. Acquiring needed capital
– 2. Developing projected financial capital
– 3. Preparing financial budgets
– 4. Evaluating the worth of the business
 Acquiring Capital to Implement
Strategies
• Successful strategy implementation often requires additional capital.
• Besides net profit from operations and the sale of assets, two basic sources
of capital for an organization are debt and equity.
• Determining appropriate mix of debt and equity in a firm’s capital structure
can be vital.
• Can be determined using an EPS/EBIT analysis.
 Projected Financial Statements
• Projected Financial Statements
– allows an organization to examine the expected results of various actions
and approaches
– allows an organization to compute projected financial ratios under various
strategy-implementation decisions
 Performing Projected Financial Analysis

1. Prepare the projected income statement before the balance sheet.

2. Use the percentage-of-sales method to project cost of goods sold (C GS) and
the expense items in the income statement.
3. Calculate the projected net income.
4. Subtract from the net income any dividends to be paid for that year.
5. Project the balance sheet items, beginning with retained earnings and then
forecasting stockholders' equity, long-term liabilities, current liabilities, total
liabilities, total assets, fixed assets, and current assets (in that order).
6. Use the cash account as the plug figure. List commentary (remarks) on the
projected statements.
 Financial Budgets
• A financial budget is a document that details how funds
will be obtained and spent for a specified period of time.
• Financial budget is a method for specifying what must be
done to complete strategy implementation successfully.
 Evaluating the Worth of a Business
• Evaluating the Worth of a Business is central to strategy
imp.ementation because integrative, intensive and diversification
strategies are often implemented by acquiring other firms.
• Retrenchment and divestiture may result in the sale of a division o
an organization or the firm itself.
 Research and Development (R and D)
Concerns
• Research and development (R&D) play an integral part in strategy
implementation.
• This function is generally charged with developing new products
and improving old products to allow effective strategy
implementation.
• Strategies such as product development, market penetration and
related diversification require the new product be successfully
developed.
 Research and Development (R and D)
Concerns
Firms must make important decision about R&D that includes:

1. Emphasize product or process improvements.

2. Stress basic or applied research.
3. Be leaders or followers in R and D.
4. Develop robotics or manual-type processes.
5. Spend a high, average, or low amount of money on R and D.
6. Perform R and D within the firm or contract R and D to outside firms.
7. Use university researchers or private-sector researchers.
 R and D Approaches for Implementing
Strategies
• Be the first firm to market new technological products.
• Be an innovative imitator of successful products, thus minimizing the risks
and costs of start-up.
• Be a low-cost producer by mass-producing products similar to but less
expensive than products recently introduced.
Management Information System (M I S) Concerns
 Management Information System (M I S)
Concerns
• Like inventory and human resources, information is now
recognized as a valuable organizational asset that can be
controlled anad managed.
• Information systems can facilitate direct communication between
suppliers, manufacturers, marketers and customers and link
together this elements of the value chain as though they were one
organization.
 Summary
• Successful strategy implementation depends on cooperation
among all functional and divisional managers in an
organization.
• The nature and role of production, marketing, finance,
human resources, R&D and Mis activities, coupled with
management activities largely determine organizational
success.
 Acknowledgement
David, Fred R. (2020). Strategic management: Concepts and
principles (17th Ed). Prentice-Hall.

David, Fred R. (2016). Strategic management: Concepts and

principles (15th Ed). Prentice-Hall.

Hitt, Ireland & Hoskisson. (2015). Strategic management:

Competitiveness and globalization (11th Ed.). South-Western.