CHAPTER 10

STRATEGY
IMPLEMENTATION:
ORGANIZING AND
STRUCTURE
 Strategy implementation

 is the sum total of the activities and choices required for the execution of a strategic
plan. It is the process by which objectives, strategies, and policies are put into action
through the development of programs and tactics, budgets, and procedures.
 Implementation should be evaluated as strategy is being formulated although many
companies separate the two. Implementation is the key part of strategic management
for without implementation we have nothing. Strategy formulation and strategy
implementation should be considered as two sides of the same coin.
 Who Implement Strategy

 Depending on how a corporation is organized, those who implement strategy will probably be a much
more diverse set of people than those who formulate it. From large, multi-industry corporations to small
entrepreneurial ventures, the reality is that the implementers of strategy are everyone in the
organization.
 Vice presidents of functional areas and directors of divisions or strategic business units (SBUs) work
with their subordinates to put together large-scale implementation plans. Plant managers, project
managers, and unit heads put together plans for their specific plants, departments, and units. SaaS-based
company presidents work with their project managers and developers to meet the latest needs of their
customers
What must be done?

 The managers of divisions and functional areas work with their fellow
managers to develop programs, budgets, and procedures for the
implementation of strategy. They also work to achieve synergy among
the divisions and functional areas in order to establish and maintain a
company’s distinctive competence.
Competitive Tactics

 A tactic is a specific operating plan that details how a strategy is to be

implemented in terms of when and where it is to be put into action.
By their nature, tactics are narrower in scope and shorter in time
horizon than are strategies. Tactics, therefore, may be viewed (like
policies) as a link between the formulation and implementation of
strategy. Some of the tactics available to implement competitive
strategies are timing tactics and market location tactics.
Defensive Tactics

 According to Porter, defensive tactics aim to lower the probability of

attack, divert attacks to less threatening avenues, or lessen the
intensity of an attack. Instead of increasing competitive advantage per
se, they make a company’s or business unit’s competitive advantage
more sustainable by causing a challenger to conclude that an attack is
unattractive. These tactics deliberately reduce short-term profitability
to ensure long-term profitability.
 Budgets
Planning a budget is the last real check a corporation has on the feasibility
of its selected strategy. An ideal strategy might be found to be completely
impractical only after specific implementation programs and tactics are
costed in detail.

 Procedures
 the primary meansby which organizations accomplish much of
what they do.
Achieving Synergy

 Synergy is said to exist for a divisional corporation if the return on

investment of each division is greater than what the return would be if
each division were an independent business.
 Stages of corporate development

Stage I:
Simple Structure Stage I is typified by the entrepreneur or a small team, who
founds a company to promote an idea (a product or a service).
Stage II: Functional Structure Stage II is the point at which the entrepreneur
is replaced by a team of managers who have functional specializations. The
transition to this stage requires a substantial managerial style change for the
chief officer of the company, especially if he or she was the Stage I
entrepreneur.
 Stages of corporate development

Stage III:
Divisional Structure Stage III is typified by the corporation’s managing diverse product lines
in numerous industries; it decentralizes the decision-making authority. Stage III organizations
grow by diversifying their product lines and expanding to cover wider geographical areas.
Stage IV:
Beyond SBUs Even with the evolution into SBUs during the 1970s and 1980s, the divisional
structure is not the last word in organization structure. The use of SBUs may result in a red
tape crisis in which the corporation has grown too large and complex to be managed through
formal programs and rigid systems, and procedures take precedence over problem solving
Organizational life cycle

 describes how organizations grow, develop, and eventually decline. It is the

organizational equivalent of the product life cycle in marketing. These stages are
Birth (Stage I), Growth (Stage II), Maturity (Stage III), Decline (Stage IV), and
Death (Stage V).
Flexible Types of Organizational Structure

 A new strategy may require more flexible characteristics than

the traditional functional or divisional structure can offer. Today’s
business organizations are becoming less centralized with a greater
use of cross-functional work teams. Although many variations and
hybrid structures exist, two forms stand out: the matrix structure and
the network structure.
 Two Forms of Flexible Types of Organizational
Structure
Matrix Structure
 in contrast, may be very appropriate when organizations conclude that
neither functional nor divisional forms, even when combined with horizontal
linking mechanisms such as SBUs, are right for their situations.
 functional and product forms are combined simultaneously at the same level of
the organization.
 It was developed to combine the stability of the functional structure with the
flexibility of the product form.
 It is very useful when the external environment (especially its technological and
market aspects) is very complex and changeable.
Two Forms of Flexible Types of Organizational
Structure

1. Temporary cross-functional task force

2. Product/brand management

3. Mature matrix
 Two Forms of Flexible Types of Organizational
Structure

 Network Structure- The Virtual Structure

Network Structure
 A somewhat more radical organizational design.
 It is an example of what could be termed a “non-structure” because of its virtual elimination of in-
house business functions.
 This structure is also quite useful when the environment of a firm is unstable and is expected to
remain so.
The Virtual Structure
 A corporation organized in this manner because it is composed of a series of project groups or
collaborations linked by constantly changing nonhierarchical, cobweb-like electronic networks.
Cellular/Modular Organization:A New Type of
structure?
 According to Miles and Snow et al., “a cellular/modular organization is composed of
cells (self-managing teams, autonomous business units, etc.) which can operate alone
but which can interact with other cells to produce a more potent and competent business
mechanism.”
 It is used when it is possible to break up a company’s products into self-contained
modules or cells and when interfaces can be specified such that the cells/modules work
when they are joined together.
 It is also similar to a current trend in industry of using internal joint ventures to
temporarily combine specialized expertise and skills within a corporation to accomplish
a task which individual units alone could not accomplish.
 Reengineering and Strategy Implementation

REENGINEERING
 Is a commonly defined as the redesigned of business processes and the
associated system and organizational structures to achieved a dramatic
improvement in business performance.
 Is the reorganizing and modifying existing software system to make
them more maintainable.
 is the radical redesign of business processes to achieve major gains in
cost, service, or time.
 MICHAEL HAMMER PRINCIPLES FOR
REENGINEERING

 ORGANIZE AROUND OUTCOMES, NOT TASK:

 ·HAVE THOSE WHO USE THE OUTPUT OF THE PROCESS PERFORM THE PROCESS:
 ·SUBSUME INFORMATION-PROCESSING WORK INTO THE REAL WORK THAT
PRODUCES INFORMATION:
 ·TREAT GEOGRAPHICALLY DISPERSED RESOURCES AS THOUGH THEY WERE
CENTRALIZED:
 LINK PARALLEL ACTIVITIES INSTEAD OF INTEGRATING THEIR RESULTS:
 PUT THE DECISIONS POINT WHERE THE WORK IS PERFORMED AND BUILD
CONTROL INTO THE PROCESS:
 ·CAPTURE INFORMATION ONCE AND AT THE SOURCE:
 STRATEGY IMPLEMENTATION

 Is the totality of activities and choices required for the

execution of a strategic plan. It is a process by which
objectives, strategies, and policies are put into action
through the development of programs, tactics, budgets, and
procedures.
Six steps in our process guide to strategy
implementation

 Define your strategy framework

 Build your plan
 Define KPIs or Key performance indicators
 Establish your strategy rhythm
 Implement strategy reporting
 Link performance to strategy
SIX SIGMA

 -Is an analytical method for achieving near perfect results on a

production line. It is a set of techniques and tools for process
improvement.
 Is derived from the bell curve used in statistics where one sigma
represents one standard deviation away from the mean.
THE PROCESS OF SIX SIGMA:

1. DEFINE A PROCESS WHERE THE RESULTS ARE POORER THAN AVERAGE.

2. MEASURE THE PROCESS TO DETERMINE EXACT CURRENT PERFORMANCE.

3. ANALYZE THE INFORMATION TO PINPOINT WHERE THINGS ARE GOING WRONG.

4. IMPROVE THE PROCESS AND ELIMINATE THE ERROR

5. ESTABLISH CONTROLS TO PREVENT FUTURE DEFECTS FROM OCCURING.

DESIGNING JOBS TO IMPLEMENT
STRATEGY

 Organizing a company’s activities and people to implement strategy more than simply redesigning a
corporation’s overall structure.it also involves redesigning the way jobs are done.

 Job design refers to the study of individual tasks in attempt to make them more relevant to the company and
to the employee(s).

 concerned with changing, modifying and enriching jobs in order to capture the talents of employees while
improving organizations performance.