UNIT 5

STRATEGY IMPLEMENTATION

ANNUAL OBJECTIVES
‡ They translate long range aspirations into this year s budget. ‡ If annual objectives are well developed,they provide clarity,which is a power motivating factor of effective strategy implementation.

‡ Implementation of grand strategy is the identification and communication of annual operating objectives that relate logically to the strategy s long term objectives

DIFFERENCE BETWEEN LONG TERM AND ANNUAL OBJECTIVES
‡ Time Frame. ‡ Focus-Long term objectives focuses on the future position of the firm and annual objectives identify specific accomplishments for the company or functional areas. ‡ Specificity-Long term objectives are broadly stated and annual objectives are specific and directly linked to the company

‡ Measurable-Long term objectives are measured in broad,while annual objectives are stated in absolute terms. ‡ Annual objectives add breadth and specificity in identifying what must be accomplished in order to achieve the long term objective

INTEGRATED AND COORDINATED OBJECTIVES
‡ It requires objectives that are integrated and coordinated. ‡ Successful Implementation of strategy depends on coordination and integration of operating units.

CONSISTENCY IN ANNUAL OBJECTIVES
‡ Annual objectives are more consistent when each objective clearly states what is to be accomplished,when it will be done, and how accomplishment will be measured. ‡ Objectives can be used to monitor both the effectiveness of an operating unit and collectively progress towards long term objectives

MEASURABLE
‡ Key quality of annual objectives. ‡ It should be flexible,acceptable,suitable,achievable,unders tandable. ‡ Successful Implementation requires setting measurable objectives in the difficult areas as well

PRIORITIES
‡ They have relative priorities. ‡ Priority are established based on the simple ranking process or assigning weights to each objective.

BENEFITS OF ANNUAL OBJECTIVES
‡ They provides a tangible,meaningful focus through which managers can translate long term objectives and grand strategies into action. ‡ They give operating managers and personnel a better understanding of their role in the business mission

‡ Basis for strategic control-Developing budgets,schedules,trigger points and other mechanisms. ‡ They become the essential link between strategic intentions and operating reality. ‡ They can be powerful motivators of managerial performance if the objectives clarify personal and group roles in business strategies and are also measurable,realistic and challenging

‡ FUNCTIONAL STRATEGIES

‡ They translate grand strategy at the business level into action plans for subunits of the company. ‡ These strategies help clarify the what managers are expected to do in implementing the strategy

‡ DIFFERENCES BETWEEN FUNCTIONAL AND BUSINESS STRATEGIES

Time Horizon
‡ FT-short term actions usually a year. In a short term the functional managers attention has to be focused on what needs to be done to make a grand strategy work. It allows functional managers to recognize current conditions and adjust to changing conditions in developing functional strategies

SPECIFICITY
‡ A functional strategy is more specific than a grand strategy. ‡ It gives guidance to managers for accomplishing the annual objectives. ‡ It determines the strategies for each functional area and what are the strategies for the long term objectives of the firm to be achieved

‡ They improve the ability of operating managers to implement strategic decisions. ‡ It adds substance,completeness and meaning to what a specific subunit of the business must do. ‡ They clarify for top management how functional managers intend to accomplish the grand strategy

‡ They facilitate co-ordination between between operating units within the company by clarifying areas of interdependence and potential conflict

PARTICIPANTS
‡ Business strategy-Business manager ‡ Functional strategy Delegated by the business manager to principal subordinates. ‡ It is the responsibility of the business manager to establish the long term objectives and a strategy that corporate management feels to contribute to corporate level goals

FUNCTIONAL STRATEGIES IN MARKETING
‡ Profitably bring out the sale of product s / services in target market for the purpose of achieving the business s goals. ‡ The strategies should guide the marketing managers in determining who will sell what,where,when,to whom,in what quantity and how. ‡ It must entail four components product,price,promotion and place

PRODUCT
‡ The product component should clearly identify the customer needs the firm seeks to meet with its product/service. ‡ It should guide marketing managers in decisions regarding features,product lines,packaging,accessories,warranty,quality and NPD.

place
‡ It identifies where,when and by whom the product/service are offered for sale. ‡ The channel of distribution , the combination of marketing institutions through which the goods flow to the final consumer. ‡ This component guides decisions regarding channels to ensure consistency with the total marketing effort

PROMOTION
‡ How the firm will communicate with the total target market. ‡ It should provide marketing managers with basic guides for the use and mix of advertising , personal selling,sales promotion and media selection.

price
‡ Influences demand and supply , profitability,consumer perception and regulatory response. ‡ It may be cost oriented,market oriented or competition oriented.

‡ FUNCTIONAL STRATEGIES IN FINANCE / ACCOUNTING

‡ It directs the use of financial resources in support of the business strategy, long term goals and annual objectives. ‡ It guide financial managers in long term capital investment,use of debt financing,dividend allocation and the firm s leveraging posture. ‡ They manage working capital and short term assets have a more immediate focus

‡ Capital Acquisition-Desired level of debt versus equity versus long term financing of business activities

CAPITAL ALLOCATION
‡ They require numerous major investments in facilities,projects,acquisitions. ‡ This strategy sets priorities and timing for these investments. ‡ Retrenchment or stability require a financial strategy that focuses on the reallocation of financial resources-Pruning product lines,production facilities or personnel to be reallocated elsewhere.

‡ If a business is pursuing rapid growth, flexibility in making capital expenditures at the operating level may enable timely responses to an evolving market

DIVIDEND AND WORKING CAPITAL MANAGEMENT
‡ They are paid on earnings. ‡ Lower dividends increase the internal funds available for growth, and internal financing reduces the need for external,often debt , financing. ‡ Stability of earnings and dividend makes a positive contribution to the company s earnings and dividends.

‡ Working capital is critical to the daily operation of firm and capital requirements are directly influenced by seasonal and cyclical fluctuations , firm size and pattern of receipts and disbursements

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‡ FUNCTIONAL STRATEGIES IN RESEARCH AND DEVELOPMENT

‡ Basic Research Versus commercial DevelopmentTo what extent should innovation and breakthrough research be emphasized.In relation to the emphasis on product development,refinement and modification? ‡ Time Horizon-Is the emphasis short term or long term? ‡ Which orientation best supports the business strategy , marketing and production strategy?

‡ Organizational Fit-should R&D be done in house or contracted out. ‡ Should it be centralized or decentralized? ‡ What should the relationship between R&D Units and product managers?production managers?marketing managers?

‡ Basic R&D posture-should the firm maintain a offensive posture seeking to lead innovation and development in the industry? Should the firm adapt a defensive posture responding quickly to competitors developments.

‡ FUNCTIONAL STRATEGIES IN PRODUCTION / OPERATIONS

‡ Facilities and equipment-How centralized should the facilities be? How integrated should the processes be? To what extent will mechanization or automation be pursued? Should size and capacity be oriented towards peak or normal operating levels

‡ Purchasing-How many sources are needed? How do we select suppliers and manage relationships with them? What level of forward buying is appropriate?

‡ Operations Planning control-should the work be scheduled to order or to stock. What level of inventory is appropriate? How should the inventory be used , controlled or replenished? Should maintenance efforts be preventive or breakdown? What emphasis should be placed on job specialization?plant safety?use of standards

‡ DEVELOPING AND COMMUNICATING CONCISE POLICIES

Policies are directives designed to guide the thinking ,decisions and actions of managers and their subordinates in implementing the organization s strategy. Policies serve to increase managerial effectiveness by standardizing many routine decisions and controlling the discretion of managers and subordinates in implementing operational strategies

‡ PURPOSE OF POLICIES

Policies establish indirect control over independent action by making a clear statement about how things are now to be done. Policies promote uniform handling of similar activities. Policies ensure quick decisions by standardising answers to previously answered questions.

‡ Policies helps institutionalize basic aspects of organisation behavior This minimizes conflicting practices and establishes consistent patterns of action. ‡ Policies reduce uncertainity in repetitive and day to day decision making. ‡ Policies can counteract resistance to or rejection of chosen strategies by organization members.

‡ Policies offer a predetermined answer to routine problems. ‡ Policies offer managers a mechanism for avoiding hasty and ill conceived decisions in changing operations. ‡ It may be written and formal or unwritten and informal.

‡ ADVANTAGES TO FORMAL WRITTEN POLICIES

‡ Managers are required to think through the policy s meaning,content and intended use. ‡ The policy is explicit so misunderstandings are reduced. ‡ Equitable and consistent treatment of problems is more likely. ‡ Unalterable transmission of Policies is ensured.

‡ Authorization or sanction of the policy is more clearly communicated,which can be helpful in many cases. ‡ A convenient and authoritative reference can be supplied

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