Strategy Implementation
The formulated strategy must be translated into concrete
action and that action must be carefully implement.
Implementation is successfully initiated in three
interrelated stages:
1- Identification of measurable, mutually determined
annual objectives.
2- Development of specific functional strategies.
3- Development and communication of concise policies
to guide decision.
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A new strategy must be institutionalized-
permeate the very day-to-day life of the
company-to be effectively implemented.
Institutionalization of the company structure
involves:
(i) the structure of the organization.
(ii) Leadership of the CEO & key managers.
(iii)the fit between the strategy and the
company’s culture.
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Since the strategy is to be implemented in a changing
environment, execution must be controlled and
evaluated, if the strategy is to be successfully
implemented and adjusted to changing conditions.
The control and evaluation process must include at
least three fundamental dimensions:
(a) Establishing control systems based on performance
standards that are linked to annual objectives.
(b) Monitoring performance and evaluating
&correction of deviations.
(c) Motivating control and evaluation.
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:I. Annual Objectives
A critical step in successful implementation of grand
strategy is the identification and communication of
annual operating objectives that relate logically to
the strategy’s long-term objectives.
Accomplishment of these annual objectives adds up
to successful execution of the business’s overall
long-term plan. Also they provide a specific basis
for monitoring and controlling organizational
performance.
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:Qualities of Effective Annual Objectives -1
Annual objectives are specific, measurable statements of
what an organization subunit is expected to achieve in
contributing to the accomplishment of the business’s
grand strategy. The following basic qualities must be
incorporated in development & communicating annual
objectives:
(i) Linkage to long-term objectives
(ii) Integrated and coordinated objectives:
Annual objectives provide a focal point for raising and
resolving conflict between organizational subunits that
might otherwise impede strategic performance.
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:Consistency in Annual Objectives -2
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 then be used to monitor
both the effectiveness of an operating unit and
collectively, progress toward the business’s long-term
objectives. Annual objectives must be measureable,
prioritized in terms of time & impact on the success
of the strategy. E.g. ranking, weights or designating
objectives as “primary”, “top” or “secondary”.
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Benefits of Annual Objectives:
(i) They provide a tangible, meaningful focus through which
managers can translate long-term objectives and grand
strategies into specific action i.e. clarity of purpose which helps
to mobilize people assests.
(ii) If these objectives have been developed through the
participation of managers responsible for their implementation,
they provide on “objective” basis for addressing and
accommodating conflicting concerns.
(iii) They provide a basis for strategic control e.g. budgeting,
scheduling.
(iv) They provide motivational forces in strategy implementation.
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II Developing Functional Strategies
A functional strategies is the short-term plan for a key functional
area within a company. Such strategies clarify grand strategy
by providing more specific details about how key functional
areas are to be managed in the near future e.g. in marketing,
finance, production/operations, R&D and HR. They must be
consistent with long-term objectives and grand strategy.
Functional strategies help in implementation of grand strategy
by organizing and activating specific subunits of the company
to pursue the business strategy in daily activities. In a sense,
functional strategies translate thought (grand strategy) in to
action designed to accomplish specific annual objectives.
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Functional strategies are different from grand strategies in the
following three aspects:
(i) Time horizon covered: Functional strategies usually
cover short-term actions e.g. one year or less.
(ii) Specificity: A functional strategy is more specific than
grand strategy.
(iii) Participation: different people participate in strategy
development at the functional and business level. Active
involvement improve better understanding &
commitment.
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III Development & Communicating
Concise Policies:
Policies are directives designed to guide thinking &
decisions of managers & their subordinates in
implementing strategies. They are often referred to
as ”standard operating procedures” Policies serve to
increase managerial effectiveness by standardizing
many routine decisions and controlling the
discretion of managers and subordinates in
implementing operational strategies. They fulfil the
following purposes:
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(i) They establish indirect control over independent action without
direct intervention by top management.
(ii) They promote uniform handling of similar activities.
(iii) They ensure quicker decisions.
(iv) They help insitionalization of basic aspects of organization behavior.
(v) They reduce uncertainty in repetitive and day-to day decision
making.
(vi) They can counteract resistance to or rejection of chosen strategies by
organization members.
(vii) They offer a predermined answer to routine problems, giving
managers more time to cope with no routine matters.
(viii)They afford managers a mechanism for avoiding hasty and ill-
conceived decision in changing operations.
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Policies may be written and formal or unwritten and
informal.
Carefully constructed policies enhance strategy
implementation by:
(i) Formulating policies is necessary to guide and control
operating activities consistent with current business &
functional strategies.
(ii) Communication of specific policies will help overcome
resistance to strategic change & foster greater
organizational committment for successful strategy
implementation.
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Institutionalizing the Strategy
By translating long-term intentions (objectives) into
short-term guides to action (annual objectives), the
strategy is operationalized. But the strategy must also
be institutionalized i.e. permeate the very day-to-day
life of the company-if it is to be effectively
implemented. Three organizational elements provide
the fundamental, long-term means for
institutionalizing the firm strategy:
(1) Structure (2) leadership & (3) culture.
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:Structural Considerations )1(
An organizational structure is a major priority in implementing a
carefully formulated strategy.
Activities, responsibilities and interrelationships are to be defined
in a manner that is consistent with the strategy chosen. If
structure & strategy are not coordinated, the result will
probably be inefficiencies, misdirection and fragmented
efforts. Structural options include:
(1) Simple Functional Structure.
(2) Divisional structure e.g. geographical, product or customer
based.
(3) Strategic business unit.
(4) Matrix organization.
The best structure to be applied depends on the strategy of the
firm.
Alfred Chandler provided a landmark study in understanding the
choice of structure as a function of strategy.
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:Organizational Leadership )2(
Leadership is an essential element in effective
strategy implementation. And two issues of
leadership are of fundamental importance
here: (i) the chief executive officer (ii) the
assignment of key managers.
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:The Role of CEO )i(
The CEO is the most closely identified with and ultimately accountable for a
strategy’s success.
The nature of the CEO role is both symbolic and substantive in strategy
implementation. First the CEO is a symbol of the new strategy. His actions
and committment to a chosen strategy exert a significant influence on the
intensity of subordinate manager’s committment to implementation.
Secondly: the firm’s mission, strategy and key long-term objectives are
strongly influenced by the personal goals and values of it CEO he or she
represents an important source for clarification, guidance and adjustment
during implementation.
Different strategies require different CEO’s if they are to succeed. Clearly
successful strategy implementation is directly linked to the unique
characteristics, orientation and action of the CEO.
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(ii) Assignments of Key Managers:
A major concern of top management in implementing a
strategy, particularly if it involves a major change, is
that the right managers are in the right positions for
new strategy. Confidence in the individuals
occupying key managerial positions is directly and
positively correlated with top-management
expectations that a strategy can be successfully
executed
The question is whether they have the right
characteristics to ensure that the strategy will be
effectively implemented.
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These probable characteristics include:
(a) Ability and education.
(b) Previous track record and experience.
(c) Personality and temperament.
These characteristics combined with gut feeling and top managements
confidence in the individual, provide the basis for this key
decision.
One practical consideration in making key managerial assignments
when implementing strategy is whether to emphasize current (or
promotable) executives or bring in new personnel. Either
alternative is associated with advantages & disadvantages.
The following two fundamental aspects of the strategic situation
strongly influence the managerial assignment decision:
(d) The changes required to implement the new strategy, and
(e) The effectiveness of past organizational performance.
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Organizational Culture
Culture is the shared values, beliefs, expectations and
norms learned by becoming a part of and working in
a company over time and influence the behavior and
set a pattern for activities, opinions and action within
that firm. A company’s culture influences how
employees and managers approach problems, serve
customers, deal with suppliers, react to competitors
and otherwise conduct activities now and in the
future.
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:The Strategy-Culture Connection
Culture gives employees a sense of how to behave, what they
should do and where to place priorities in getting the job done.
Culture helps employees fill in the gaps between what is
formally decreed and what actually takes place. As such
culture is of critical importance in the implementation of
strategy. A company's culture can be a major strength when it
is consistent with strategy and thus can be a powerful driving
force in implementation of strategy.
The opposite can occur. A culture can prevent a company from
meeting competitive threats or adapting to changing economic
or social environments that a new strategy is designed to
overcome.
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:Factors that shape Culture
Rather than trying to assess culture directly, culture is best
“measured” if viewed as the product of selected factors
common to all organizations.
The consulting frim McKinsey & co. has popularized the “7s
frameworks which suggests that an organization's culture is
the product of the following 7 broad factors:
(i) Strategy (ii) structure (iii) the systems (iv) the styles (v)
staffing (vi) shared values (vii) the main skills, capabilities
and competencies.
The Management Analysis Center has tried to simplify the
culture equation by linking culture to three broad factors:
structure, systems and people.
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Whether 7 or 3 these culture determinants focus
attention on the specific factors that shape culture.
These factors are also the central elements a business
must use in implementing strategy.
Structural adjustments, management systems, core skills
and people resources are key factors in strategy
implementation and provide the basis for managing
the strategy-culture relationship.
The question that must be dealt with is whether the “fit”
between these factors is consistent with the
implementation requirements of the chosen strategy.
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Controlling & Evaluating the Strategy
The process of controlling and evaluating strategy
implementation must include at least the
following three fundamental dimensions:
(1) Establishing control systems based on
performance standards that are linked to annual
objectives.
(2) A way of monitoring performance and
evaluating deviations.
(3) A means for motivating control and evaluation
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Establishing Control Systems Linked .1
:to Annual Objectives
There are two basic control systems for
controlling and evaluating new-strategy
implementation: strategic control and
operational control.
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:Strategic control )a(
Focuses on factors related to external forces and
internal performance that are essential to the
success of a strategy.
Once key performance indicators (product
quality E.g. meeting specifications, % of
product return & customer complaints)
customer service e.g. delivery cycle in days, %
of orders shipped complete, field service
delays and for employees e.g. employee
attitude, absenteeism & turnovers) are
25identified, strategic success factors can be
:Operational Control Systems )b(
It involves allocation and use of a firm’s financial,
physical and human resources. Operational control
systems guide, monitor and evaluate progress in
meeting strategy’s objectives.
The key mechanisms for operational control are budgets
and scledules, timing e.g. critical path method, PERT
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Monitoring Performance and .2
:Evaluating Deviation
strategic and operating control systems require
the establishment of performance standards
and monitoring of progress and deviations
from standards.
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:Motivating Control and Evaluation .3
Control and evaluation of strategy ultimately depend on
individual organizational members particularly key managers.
And motivating and rewarding good performance by individuals
and organizational units are key ingredients in effective
strategy implementation. These control & motivation are
accomplished through a firm’s reward-sanction mechanisms.
Short- and long-term motivating & rewarding plans are to be
integrated. It is necessary to base reward systems on the
assessment and control of both the short-term and long-term
strategic contributions of key manager. An effective reward
system should provide payoffs that control and evaluate the
creation of potential future performances as well as last year’s
results (historical short-term performance)
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