Strategy implementation and control

Strategy Implementation• The activity performed according to a plan in order to achieve

an overall goal.• It means mobilizing employees and managers to put

formulated strategy into actions. It is action stage• It includes developing a strategy supportive culture,

redirecting marketing efforts, developing and utilizing information system, linking employee incentives to organizational performance

• The basic strategy - implementation activities are establishing annual objectives, devising policies, and allocated resources, managing conflict, restructure, reengineering-engineering,rewards and incentive plan, minimizing resistance to change, matching managers with strategies, adapting p/o process, developing effective HRM functions.

• Strategy implementation also includes the making of decisions with regard to matching strategy and organizational structure; developing budgets, and motivational systems

Strategy Formulation vs. Implementation

Strategy Formulation (SF)

• Positioning forces before the action

• Focus on effectiveness

• Primarily intellectual

• Requires good intuitive and analytical skills

• Requires coordination among a few people

Strategy Implementation (SI)

• Managing forces during the action

• Focus on efficiency

• Primarily operational

• Requires special motivation and leadership skills

• Requires coordination among many people

• Shift in responsibility

Nature of Strategy ImplementationSI problems can arise because of the shift in responsibility,

especially if SF decisions come as a surprise to middle- and

lower-level managers. Therefore, it is essential to involve

divisional and functional managers in SF.

Divisional or

Functional

Managers

Strategists

Management Issues Central to Strategy Implementation

• Establish annual objectives

• Devise policies

• Allocate resources

• Alter/change existing organizational structure

• Restructure & reengineer

• Revise reward & incentive plans

• Minimize resistance to change

• Match managers to strategy

• Develop a strategy-supportive culture

• Adapt production/operations processes

• Develop an effective human resources function

• Downsize & furlough (give a leave of absence) as needed

• Link performance & pay to strategies

Purpose of Annual Objectives

Basis for resource allocation

Mechanism for management evaluation

Major instrument for monitoring progress

toward achieving long-term objectives

Establish priorities (organizational, divisional,

and departmental)

Resource allocation

• Resource allocation is a central management activities that allows for strategy execution.

• if organization do not use strategy management approach resource allocation is often based on political and personal factors.

• Strategy management enables resource to be allocated according to priorities established by annual objectives.

• All organization have at least four types of resources that can be used to achieve desire objectives.

1. Financial resources

2. Physical resources

3. Human resources

4. Technological resources

Four Types of Resources

Factors prohibit effective Resource allocation

• Overprotection of resources

• Organizational politics

• Vague strategy targets

• A reluctance to risk

• Lack of sufficient knowledge

• Over emphasis on short term criteria

sometime, Strategy management itself is referred to as a resource allocation program.

Managing conflict

• Interdependence of objectives and competition for limited resource often lead to conflict.

• Conflict can be defined as a disagreement between two or more parties on more or one issues

• Establish annual objectives can lead to conflict because individual have different expectation and perception, scheduled created pressure, personalities are incompatible, misunderstanding between line managers.

Understanding about Conflict

Conflict not always “bad”

Lack of conflict may signal apathy and

indifference

Can energize opposing groups to action

May help managers identify problems

Approaches for Resolving conflict

• Avoidance: includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individual

• Diffusion: playing down differences between conflicting parties, emphasis on common interest, resorting to majority rule, appealing to a higher authority

• Confrontation: holding a meeting at which conflicting parties present their views and work through their differences.

MATCHING STRUCTURE WITH STRATEGY

• Changes in strategy often require changes in the way an organization is structured because: (1) structure largely dictates how objectives and policies will be established (e.g., objectives and policies established under a geographic organizational structure are couched in geographic terms) and (2) structure dictates how resources will be allocated (e.g., if an organization’s structure is based on customer groups, then resources will be allocated in that manner).

• Structure should be designed to facilitate the strategic pursuit of a firm and, therefore, follow strategy.

• When a firm changes its strategy, the existing organizational structure may become ineffective. For example, new strategies to reduce payroll costs may require a change in span of control.

Basic Forms of Structure

Functional Structure

Divisional Structure

Strategic Business Unit Structure

(SBU)

Matrix Structure

Functional Structure

• Groups tasks and activities by business function (e.g., production, finance, marketing, R&D, HR, IT, etc.).

Functional Structure

Divisional Structure

• Can be organized in one of four ways:

–By geographic area

–By product or service

–By customer

–By process

Divisional Structure

Strategic Business Unit Structure (SBU)

• Groups similar divisions into strategic business units and delegates authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer.

Matrix Structure

• The most complex of all structures because it depends upon both vertical and horizontal flows of authority and communication.

Restructuring

Restructuring - reducing the size of an organization. Also

called:

Downsizing

Rightsizing

Delayering

These methods involve, respectively, reducing the number of

employees, number of divisions, and number of hierarchical

levels in a firm’s organizational structure. Reducing the size of an

organization is intended to improve its efficiency and

effectiveness.

Reengineering • The argument for a firm to reengineering as

follows:

• Over time passes managers and employees mind sets being defined by their particular function rather than by overall customers services, product quality, or corporate performance.

• The logic is that all firm tend to bureaucratize over time.

• Politics take precedence over performance

• Walls that exist in the physical work place can be reflections on mental walls.

Reengineering • In reengineering a firm uses a information technology to

breakdown functional barriers and create a work system based on process, product or output rather function or input.

• Cornerstones of reengineering are decentralization, reciprocal interdependence and information sharing.

• It is also called process management, process innovation, or process redesign

• It involves redesigning work, jobs, and process for the purposes of improving cost, quality, service, and speed.

• It is concerned more with employee and customers well being than shareholder wellbeing.

Managing Resistance to Change

Resistance to change –

– Single greatest threat to successful strategy implementation

Managing Resistance to Change

Change raises anxiety over fear of:

– Economic loss

– Inconvenience

– Uncertainty

– Break in status-quo

Change Strategies

• Force Change Strategy

• Educative Change Strategy

• Rational or Self-Interest Change Strategy