3 Strategy Implementation and Control Chapter Strategy ImplementationandControl
4 Interrelation between Formulation and Implementation Translation of strategic plan into strategic action.To be strategically successful Strategy formulation should be effective and implementation should be efficient.Organization place more focus on efficiency rather then effectiveness.
5 Thrive Die slowly Survive Die Quickly Strategy FormulationEffectiveIneffectiveThriveDie slowlySurviveDie QuicklyEfficientStrategy ImplementationInefficient
6 FormulationAn intellectual processPerformed by top managementRequires managerial focus before actionFocus is on effectivenessRequires creative and analytical skillRequires coordination among few individualsBased on Forward linkagesImplementationAn Operational processPerformed by divisional or functional managementRequires management focus during actionFocus is on efficiencyRequires motivational and leadership skillsRequires coordination among many individualBased on Backward linkages
8 Structural Implementation Structure dictates how strategies should be developed and resources will be allocated. E.g. - Product structure develops product based strategy.Competitive advantages are created when there is a proper match between strategy and structure.Strategy is influenced by structure and structure should be changed according to the newly developed strategy.
11 Advantages ~ Disadvantages ~ It promotes specialization of labour Encourage efficiencyMinimum elaborate controlRapid decision makingDisadvantages ~It forces accountability to the topMin. career development opportunitiesPossible staff conflictsPoor delegation of authorityFunctional specialist may develop narrow perspective.
12 Divisional Structure CEO Division A Marketing Production HRM Division BDivision C
13 Type ~ Advantages ~ Disadvantages ~ Geographic Area Product Customer ProcessAdvantages ~Accountability is clearExtensive delegation of authorityHigh employee moraleOffer career development opportunityDisadvantages ~CostlyDuplication of staffElaborate H.Q. Control systemCertain region, product, customer may suffer.
14 SBU StructurePresidentCEO SBU - ADivisionDicisionCEO SBU - B
15 Characteristics ~ Advantages ~ Disadvantages ~ SBU is a grouping of related business that can be taken up together for strategic planning.Corporate office manages SBU through strategic and financial control and delegate authority and responsibility for day-to-day operations.SBU divides into divisions under a senior executive who reports directly to the CEO.Advantages ~More accurate monitoring of individual businessSimplifies the control problemBetter allocation of resourcesSynergy among the divisions of the group can be achievedDisadvantages ~Costly
17 Characteristics ~ Advantages ~ It is combination of divisional and functional structure.Employees have 2 bosses.It has dual-line of authority, dual-source of reward and punishment, dual-reporting channels.Home department of employees is functional and they are often assigned temporarily to one or more projects.Advantages ~Project objectives are clear.There are many channels of communicationWorkers can see the result of their workShutting down a project is relatively easyIt has stability of functional structure and flexibility of divisional form.
18 Network StructureThe corporations organized in this manner is often called virtual organization.In such organizations many activities are out-sourced.The organization is only a shell with a small HQ acting as a Broker and electronically connected to some independent organizations.Advantages ~Provides increased flexibility and adaptability to cope with rapid technological changes.Allows company to concentrate on its distinctive competencies.Disadvantages ~Availability of numerous potential partners can be source of trouble.Keep the firm away from the benefit of synergy
19 Strategic Business Unit Relevant to multi-business, multi-product organization, which group strategically related products into a business unit.Traditionally organizations handles planning on territorial basis, which had 2 disadvantages –Same product – separate treatmentDifferent products – Same treatment
20 Characteristics of SBU ~ A group of related business that can taken up together for strategic planning.On the basic factor such as mission, objectives, competition, and strategy one SBU is different from other SBU.Each SBU will have its CEO who is responsible for business level planning and profit.Facilitate correct allocation of resources
21 Value Chain AnalysisValue chain is a set of activities within and around an organization to provide value-for-money product/services.VC analysis is a 2 steps process : First identify separate activities and Second assessing the value added by each of them.
23 Core CompetencesCC is a unique strength of an organization which critically support its competitive advantages.These tend to be easily imitated, so, organization should continually shift the ground of competition.VC analysis can be helpful in identifying those activities which represents the competences of the organization.
24 Linkages between primary activities ~ E.g. Outbound Logistics (Inventory of finished goods) and Operations (Manufacturing).Linkages between support activities ~E.g. Human Resource Management and Technology DevelopmentLinkages between primary and support activities ~E.g. Infrastructure (MIS) and Operations (Service delivery)External linkagesVertical linkages attempts to improve performance through ownership of more part of value system.TQMMerchandising Activities
25 Leadership and Strategy Implementation A strategy manager has many leadership role : Visionary, Chief administrator, Culture builder, Resource allocater, Crisis solver, Motivator, Arbitrator etc.On the top of all these he is a change agent.5 leadership role in implementation ~Staying on the top of what is happening.Promoting a culture to execute strategyKeeping organization responsive to changeExercise ethical leadership to make organization as good corporate citizen.Pushing corrective action to improve strategy execution.
26 Leadership role in Implementation Strategic leaders guide company in formation of mission, objectives and strategy.Strategic leaders guide company implement the strategy by influencing the behavior, thought and feelings of co-workers.They can use their frame of reference which is set of assumptions, promises and accepted wisdom to deal with environment and perform the responsibility.
27 Leadership Style Transformational leadership They use charisma and enthusiasm to inspire people to exert for the good of the company.This appropriate in turbulent environment and when major changes are required to be made.This style offers excitement, personal satisfaction, dream of higher level etc. to achieve dramatic improvement.Such leaders motivate followers to stretch their abilities to do more, increase self-confidence and create innovation.
28 Leadership Style Transactional leadership This style focuses only on controlling organization activities and improve present situation.This style uses authority of its office and follow a formalized approach of motivation such as punishment and rewards.It is appropriate in settled environment and in mature industries.
29 Institutionalise the change. Strategic ChangeModification in strategies due to the changes in the environment is called Strategic Change.Need for changeCreate shared visionInstitutionalise the change.
30 Recognize the need for change Diagnose which part of corporate culture is not supportive to strategy so that strategy can be changed according to it.This calls for SWOT analysis and then determine scope for change.Create a shared vision to manage changeCommunicate the vision with every one so that there is no conflict between the objectives of individuals and organization.Convince all that the change is not superficial or cosmetic. Actions must be highly visible and indicative of management’s seriousness.
31 Institutionalise the change This is action stage where changed strategy is implemented.It calls for creating supportive attitude and ensure it does not slips backChange process is regularly monitored and analysed for deviation; And if necessary corrective actions are taken.
32 Kurt Lewin change process Un-freezingChangingRe-freezing
33 Un-freezing the situation It is the process of braking down old attitude, behavior, customs and traditions.It is the process of making employees aware of the necessity for changes because sudden changes are socially destructive.It is all done by making announcements, holding meetings and promoting ideas etc.
34 Changing the new situations Three methods of changing pattern of behavior~ComplianceIt focuses on strictly enforcing rewards and punishmentIdentificationIt focuses on creating role models.InternalizationIt focuses on freedom to learn to change the individual’s thought process.Re-freezingWhen new behavior becomes a normal way of life it must be continuously reinforced by orientation training.
35 Organizational Control Control is the check exercised to ensure that –Performance meets the standardUndesirable events are prevented, detected and corrected.Use of resources is efficientAssets are adequately safeguarded.Control function involve Monitoring, Measuring, Correcting and Maintaining the system
36 Control Process Setting objectives as standard Measuring actual performanceComparing with standardDetecting deviationIdentifying the improvementFeeding back corrective instructionControl Process
37 Controls Operational Management Strategic Premise Surveillance Special alertImplementation
38 [A] Operational Control This control is applied on individual tasks where measurable relationship between input and output exist.It regulates the process within certain tolerable boundaries.Example : Quality control, Cost control, Inventory control, Production control etc.
39 [B] Management Control This control is applied over integrated activities of a department, division or entire enterprise.It helps to achieve corporate goals in most effective and efficient manner.According to Robert Anthony ~“Management control is the process by which managers assure that resources are used effectively and efficiently in the accomplishment of the organizational objectives.”
40 [C] Strategic Control According to Schendel and Hofer ~ “Strategic control focuses on the dual questions of whether : (1) the strategy is being implemented as planned and (2) he results produced by the strategy are those intended.”1. Premise controlStrategy is formed within certain premises or assumptions about environment.PC is a tool to verify the validity and accuracy of these premises on which the strategy is built.PC focuses on environmental factors : economic, social, technological, legal, competitive, supplier, customer etc.
41 2. Surveillance Control 3. Special Alert Control Unlike Premise control it is unfocussed.It involve general monitoring of sources of information to uncover unanticipated information having bearing on strategy.It includes reading newspaper, business magazines, meeting, conferences discussions etc.3. Special Alert ControlThis control focuses on sudden changes in government, natural calamities, terrorist attack, unexpected merger/acquisition by competitors and such other event that may calls for intense review of strategy.
42 4. Implementation Control This control directed towards assessing the need for changes in the strategy in the light of company performance.It requires continuous monitoring of direction movement of strategy.Types ~Monitoring strategic thrustDetermine whether strategy is progressing as desired .Milestone reviewsEvaluating the milestone achieved.
43 Building a strategy supportive culture Company’s Values, Belief, Business principles, traditions, approach to decision making and problem solving etc are all collectively make corporate culture.Organization culture comes from the complex combination of socio-cultural background of its employees.
44 Culture : Alloy or Obstacle An organization culture is either a contributor or an obstacle in the successful strategy execution.For e.g. – a culture where frugality is strongly shared by employee is very supportive to successfully execution of a Cost leadership strategy.A tight strategy-culture alignment gives 2 benefits ~It develops a system of informal rulesNurtures and motivates people to do their job in strategy supportive manner.
45 A sizable and prolonged strategy-culture conflict weakens the managerial efforts to make the strategy work.It is strategy maker’s responsibility to select strategy compatible with unchanged part of culture; andIt is responsibility of strategy implementer to change which ever part of culture is in conflict with strategy.
46 Changing a problem culture Tough to change heavy anchor of deeply held values.Requires concerned managerial actions over a period of time.Talk to all those concerned with that aspect of culture which is to be changed.Talk should be followed swiftly by visible aggressive actions to modify culture.
47 There are several ways to accomplish this ~ Visibly praising and recognizing people who display the new cultural traits.Engineer some quick successesReplace old-culture managers with new one.Change long standing policies that are dysfunctional.Re-organize corporate structure in alignment with strategyTying incentives directly to new measures.Making major budgetary re-allocations.Sincere, sustained commitment by CEO