Strategic Implementation Requirements for Strategic Implementation 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Strategic Management Prof. Dr. Majed El-Farra 2012 Strategy implementation- the sum total of all activities and choices required for the execution of a strategic plan Who are the people to carry out the strategic plan? What must be done to align company operations in the intended direction? How is everyone going to work together to do what is needed? 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Common Strategy Implementation Problems Took more time than planned Unanticipated major problems Poor coordination Competing activities and crises created distractions Employees with insufficient capabilities Poor subordinate training Uncontrollable external environmental factors Poor departmental leadership and direction Inadequately defined implementation tasks and activities Inefficient information system to monitor activities 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Strategy Implementation Effective strategic implementation requires the follows: 1- Organizational structure appropriateness. 2- Sound leadership of the company. 3- Effective motivational system 4- Annual objectives 5- Functional strategies 6- Clear budget 7- Detailed action plan 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Criticisms of SWOT analysis Generates lengthy lists Uses no weights to reflect priorities Uses ambiguous/vague words and phrases Same factor can be in 2 categories No obligation to verify opinion with data or analysis Requires only a single level of analysis No logical link to strategy implementation Prentice Hall, Inc. ©2012

Communicating Strategy Strategy must be clearly understood. It provides employees with general guidance to make decision. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Strategic Management Prof. Dr. Majed El-Farra 2012 Strategy & Structure Definition of Organizational Structure: The structure can either facilitate or inhibit strategy implementation. Chandler says: Changes in strategy ultimately lead to changes in the organization’s structure. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Types of organizational structure 1- Functional 2- Geographical 3- Divisional 4- Customer-based 5- Matrix 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Departmentalization by Type Functional Grouping jobs by functions performed Product Grouping jobs by product line Geographic Grouping jobs on the basis of territory or geography Process Grouping jobs on the basis of product or customer flow Customer Grouping jobs by type of customer and needs Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Functional Departmentalization Advantages Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations Coordination within functional area In-depth specialization Disadvantages Poor communication across functional areas Limited view of organizational goals Figure 10.2a Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Geographical Departmentalization Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geographic markets better Disadvantages Duplication of functions Can feel isolated from other organizational areas Figure 10.2b Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Product Departmentalization + Allows specialization in particular products and services + Managers can become experts in their industry + Closer to customers – Duplication of functions – Limited view of organizational goals Figure 10.2c Source: Bombardier Annual Report. Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Process Departmentalization + More efficient flow of work activities – Can only be used with certain types of products Figure 10.2d Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Customer Departmentalization + Customers’ needs and problems can be met by specialists - Duplication of functions - Limited view of organizational goals Figure 10.2d Copyright © 2005 Prentice Hall, Inc. All rights reserved.

An assessment of Org. Structure No structure is appropriate for all situations. Appropriate structure may change as the organization develops. Examples require structure change: Introducing new strategy, having problems in achieving its objectives, leadership changes. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Symptoms of an ineffective org. Structure According to P. Drucker: 1- Too many management levels make cooperation and communication difficult 2- Too many meetings attended by too many. 3- Too much attentions are given to resolve interdepartmental conflict. 4- Excessive decision making at top management. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Evolution of organizational structure: Alfred D. Chandler Changing strategy. Administrative problems leading to decline performance. Revised structure subsequent return to economic health. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Structural adjustments: Chandler When does it happen? Market expansion. Product line diversification. Vertical integration. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Relationship between strategy and Org. Structure The process of matching structure to strategy is complex and should be undertaken with a thorough understanding of: the historical development of the organizational structure. The requirements of the organization’s environment and technology. The political relationships that might be affected inside the organization. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Organizational Culture . Culture: Refers to the values and patterns of belief and behavior that are accepted and practiced by the members of a particular organizations Org. culture change as environment changes. The founder and Top management shape the org. culture. Change in strategy requires change in culture. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Organizational Leadership The leader is an individual who is able to influence the attitudes and opinion of others by motivation and guiding. The leader must have a clear vision. Different strategies need different skills. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Strategy and Motivational systems Organizational reward system influence the entire organizational climate. Organizational rewards include all types of rewards, tangible and intangible. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Deployment of Resources through Budgeting Budgeting: Is the process of allocating resources to be employed to achieve objectives. Budget should be directly linked to strategy implementation. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012

Developing functional Strategies Functional Strategies describe the methods and means at functional level to achieve corporate strategies and business unit strategies. 29/07/1438 Strategic Management Prof. Dr. Majed El-Farra 2012