CHAPTER FIVE

STRATEGY IMPLEMENTATION
Learning Objectives
- Explain the nature of strategy implementation.
- Describe the key concepts in strategy implementation.
- explain the importance of implementing strategy
- Discuss the functional structures used to implement business-level strategies.

- Describe the relationship between strategy and structure.

5.1 Introduction
Once managers have decided on a strategy, the emphasis turns to converting it into actions and
good results. Strategy implementation has been defined in many ways. Traditionally the focus
has been on organizational structure and systems. Others have stressed the communicational and
cultural aspects in strategy implementation. However, scholars and managers alike agree on
some central ideas:
- First, successful strategy implementation depends in part on the organization’s structure.
- Second, strategy must be institutionalized, or incorporated into a system of values, norms,
and roles that will help shape employee behavior, making it easier to reach strategic
goals.
- Third, strategy must be operationalized, or translated into specific policies, procedures,
and rules that will guide planning and decision-making by managers and employees.
Factors Causing Unsuccessful Implementation of Strategy
Before going into the details of how a chosen strategy is implemented, it is desirable to identify
the factors, which cause unsuccessful implementation of strategy so that managers can take
adequate safeguard against these factors. These factors are :-
i. Unsatisfactory coupling of strategy and operational actions.
Unsatisfactory coupling of the strategy to the actions necessary to implement it, both within the
organization and in the external decision situations with which it is concerned may cause
unsuccessful implementation of the strategy. This type of difficulty can result from a number of

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causes and conditions. For example, unsatisfactory coupling of the new strategy may be due to
the lack of explicit decoupling from previous strategy and commitment within the organization
itself. This decoupling may be caused, in turn, by the existence of a sizable group of people
within the organization who are convinced that the new strategy is not practical and that the
previous ways and activities are best.
ii. Insufficient Attention
Another major factor causing unsuccessful implementation of the strategy is insufficient
attention to the negotiation of outcomes in the external decision situations. It is a tendency to
assume, once the strategy is formulated, that all that is necessary for the success of the
organization is the aggressive pursuit of the strategy.
iii. Defective Strategy
Sometimes, there may be strategy, which cannot be implemented within the context of present
and future organizational resources. Perhaps, every one of us may be aware about ‘who will bell
the cat’
5.2 Activating Strategy
Activation is the process of stimulating an activity -so that it is undertaken effectively.
Activation of strategy is required because only a very small group of people is involved in
strategy formulation while its implementation involves a large number of people in the
organization. So long as a strategy is not activated, it remains in the mind of strategists.
Activation of a strategy or set of strategies requires the performance of following activities:
1. Institutionalization of strategy,
2. Formulation of derivative-plans and programs,
3. Translation of general objectives into specific objectives, and
4. Resource mobilization and allocation.
1. Institutionalization of Strategy
The first basic role of the strategist in strategy implementation is the institutionalization of the
strategy. Since strategy does not become either acceptable or effective by virtue of being well
designed and clearly announced, the successful implementation of strategy requires that the
leader act as its promoter and defender. Therefore, there is an urgent need for the
institutionalization of the strategy because without it, the strategy is subject to being

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undermined. Institutionalization of strategy involves two elements: Communication of strategy to
organizational members and getting acceptance of strategy by these members.
2. Formulation of Derivative Plans and Programs
Once the strategy is institutionalized through its communication and acceptance, the organization
may proceed to formulate action plans and programs. Since these plans and programs are derived
from a strategic choice (strategic plan), these are known as derivative plans and programs.

Action Plans - Action plans target at the most effective utilization of resources in an
organization so that objectives are achieved. These action plans may be of several types like plan
for procuring a new plant, developing a new product, and so .on.
Programs - A program is a single-use plan that covers relatively a large set of activities and
specifies major steps, their order and timing, and responsibility for each step. There may be
several programs in an organization; some of them being major, others being minor. These
programs are generally supported by necessary capital and operating budgets.
3. Translating General Objectives into Specific Objectives
Organizational objectives are of general and broad nature. They provide direction for action on
continuous basis. However, these objectives are too general and, sometimes, intangible to be
transformed into action. In order to make these operative, managers determine specific objectives
within the framework of general objectives, which the organization and its various units will
seek to achieve within a specific period.
Translation of general objectives into specific and operative objectives must fulfill two criteria.
- Translation of general objectives into specific objectives should be tangible and
meaningful.
- Specific objectives should contribute to the achievement of general objectives.
4. Resource mobilization and allocation
For implementing a strategy, an organization should have commensurate resources and these
resources should be committed and allocated to various units and functions where these have
optimum use. These resources are the means by which an organization produces goods and
services of value through conversion process. The success of the organization depends on the
quality of its resources and their utilization. Therefore, the organization should feel concerned
about how to mobilize resources and allocate these to various units and subunits.

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5.3 Implementation of Strategy
‘It’s been rather easy for us to decide where we wanted to go. The hard part is to get the
organization to act on the new priorities.’(Floyd and Woolridge, 1992)
Implementation is taking the actions necessary to accomplish the goals, strategies, and
objectives. It requires action planning, senior leadership involvement, commitment to the plan,
resourcing (people, time, and money), and involvement from the entire organization. The
strategic planning process that was used to create the plan is inverted in the implementation
phase. Completion of the objectives impacts completion of the strategies, then the goals, and
leads toward accomplishing the vision. To implement the strategic plan successfully, it is
necessary for the organization to have a formal implementation plan with actions assigned to
either teams or individuals who are responsible for their accomplishment. Following are actions
that are keys for successfully implementing the strategic plan and actions that guarantee failure.
Keys to Success
- Assign roles and responsibilities
- Involve senior leaders
- Define an infrastructure
- Link goal groups
- Phase integration of implementation actions with workload
- Involve everyone within the Organization Allocate resources for implementation
- Manage the change process Evaluate results
- Share lessons learned;
- acknowledge successes through
Facts of Failure
 
 No accountability
 
 Disengagement from process
 
 Unmanaged activity
 
 Fragmented accomplishment of objectives leads to sub optimization
 
 Force people to choose between implementation and daily work; too many teams
 
 No alignment of strategies
 
 Focus only on short term need for resources
 
Ignore or avoid change

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  
 No measurement system
 
 Hide mistakes/lay blame;

1. Structural Implementation
Structural implementation of strategy involves designing of organization structure and
interlinking various units and subunits of the organization created as a result of the organization
structure. Organization structure is the pattern in which the various parts of the organization are
interrelated or interconnected. Thus, it involves such issues as to how the work of the
organization will be divided and assigned among various positions, groups, departments,
divisions, etc. and the coordination, necessary to accomplish organizational objectives: will be
achieved. Thus, there are two aspects of organizational design: differentiation and integration.

- Differentiation refers to ‘the differences in cognitive and emotional orientations

among managers in different functional departments’.
- Integration refers to ‘the quality of the state of collaboration that are required to achieve
unity of efforts in the organization. Therefore, the organization must emphasize on both
the aspects: it must design organization structure and provide systems for interaction and
coordination among organization’s parts and members.
Achieving a fit b/n strategy & structure is a complex process that involves how activities will be
grouped & groups will be coordinated. This refers to the need for identifying the appropriate
types of organizational structure, linking organizational units, & decision making (centralization
vs. decentralization)
Organizational structure facilitates the implementation of the strategy. Although there are many
types of structures, three basic types identified: Simple, functional & multi-divisional.
A. Simple Structure
an organizational form in which the owner-manager makes all decisions directly & monitors all
activities – employees serve as an extension of the manager’s supervisory authority.
Features:
- Little specialization of tasks
- Few rules & limited formalization
- Communication is frequent & direct
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 - Offering products in a single geographic market
- New products tend to be introduced to the market quickly – competitive advantage
This type of organizational structure is frequently used by firms implementing either the focused
cost leadership or focused differentiation strategy. Simple structure is more appropriate for small
firms: restaurants, repair businesses, & other specialized enterprises. As firms grow, they
implement functional structure to coordinate more complex organizational functions.

B. Functional Structure
Is an organizational form where dominant organizational areas such as human resource,
production, accounting & finance, marketing, R&D, & engineering are separately organized. A
functional structure consists of a chief executive officer & limited corporate staff. Features:

- Facilitates specialization, knowledge sharing & idea development

- Facilitates career paths & professional development in specialized areas
- However, differences in orientation impede communication & coordination
Integrating the decisions & actions of functional areas for the benefit of the entire organization
rests on the CEO. This structure is used by large firms: To implement one of the business-level
strategies However, with low levels of product diversification.
C. Multi-divisional Structure
This is composed of operating divisions, each representing a separate business or profit center.
Features:
- Separate divisions are distinct businesses
- Self-contained & have their own functional hierarchy
- Each division makes its own business-level strategic decisions
Thus, corporate-level managers are responsible for: Determining the company’s overall long-
term strategic direction and exercising overall financial control of semi-autonomous divisions.
Implications:
- Enables to monitor accurately – simplifies the problem of control
- Facilities comparisons b/n divisions – improves the resource allocation process
- Stimulates managers of poor performing divisions

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 - The cost leadership strategy requires a centralized functional structure – emphasizing
manufacturing efficiency & process engineering
- The differentiation strategy requires a decentralized functional structure – implementation
decision (specially marketing)
- Focus strategy requires a simple structure until firms begin to compete in multiple markets
- or sells multiple products

Implementation of Strategy
The growth pattern of firms

Simple structure
Efficient implementation
Sales growth – coordination &
control problems

Functional structure
Efficient implementation

Sales growth – coordination &

control problems

Multi-divisional structure

2. Functional Implementation
Functional implementation deals with the development of policies and plans in different areas of
functions, which an organization undertakes. Every business organization is built around two
basic functions: production and marketing; to be in business, every organization has to produce
goods or services and sell these to the customers. The resources that are used to perform and pay
for these two basic functions constitute two other significant functions-finance and personne1.
Thus, an organization has to formulate policies and plans in these functions to implement its
strategy successfully.
3. Behavioural Implementation
Behavioural Implementation deals with strategic leadership, organizational culture and values.
I. Strategic Leadership
Strategic leadership is the process of transforming an organization with the help of its people so -
as to put it in a unique position. Thus, two aspects are involved in strategic leadership. First, it
transforms the organization which involves changing all faces such as size, management
practices, culture and values, and people in such a way that the organization becomes unique.
Second, strategic leadership process emphasizes people because they are the source for
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transforming various physical and financial resources of the organization into outputs that are
meaningful to the society. Thus, strategic leadership proceeds as follows:

- Strategic leadership deals with vision-keeping the mission in sight-and with effectiveness
and results.
- Strategic leadership emphasizes transformational aspect.
- Strategic leadership inspires and motivates people to work together with a common
vision and purpose.
- Strategic leadership has external focus rather internal focus.
II. Organizational Culture
Organizational culture is another element which affects strategy implementation as it provides a
framework within, which the behaviour of the members takes place. Though there are differing
views on what constitute an organizational culture, generally, it is defined as a set of assumptions
the members of an organization share in common. For example, organizational culture has been
defined as follows: “Organizational culture is the set of assumptions. beliefs, values and norms
that are shared by an organization’s members. Thus, there are two types of elements, which
define the culture of an organization: abstract elements and material elements. Abstract -
elements are internally oriented and include values, beliefs, attitudes, and feelings. Material
elements are externally focused and include building, personnel dresses, products, etc.
III. Values
Values of individuals, particularly those of key strategists, have major impact on strategy of the,
organization. While terminal values shape organizational strategies, instrumental values indicate
how these strategies are to be implemented. Depending on the dominance of terminal values in
strategists, these are means for organizational transformation.
6.4 The Seven-S Model
Based on discussions with consultants, academics, and business leaders, the consulting firm of
McKinsey & Co. has proposed the Seven-S Model for successful strategy implementation. The
model starts on the premise that an organization is not just structure, but consists of seven
elements:
Those seven elements are distinguished in so called hard S’s and soft S’s.

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 - The 3Ss across the top of the model are described as 'Hard Ss', which are feasible and
easy to identify. They can be found in strategy statements, corporate plans, organizational
charts and other documentations.
- The four soft S’s however, are hardly feasible. They are difficult to describe since
capabilities, values and elements of corporate culture are continuously developing and
changing. They are highly determined by the people at work in the organization.
Therefore it is much more difficult to planor to influence the characteristics of the soft
elements. Although the soft factors are below the surface, they can have a great impact of
the hard Structures, Strategies and Systems of the organization.
Description
The Hard S’s
Strategy Actions a company plans in response to or anticipation of
changes in its external environment.
Structure Basis for specialization and co-ordination influenced primarily
by strategy and by organization size and diversity.
System Formal and informal procedures that support the strategy and
structure. (Systems are more powerful than they are given credit)
The Soft S’s
Style/Culture The culture of the organization, consisting of two components: Organizational
Culture: the dominant values and beliefs, and norms, which develop over time and
become relatively enduring features of organizational life.
Management Style: more a matter of what managers do than what they say; How
do a company’s managers spend their time? What are they focusing attention on?
Symbolism – the creation and maintenance (or sometimes deconstruction) of
meaning is a fundamental responsibility of managers.
Staff The people/human resource management – processes used to develop managers,
socialization processes, ways of shaping basic values of management cadre, ways
of introducing young recruits to the company, ways of helping to manage the
careers of employees. c
Skill The distinctive competences – what the company does best,
ways of expanding or shifting competences.

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Shared Guiding concepts, fundamental ideas around which a business is built – must be
Values/Subordinate simple, usually stated at abstract level, have great meaning inside the organization
goals even though outsiders may not see or understand them.

The 7-S Model is a valuable tool to initiate change processes and to give them direction. A
helpful application is to determine the current state of each element and to compare this with the
ideal state. Based in this it is possible to develop action plans to achieve the intended state.
5.5 Balanced Scorecard (BSC) Model
According to the balanced scorecard organizations are viewed from four perspectives:
• The Financial Perspective
• The Customer Perspective
• The Business Process Perspective
• The learning & Growth Perspective
To develop metrics, collect data & analyze it relative to each of these perspectives
• Financial perspective - measures reflecting financial performance, for example number
of debtors, cash flow or return on investment. The financial performance of an
organization is fundamental to its success.
• Customer Perspective - measures having a direct impact on customers, for example time
taken to process a phone call, results of customer surveys, number of complaints or
competitive rankings (an increasing realization of the importance of customer focus &
customer satisfaction in any business)
• Business Process Perspective - measures reflecting the performance of key business
processes, for example the time spent prospecting, number of units that required rework
or process cost (whether its products & services conform to customer requirements)
• Learning and growth perspective - measures describing the company's learning curve -
for example, number of employee suggestions or total hours spent on staff training (ease
of communication & knowledgable employees)

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