CHAPTER-4

STRATEGY
IMPLEMENTATION
 CONTENTS..,
 Aspects of strategy implementation- project
manipulation- procedural implementation- structural
implementation – structural considerations- structures for
strategies- organizational design and change –
organizational culture – corporate polices and use of
power. Functional and operational implementation –
functional strategies- functional plans and policies.
Financial – marketing – operational and personnel
dimensions of functional plan and policies- integration of
functional plans and policies.
 MEANING:
 Implementation of strategy is the process of activating the
chosen strategy.
DEFINATION:
According to Charles W.L Hill and Gareth R.J “strategy
implementation as the way in which a company creates the
organizational arrangements that allow it to put its strategic
plan into operation most efficiently and to achieve its
objectives.”
STEPS IN IMPLEMENTING OF A STRATEGY
 Resource allocation
 Fixing key task and priorities

 Assigning tasks

 Authority delegation

 Formulating methods for co-ordination

 State policies as designed for implementation

 Clearly state the various goals of individual managers

 Develop MIS and feed back system for evaluation

 Provide incentives and rewards to reinforce the behavior of

workers to new system
 Training program

 Implement

 restructuring the strategy

 REASONS THAT MAKE IMPLEMENTATION
DIFFICULT
 The organizational immune system
 Presence of mighty paradoxes

 Number of variables involved

 Interconnectivity of elements affecting change

 The need to change everything at one shot

 Behavioral implementation
STRATEGY FORMULATION V/S
IMPLEMENTATION
Formulation of Strategy Implementation of Strategy

• Focus on Effectiveness
choosing the right things • Focus on Efficiency –
• Primarily an Intellectual doing things right
process • Primarily an Operational
• Requires good intuitive & process
analytical skills • Requires good motivational
• Requires coordination & leadership skills
among a few individuals • Requires coordination
among many individuals
THE MCKINSEY 7- S FRAME WORK TO OVER COME
IMPLEMENTATION DIFFICULTIES
 LEADERSHIP
 To lead is to guide, direct, supervise, integrate and
energies the efforts of other towards a common goal.
 Leadership is the ability to get people to do what you
want them to do .
 “Leadership is the relationship in which one person, the
leader, influence others to work together willingly on
related tasks to attain that which the leader desires.”
- by professor Geroge Terry
WHAT QUALITIES MAKE GLOBAL LEADER
 Radical change in the mind set
 Integrity, clear vision and candid credibility

 Cross functional knowledge and expertise

 Master the art of learning and unlearning

 Ability to turn-the table of organizational pyramid

 Leader has specific meaning of responsibility,

insight and commitment
 Innovative and competitive standards

 Independent and path finders

 Leaders take calculated risks.

 LEADERSHIP STYLES
Efficiency Effectiveness

Logical Inspirational
Retail Advertising
agency
Process/ Creativity
People based based

Directive Supportive

Manufacturing Production/ Team/ IT &

Consulting
Asset based Knowledge based
 ORGANIZATION CULTURE

 Organizationculture is a set of assumptions, beliefs,

values and norms that are shared by an organization’s
member.
ORGANIZATION STRUCTURE AND
STRATEGY
• Structure states how objectives and policies are established
• Structure dictates how resources will be allocated
• Changes in strategy lead to changes in structure
• There is no one optimal structure - firms in a given industry
tend to have similar structures
• A strategy that requires major structural change is not a good
strategy as it may fail
• People make strategies happen and people are embedded in
structures
ORGANIZATION STRUCTURE –
SYMPTOMS WHEN IT IS NOT WORKING
 Too many levels of management
 Delayed decision making

 Too many meetings by too many people

 High Attrition

 Too many conflicts

 Span of Control is very high

ORGANIZATION STRUCTURE - TYPES
1. Functional
2. Divisional
 By Geographic area (Regional)
 By Product
 By Customer
 By Process
3. Strategic Business Unit (SBU)
4. Matrix
FUNCTIONAL STRUCTURE
Corporate
HQ

Business 1 Business 2 Business 3

Operations R&D Financial Marketing HR

FUNCTIONAL STRUCTURE
• Simple and least expensive
• Grouping of tasks by business function –
Production/Operations, Marketing, Finance etc.
• Promotes specialization of labor, efficiency, minimizes need
for elaborate control system and allows rapid decision
making
• Disadvantages:
Conflicts, Poor delegation, Inadequate cross-functional
planning, Low morale
• Suitable for small organizations
DIVISIONAL STRUCTURE
DIVISIONAL STRUCTURE
 Decentralized
 Suitable for large organizations
 Four types within this structure:
 By Geographic area (Regional)
 By Product
 By Customer
 By Process
 Functional activities are performed at central and division level
 Advantages:
 Clear accountability, High empowerment, Competitive climate,
Easy to add new businesses/products/services, Creates leaders
 Disadvantages:
 Expensive, Duplication/Overheads, Needs higher managerial
competency, Elaborate control systems, Poor visibility
STRATEGIC BUSINESS UNIT (SBU)
STRATEGIC BUSINESS UNIT (SBU)

 Suitable for very large organizations

 Similar divisions are under one SBU
 Grouping based on similarity – regions,
products, customers etc.
 Each SBU is run like a separate organization
 Same advantages as a divisional structure
 Disadvantages: Additional layers, Expensive
MATRIX STRUCTURE

• Most complex
• Vertical and Horizontal flow of authority and
communication
• Advantages: Clarity of objectives, best resources for the job,
increases collaboration
• Disadvantages: Overheads, dual lines of budget authority,
shared reward and penalty, dual reporting channel, need
for effective communication systems, confusion in authority
• Organizations need to be mature and have a culture of trust
to make this structure work
 STRUCTURAL CONSIDERATION
 Organization structure is not a mere graphical
representation of activities and people responsible for
various activities. It covers various activities like
 Identification of different activities needed to
accomplish the strategy
 Group the activities based on the skill required

 Establish proper authority and responsibility

 Establish effective information system and

administration of the same
 Designing and administration of motivation and
appraisal system.
 PROJECT MANIPULATION
 Projectmanagers are expected to prepare detailed
plan for every project. Plan should clearly state the
duration of the project, different activities, start time,
end time, resource required and budget. If the project
manager feels there is an emergency that the project
needs to be completed well before the planned
schedule he will go for manipulation.
 ORGANIZATIONAL DESIGN
 Organizational design is a step by step methodology
which identifies dysfunctional aspects of work flow,
procedures, structures and systems, realigns them to fit
current business realities/goal and then develop plan to
implement the new changes.
 Efficient performance of activities requires proper
organization design
 Proper distribution and integration of work is the basic
objective of organization design.
 ORGANIZATIONAL CHANGE
 Organization does not exist in a vacuum. It is
surrounded by ever changing external environment.
 Change in environment have a greater impact on the
organizational activities.
 Changing environment may either create opportunity or
pose new threats.
 Organization must change the structure to use the
opportunity and combat threats.
 Environmental changes may call for structural
modification or behavioral modification.
 ORGANIZATION SYSTEM
 A system is an organized collection of parts that are
highly integrated in order to accomplish an overall goal.
The system has various inputs which are processed to
produce certain outputs, that together, accomplish the
overall goal of the organization. There will be ongoing
feedback system.
 Information system

 Appraisal system

 Motivation system

 Control system

 Planning system

 Development system
 BEHAVIORAL IMPLEMENTATION
 Organization is a group of people working towards
accomplishment of its common goal. Each individual
is different in his own way. Individuals in the
organization will have their own personal goals as
well as organizational goals.
CORPORATE POLITICS AND USE OF POWER
 POWER: it may be defined as the capacity to a person,
team, department or organization to influence others.
Power has a potential to influence and change the
attitude of people.
 Types of power are as follows:

I. Legitimate power
II. Reward power

III. Coercive power

IV. Expert power

V. Referent power
 POLITICS:
 Tocertain extent politics play significant role in an
organization. Politics may be understood as the use of
available power. Political behavior of a employees
cannot be eliminated completely. If the mgt is able to
use politics by regulating dysfunctional politics, better
results can be see in the organization.
 FOLLOWING ARE THE IMPLICATION OF POWER AND
POLITICS

 Can use power and politics to motivate the workers to

achieve common goals of the organization.
 If power and politics are used properly, it will lead to
job satisfaction of the employees and to achieve higher
performances.
 Power and politics enables the executives to create an
attitude of team work among the people working in the
organization.
 Power and politics help in moulding behavior of
unwilling workers positively and bring to a desired
level.
 FUNCTIONAL AND OPERATIONAL IMPLEMENTATION
 A functional strategy is a game plan for different
functions in the organization. Functional strategy
provide more details about how each of these
functions is carried out in near future.
 Operation management directs and controls processes
that are needed to convert inputs into finished goods.
 Operation strategy deals with the following issues:
product planning, capacity planning, technology management,
inventory management, purchase management, use TQM,
quality management, facility location, process planning.
 FUNCTIONAL STRATEGIES
 Functional strategies are short term plans for the key
functional areas. They help in accomplishing annual plans.
Functional strategies help organization to accomplish
long-term objectives systematically. In fact, functional
strategies help organizational to accomplish long term
objectives systematically.
 NEED FOR FUNCTIONAL PLANS AND POLICIES
 Functional strategies divide corporate strategies into
manageable small functions
 Functional managers consult each other while formulating
their respective strategies. It avoids conflicts in regard to
resource allocation.
 Due to the functional strategies, proper decentralization
take place in the organization.
 Ordinary problems are quickly solved by functional
managers. It helps top mgt to concentrate on strategic
issues.
 By working on the similar line day in and day out,
functional managers become experts in their respective
function.
 FINANCIAL POLICIES
 Financial plan of an organization in concerned with the
planning and controlling of financial resources of the
company. Financial policy is a very vital and integral part of
overall management.
 Financial plan takes care of three major issues:

I. Sources of funds

II. Uses of funds

III. Management of funds

 MARKETING POLICIES
 Marketing consists of business activities that direct the flow
of goods and services from producer to the final consumer.
Marketing is a creative function which promotes trade and
employment by assessing consumers needs and initiating
research and development to meet them. It coordinates the
resources of production and distribution of goods and
services.
 Which channel will be used to market the new product?

 How are we going to promote the new product?

 Which type of promotional activity should choose?

 Which product line to be expanded?

 PERSONNEL POLICIES
 Personnel policies deal with planning, organizing and
controlling of various functions of procuring, developing,
maintaining, and utilizing labor force in such a way that the
objectives for which the organization is established are
attained economically and effectively.
 Functions of personnel policies:

I. Planning
II. Organizing

III. Directing

IV. Controlling

V. Industrial relations

VI. Personnel research and audit

 INTEGRATION OF FUNCTIONAL PLANS AND POLICIES

 Corporate strategy is divided into various functional areas.

Each functional head should formulate sound policies and
strategies to accomplish their respective objectives.
Strategies formulated by functional head should not
contradict the overall objective of the organization. It is
therefore necessary to ensure that the functional strategies
are in line with organization strategies .
 IMPORTANT QUESTIONS
1. What is strategic implementation?
2. What is project manipulation?
3. What is organization design?
4. What is organization change?
5. What is organization system?
6. What is organization/corporate culture?
7. What do you mean by behavioral implementation.
8. What do you mean by power?
9. What is functional strategy?
10. What do you mean by policies?
1. Discus the interrelationship between strategy formulation
and implementation.
2. Explain in detail steps involved in strategy implementation
3. Explain in detail difficulties in strategy implementation
4. What do you mean by organization structure? Explain the
types of structures.
5. What do you mean by org system? Explain types of
systems
6. Write a note on integration of functional plans and policies
7. Write a note on corporate politics and power.