IMPLEMENTING: REALIZATION OF

STRATEGY

Rodel C. Pomentil, MBA

Objectives
 Discuss the three heirarchical levels of strategy in
the implementation stage
 Define corporate governance and its significance in
the formulation and implementation of strategies
 Understand strategic leadership and its impact in
the implementation stage
 Determine the fit and alignment of functional
strategies to organizational objectives
 Appreciate the tools under implementation stage
Elements of the Implementation Stage

 Three Hierarchical Levels of Strategy

 1. Corporate or Directional Level Strategy
 Arelaid down to determine the direction of the business
on a broad or corporate level.
 Three directions according to Wheelen and Hunger
(2010)
 Growth Strategies-growth in sales, assets, profits
 Stability Strategies-stay put or maintain current array of
businesses
 Retrenchment Strategies- weak competitive position in some
or all of its product line
 Four generic ways that a corporate strategy can
evolve
 A. Exit-making some sacrifice by dropping some
product lines and services or business units deemed
unprofitable
 B. Enhance-adding functionalities or improving the
product or services currently being offered
 C. Extend- adopting a new business model or entering
new business
 D. Expand-adding products and services within an
existing business
2. Business or Portfolio Level Strategy
 Refers to a heirarchichal level of strategy where tactics are
mapped out to beat competition through its products and
strategic business units (SBU’s) such as competitive,
cooperative and integration among others.
 The question “ How to compete?” is answered
3. Functional or Parenting Level Strategy
Operational methods and process are properly coordinated
and involve transferring of resources and cultivating
capabilities among product lines and business units.
“How do we maximize the productive use of internal
resources, capabilities and competencies?”
Good Corporate Governance
 Refers to balancing of and relationships among
stakeholders that is used to determine and control the
strategic direction and performance of organizations.
 Guiding Principle is FAT (fairness, accountability and
transparency)
 Separation of powers
 Ownership-belongs to shareholders
 Governance- responsibility of the BOD

 Management- delegated to CEO and his team of officers

The Role of the Board of Directors
(BOD)
 Highest governing authority in the organization
 Highest policy making body
 BOD should comprise the following
 Insiders,
Related Outsiders and Outsiders
 Most important role
 To make strategic decisions for the company
 To protect the shareholders interest
 To appoint senior management
BEST PRACTICES TO HAVE CGC
 1. separate ownership with managerial control
 2. increase diversity of board members
 3. establish for formal evaluation of the BOD’s
 4. promote democracy in the boardroom
 5. receive compensation in accordance to the
capacity of the firm
Politics of Strategy Choice
 Is politics good or bad for any organization?
 Hidden agenda
 Key people

 decisions
The Role of the Top Management
 Comprise of key officers who are responsible for
formulating and implementing the organizations
strategies
 Also called strategic managers
 CASH match with firms strategies
 Composed of CEO ,President, VP, Chairman and
BOD
Role of CEO in Strategic Management
 Must understand that strategic management is his responsibility; part
of this task, but certainly not all must be delegated
 Responsible for establishing a climate in the organization that is
congenial to strategic management
 Responsible for ensuring that the design of the process is
appropriate to the unique characteristics of the company
 Responsible for determining whether there should be a corporate
planner
 Must get involved in doing planning
 Should have face to face meeting with the executives for making
plans and should ensure that there is a proper evaluation of the
plans and feedback to those making them
 Responsible for reporting the results of the strategic management
process to the BOD
Four types of executives who use their
time badly
 Online junkies
 Stick to the office and spend less of their time managing and
motivating their employees ( 38% of their time is using
asynchronous messaging)
 Schmoozers
 Spend much time outside the office and can be elusive for direct
reports ( 29% of their time is spent on phone)
 Cheerleaders
 Are good with employees but spend little time with the outsiders (
55% of time spent is face to face)
 Firefighters
 Are invariably dealing with emergencies, micro-managing, and
operationally focused ( 39% of their time is spent alone)
Tips on how company can ensure that
executive time is used effectively
 Create a budget for leaders time ( attention,
priority, delegate)
 strip out redundancy and extra layers in the
decision making process
 Encourage executives to measure how they use their
time, so they can align it with their company’s
priorities
 Use a calendar not only as a scheduling tool, but
also to strip out time-wasting meetings
STRATEGIC LEADERSHIP
 Involves the ability to anticipate, envision, maintain
flexibility, and empower others to create strategic
change
 An effective strategic leadership shapes the
formulation of strategic intent and corporate
mission, which influences the strategic actions
heading to achieve competitiveness and above
average returns
FUNCTIONAL STRATEGY FITNESS AND
ALIGNMENT
 Management and Operations
 Influence the implementation of strategies in various ways
 Product and service design
 Cost
 Location
 Quality
 Quick response
 Flexibility
 Inventory management
 Supply chain management
 Service after sale
 Marketing and Sales
 About creating demand and managing profitable customer relationship
 Customer Relationship Management (CRM)
 Finance/Accounting
 Without access to money plans cannot be put into action
 ANALYSIS OF REVENUE AND COST
a. total revenue and total cost are significantly less-asset reduction
strategy
b. Total revenue is lower than total cost- asset maximization-revenue boosting
strategy
c. Total revenue is slightly lower than total cost –asset reduction cum
maximization-revenue boosting strategy
d. Total revenue is the same as the total cost- asset maximization-revenue
boosting cum cost cutting strategy
 Research and Development Engineering
 Is about investing for the future given today’s knowledge
based world economy. It is expected that this functional
area will about innovation
 Management Information System (MIS)
 is an organize combination of people, hardware,
communication networks and data sources that collect,
transform, and distribute information to support managerial
functions
 Human Resource
 The right people with the right skills and competencies are
valuable employees who will spell a big difference in
achieving successful strategies
Tools in the Implementation Stage
 1. Synergistic Strategy
 It is a directional strategy where two independent firms
agree to combine their resources to establish a greater than
the value of the two firms prior to acquisition due to
economies of scale.
 Horizontal integration
 Action to strengthen the company’s position by way of acquisition,
merger, or takeover of a competitor in the same industry value chain
 Advantages
 Lower costs
 Increased level of differentiation
 Increased bargaining power
 Reduced competition
 Increased diversification
  Disadvantages
 Damaged value
 Legal repercussion
 Reduced flexibility
 Vertical Integration
 A synergistic strategic action where a firm usually expands to
strengthen the company’s position to the industry by way of
acquisition, merger, or takeover of another company along the
industry value chain
 Two Kinds
 Forward- the manufacturing company acquires the wholesaler or
retailer for the purpose of achieving higher economies of scale and
larger market share
 Backward- the manufacturer acquires the supplier company to
streamline the supply chain process
 2. Intensive Strategies
 Market penetration is a strategy that seeks to increase
market share for existing product or services in existing
market through intensified marketing efforts such as
promotion and adverting
 Market development is a strategy that seeks to increase
market share by introducing existing products or services
into new market or geographical area
 Product development is a portfolio strategy that seeks to
increase market share and sales by innovating or improving
existing products or services to be sold in existing market
 3. Diversified Strategy
 Isa strategic action applied for a firm to expand
business operation that offers new products to new
markets whether related or not related in p/s
 Two ways
 Horizontal or related diversification
 Offering new products to related products or services
 Unrelated diversification
 Offering new product not related to existing products or services
 4. Defensive Strategies
 Designed to achieve two purposes
 To hold onto market leader position
 To hedge or reduce the risk of loss or uncertainty specially when the market is shrinking
 A. joint venture
 Action occurs when two or more companies form a strategic alliance or partnership for the
purpose of capitalizing on some opportunity
 B. retrenchment
 Happens when an organization regroups through cost and asset reduction to reverse
declining sales and profits
 C. divestiture
 A strategy which sells a business unit or a division of a company for the purpose of
recovering from financial woes or raising capital for further strategic acquisitions or
investments
 D. receivership and liquidation
 Instead of putting the firm in bankruptcy, a firm can opt for the appointment of receiver to
safeguard the company’s assets for the best interest of its creditors
 Liquidation occurs when it is better to cease the operation than to continue losing a large sum
of money
 5. Generic Competitive Strategies
 Cost Leadership
 A business level action designed to produce or deliver goods or
services with features acceptable to many customers at the lowest
cost relative to that of the competitors
 Differentiation
 A business level action that distinguishes a product or offering
from competitors to make it more attractive to target market
 A.. Unique product and feature performance
 B. extra-ordinary services
 C. new technologies or state of the art facilities
 D. quality of input
 E.. Excellent skill or experience
 Focused leadership
A business level that produce or deliver goods or
services that serve the needs of a particular segment or
niche at the exclusion of others
 Particular buyer group
 Different segment of a product line
 Different geographic market