STRATEGY IMPLEMENTATION

• It is a crucial issue because successful strategy

implementation requires support, discipline,
motivation and hard work from all managers and
employees.

• It requires a suitable organizational structure to

translate ideas into concrete action plans.

• Strategy is dependent on many variables (internal

& external) and this variables are interrelated.
• Any change in one variable could upset managerial
calculations overnight.

• Given the complexities inherent in organizational

change and strategy implementation Mckensey a
management consultancy firm proposed a 7s frame
work.

• He says that strategy is only one lever in the hands

of management the other levers are style, staff,
skills, system etc.

• A strategy is usually successful when the other S’s

in the 7s framework fit into (or) support the strategy.
• Strategy: a set of decisions and actions aimed at gaining a sustainable
competitive advantage.

• Structure: the organizational chart and associated information that

shows who reports to whom and how tasks are both divide and
integrated.

• Systems: the flow of activities involved in the daily operations of a

business.

• Style: how managers collectively spend their time and attention.

• Staff: how companies develop employees and shape basic values.

• Shared values: commonly held beliefs, mindsets and assumptions that

shape how organizations behaves.

• Skills: organizations dominant capabilities and competencies.

 Issues in strategy implementation
• Successful strategy implementation requires an
effective organization.

• Structural framework wherein roles of management

and employees should be clearly defined and actions
action’s interrelate to support and execute the firms
strategy.

• Services of talented and capable leaders also required

to translate corporate vision into a concrete reality.

• Functional plans and policies need to be formulated

carefully and implemented with active support from
employees at various levels.
 Activating strategy
• After institutionalization of strategy action plans could be
formulated.

• These are basically functional level strategies undertaken at

the departmental level and usually deal with operational
aspects of a strategy.

• The action plans try to translate the overall strategic plan in

letter and spirit without any deviations.

• Issues like who will do what, what kind of support is required

at various stages, etc must be carefully looked into.

• Once action plans are set allocation of resources need to be

made.
 Resource allocation
• Scale resources of a firm need to be allocated
carefully according to the plan.
• One can follow a top down approach or bottom
up approach.
• Top down approach: resources are allocated
through a process of segregation down to the
operating levels.
• Bottom up: resources are distributed after a
process of aggregation from the operating level.
 Problems in resource allocation
• Strategists need to prioritize everything and
decide budgetary allocations in the initial
stage.
• Budget battles can be avoided if targets,
resource sharing, prioritization and midway
revisions etc. are decided in an atmosphere of
close cooperation and participation at
departmental level.
 Strategy-structure relationship
• A suitable organizational structure is essential to
implement strategies and achieve stated goals.
• Organizational structure refers to the ways that
tasks and responsibilities are allocated to
individuals and the ways that individuals are
grouped together into offices, departments and
divisions.
• The structure given in organizational chart
designates formal reporting relationships and
defines the number of levels in the hierarchy.
• The structure is governed by set of rules and
regulations, reward punishment systems,
information networks, control procedures etc.
• It is there to facilitate the smooth translation of
organizational plans, strategies and policies into
concrete action.
• Without a proper fit between strategy and
structure, there will be chaos and confusion in the
organization.
• Which may lead to improper use of facilities and
failure to achieve goals.
• While evaluating whether an organisation is
properly structured to meet the requirments of the
strategy, the following questions need to be
addressed.
• Is the structure compatible with the corporate
profile and the corporate strategy?
• At the corporate level, is the structure compatible
with the outputs of the firms business units?
• Are there too few or too many hierarchical levels
at either the corporate or business unit level of
analysis?
• Does the structure promote coordination among
its parts?
• Does the structure allow for appropriate
centralization or decentralization of authority?
• Does the structure permit the appropriate
grouping of activities?
• Changes in strategy leads to changes in
organizational structure.
• Structure should be designed to facilitate the
strategic pursuit of a firm.
• Functional structure is useful when the firm
begins operations at a single site and emphasize
on increasing volume.
• A firm in several lines of business that are
somehow related should employ a multi-
divisional structure.
• A firm in several unrelated lines of business
should be organized into strategic business units
• Early achievement of a strategy-structure fit can
be a competitive advantage.
• Strategy-structure fit:
• Based on how authority relationships are
prescribed, how departments are created, the
design choices basically revolve around the
following types:
• Functional structure, divisional structure,
matrix forms, emerging structures like teams,
virtual teams, boundary less organizations etc.
 The functional structure
• Activities are grouped together by common
function e.g., marketing, management, finance
etc.
• Each functional unit has a similar set of duties
and responsibilities.
• similar and related occupational specialties are
grouped together.
 Features of functional structure
• Clarity
• Economies of scale within function
• Specialization
• Coordination
• In-depth skill development
• Suitability: best suitable for small and medium
size org.
Limitations of functional structures
• Effort focus: functional manager considers his
function the most important and will give less
importance to overall goals of org.
• Poor decision making: Decision making at the top
level often give misleading interpretation among
functional managers.
• Sub-unit conflicts: problem arises when org.
balloons to a reasonable size.
• Managerial vacuum: functional structure does
not prepare people for tomorrow.
 Divisionalisation: product and
geographic forms
• It is the process of dividing the large
functional pyramids into small, flexible
administrative units.
• It is designed to foster independence and self-
contained units.
• It creates a set of autonomous little
companies in terms of product or geography.
• It is particularly adaptable to the large and
complex organizations.
 Product departmentation
• It is adaptable to tremendously large, complex
and multiproduct org.
• It calls for division of org. work on product basis.
• The large functional units in the org. are divided
into smaller units, in terms of product
manufactured and sold.
• It emphasis on product development and
products which need to be developed, will have
prompt and improved attention
 Geographic divisionalisation
• It sets up separate regional units, each self-
sufficient in manufacturing, marketing etc. to
cater to the needs of local markets.
 Strategic business units
• The SBU structure is an extension of the
divisional structure.
• The SBU operates as a separate autonomous
org. and may periodically send profits to the
corporate parent.
• Each unit will have a clearly defined strategy,
based on its capabilities and overall
organisational needs.
 Project organization
• It is an effective way of focusing all of the
necessary talent and org. resources for a given
period on a specific project goal.
• The best talent is pooled to achieve a specific and
complex undertaking within time, cost and
quality parameters.
• The organization can continue to focus on its
routine activities without interruption. It allows
the main organization to proceed normally while
providing concentrated attention to a new
project.
 Virtual organization
• It is a small core organization that outsources
major business functions.
• Eg. Dell compute, doesn't not owns any plants
and merely assembles computers from
outsourced parts.
• The core functions are the strengths of the
virtual organizations.
• It can be designing, marketing, distribution
etc.
• The core group consists of a small group of
executives overseeing activities that are
undertaken in-house and coordinating
relationships with outside organizations that
carry out work on behalf of the virtual
organization.
 Structure and strategy implementation
• Strategy implementation requires proper
communication of plans, strategies and policies to
various functional/ divisional units.
• Support of people involved in the process
• Proper guidance and support of top management
• Appropriate structure and climate suitable to
carry out the assigned tasks.
• Allocation of resources over competing
alternatives
• Establishment of appropriate control points to see
plans are effectively implemented.
• No single structure is appropriate to implement
all strategies.
• Firms has to choose suitable structure that best
fits and accommodates its strategy.
 Strategy and leadership
• Effective strategic leadership is needed for
strategy implementation.
• Strategic leaders often produce results by 1)
deciding the firms strategic direction 2)
exploiting the firms core competencies 3)
developing human resources 4) sustaining an
effective organizational culture 5) sticking to
widely acclaimed ethical practices 6) setting
balanced organizational controls.
 Strategic leadersip
• It may be defined as the ability to anticipate, envision,
maintain flexibility and empower others to bring about
strategic change as necessary.
• The crux of strategic leadership is the ability to manage
firms operations effectively and sustain high level of
performance over time.
• Strategic leaders face challenges head on, set stretch
goals for themselves and for others, remain proactive,
exhibit dedication and integrity, communicate ideas
well, take timely decisions, demonstrate caring,
motivate people and enjoy teamwork.
 Ratan Tata
• Over 10 years he quietly entered 15 new
business (auto parts, passenger cars, retailing,
internet service, insurance, telecom,
infrastructure, IT, finanacial services etc.)
• Exited 11 (cosmetics, pharmaceuticals, white
goods cements, paints, oil drilling etc.)
• Under his leadership the strategic tenor has also
changed from commodity business to branded
products and services.
• His single contribution so far has come in the
form of indica – indias own car.
• People have questioned the viability of an
independent company (TELCO) making a model
primarily in one market, having invested very
large sums of money to create a capacity that
seemed well beyond what the company could
hope to sell in a crowded market.
• But Ratan Tata encourage his team to do their
best and turn his dream into reality.
• The term strategic leader is used to describe the
managers who head the org. and who are
primarily responsible for creating and
implementing strategic change.
• He gives proper direction to the org., the
communications system and the structure.
• He ensures that the long term objectives are
translated into concrete plans of actions and
understood and supported by people working at
various levels.
• He sets the communication system which
enables through out the org. to be strategically
aware and informed of the changes taking place.
Seven contributions made by strategic
leader is as follows
Strategic vision: a well crafted, appreciated and
supported mission is at the heart of a leaders
strategic vision.
It may reflect his own current assessment of
where the firm should go or he may continue
to carry out the long term plans established by
his predecessor.
 Visionary leadership
• Articulates vision and philosophy constantly
• Contacts people at all levels regularly and
persuades them to do their best; builds enduring
relationships with internal as well as external
groups.
• Creates and fosters a particular culture.
• Pays particular attention to strengths.
• Relies on charisma and personal power.
• Is visible, accessible, supportive and a good
listener.
• PRAGMATISM: it is the ability to make things
happen and achieve positive results through
utilization or resources in effective ways.
• Structure and polices: he should act as an
agent of change.
• Should lay down the rules of the game in
concrete terms and resolve any issues in a
proper way.
• Important issues like tall or flat structure,
informal or formal org., distribution of power,
kind of empowerment needed to the people,
should be decided.
• The communications network: both formal
and informal networks should be used to
inform people about priorities and strategies
and ensure these are implemented
expeditiously.
• Culture: it is a system of shared values and
beliefs that produces norms of behavior.
• Beliefs and values of a leader have a strong
bearing on how employees behave and react to
situations on a daily basis.
• Managing change: effective leaders are responsible
for initiating necessary changes that ensure
continued org. success.
• As change agents strategic leaders must proactively
introduce changes in products, tech., market
practices etc. securing cooperation and
commitment of employees.
• Corporate governance:
• He should provide direction in the form of a
mission
• Formulate and implement changes
• Monitor and control operations
• Provide guidelines to other team members
• Achieve results in a manner acceptable to society at
large.
 Transformational leader
• To bring a change and to implement strategies
successfully, org. are now pinning hopes on the
unique capabilities of transformational leaders.
• Le Lacocca is often used as an example of
transformational leader, because of his
successful efforts in transforming Chrysler
Corporation.
• It is used to signify leadership that goes beyond
ordinary expectations by transmitting a sense of
mission, stimulating learning experiences and
inspiring new ways of thinking.
• Transformational leaders will posses unique
ability to bring about innovation and change.
• Create significant change in followers and the
org.
• Have special capabilities required to lead
changes in org. mission, strategy, structure and
culture as well as to promote innovation in
products and technologies.
• The focus on intangible qualities such as vision,
shared values and ides to build relationships.
 Strategic implementation and culture
• The culture of an org is the set of values,
beliefs, behaviors that helps its members
understand what the org. stands for, how it
does things and what it considers important.
• Culture is a kind of social glue that binds
people together through shared symbols,
language, stories and practices.
 How to create a strategy support
culture.
• Formal statements of org. philosophy, creeds,
materials used for recruitment and selection and
socialization.
• Designing physical space, facades, buildings.
• Deliberate role modeling, teaching and coaching
by leaders.
• Explicit reward and status system, promotion
criteria
• Stories, legends, myths and parables about key
people and events.