Chapter Five

The nature of strategy implementation

Strategy implementation is the sum total of the activities

and choices required for the execution of strategic plan by
which strategies and policies are put into action through
the development of programs , budgets and procedures.

Although implementation is usually considered after

strategy has been formulated, implementation is a key part
of strategic management. Thus strategy formulation and
strategy implementation are the two sides of same coin.
 Good strategic planning is not enough with out good
implementation
 Process by which strategies are put into action
 Process details are unique to each organization and each
strategy
 Sub-strategies, programs, action plans, policies, procedures,
resource allocations, budgets, authority/responsibility
delegation, teams and task forces, reward and control systems,
and individual assignments all are the activity of
Developing programs, budgets and procedures
 develop programs, budgets and procedures for
implementation of strategy. They also work to achieve
synergy among the divisions and functional areas in order
to establish and maintain a company’s distinctive
competence.
Programs
 A program is a statement of the activities or steps needed
to accomplish a single use plan. The purpose of program
is to make a strategy action oriented.
Budgets
 A budget is a statement of corporation’s program in
monitory terms. After programs are developed, the
budget process begins. Planning a budget is the last
real check a corporation has on the feasibility of its
selected strategy.
Procedures
 Procedures are system of sequential steps or
techniques that describe in detail how a particular task
or job is to be done.
Characteristics of strategy
implementation
 Strategy Implementation is managing forces during the
action
 Strategy Implementation emphasizes on efficiency
 Strategy Implementation is basically an operational
process
 Strategy Implementation requires co-ordination among
many individuals
 Strategy Implementation involves all those means related
to executing the strategic plans
 Strategy Implementation follows Strategy Formulation
 WHY STRATEGY IMPLEMENTATION FAILS
Organizations don’t link strategy to budgeting
 Organizations don’t link employee incentives to
strategy
 Organizational workforce doesn’t understand their
organization’s strategy.
 Business owners and managers spend less than one
hour per month discussing strategy
KEY STRATEGY IMPLEMENTATION

1)Establish annual objectives

2)develop policies
3)Allocate resources
4)change /restructure/reengineering existing organizational structure
5)Revise reward and incentive plans
6)Minimize resistance to change
7)Match managers with strategies
8)Develop a supportive culture
9)Adapt production/operations processes
10)Develop an effective HR function
 MATCHING STRUCTURE WITH
STRATEGY
Strategy & Structure:
 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)
 Definition: Organizational structure is a firm’s role
configuration, procedures, governance, control
mechanisms, authority & decision-making processes
  Thus, organizational structure must be congruent
with the strategy to achieve strategic
competitiveness
 However, the structure should be changed when no
longer provides the coordination, control &
direction required to implement the strategy
successfully - influence
 Organizational structure facilitates the
implementation of the strategy
 Although there are many types of structures, three
basic types identified: Simple, functional & multi-
divisional
 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
 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
 Thus, as firms grow structural challenges emerge
sophisticated workflows & integrating mechanisms
 Functional structure: 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:
 Multi-divisional structure: is composed of operating
divisions, each representing a separate business or profit
center
 Corporate managers delegate responsibilities for day-to-day
operations & business unit strategy to division managers
 Features:
 Separate divisions are separate businesses
 self-sufficient & 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
 Exercising overall financial control of semi-
autonomous divisions
 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)
A firm’s performance enhances when strategy &
structure are properly matched
Leadership commitment
 The behavior & activities of top management
contribute to strategy implementation by
 Supporting the strategy & building the culture of
the organization
 Making decisions based on skills, personality, &
experience
Functional issues
 The most common functional areas & issues:
 Marketing:
Products/services
Pricing & distribution
Promotion, etc.
 Operations:
Production methods & processes
Adequate capacity to meet demand
Adequate inventory level & proper inventory control
Availability of appropriate employees & raw materials,
etc
.
 Accounting & Finance:
Availability of long & short-term financing
Cost of capital
Dividend policy
The effect of currency revaluation &
devaluation
The overall tax regimes
Preparation of budgets, etc
 Research & Development:
 Basic & applied research activity
 Develop & improve products
 New & improved production processes for efficiency
improvement, etc.
 Personnel & labor relations:
 Obtain in a timely & cost effective manner new
employees
 Retain & maintain appropriate human resources
 Administer salary & benefits
 Enhancing cooperation with union & avoid labor
strikes to promote implementation of the strategy,
etc.
Information systems
 Provide support for internal decision-making & for
monitoring the progress of strategy implementation
 Provide information about external trends: markets,
political, economic, technological environments, etc.
 It is important that the information system provides
information that is:
 Timely
 Relevant
 Complete
 In general, implementation is the action phase of the
strategic management process
 Implementation is the process of making things
happen & involves (Holt, 1993):
 Allocating resources through budgets
 Developing programs & projects that activate the
organization
 Articulating policies, procedures & rules that can be
used in guiding activities on daily basis
 The application of certain operational management
techniques to ensure that planned tasks occur when
& as designed
RESOURCE ALLOCATION
 TYPES OF RESOURCES
 i) financial
 ii) Physical
 iii) Human resources
 iv) technological

CHALLENGES IMPLEMENTATION
 Time
 Political Interference
 Limited resources
 Global economic situation
Implementation stage
1.Exploration Stage
The goal of the Exploration stage  is allow time to assess
the potential match between community needs, and
community resources and to make a decision to proceed (or
not).
In addition, potential barriers to implementation are assessed
(e.g., relating to funding, staffing, referrals, and system
changes). During this stage, champions are identified and
engaging stakeholders for feedback occurs. The result of
the Exploration Stage is a clear implementation plan with
tasks and time lines to facilitate the installation and initial
implementation of the program.
2.Installation Stage
 There are activities which need to be accomplished
before the change in practice begins. These activities
define the Installation Stage of implementation.
Resources are being consumed in active preparation
for actually doing things differently in keeping
 Resources are being consumed, and there is no change
in implementer behavior at this time.
 It takes time and talent to ensure structural supports
are put in place, materials and supports are organized
and system components are reorganized. These
include ensuring the availability of funding streams
and human resource strategies, policy and procedure
development and creating reporting frameworks for
expected outcomes.  These activities and their
associated “start-up costs” are necessary first steps to
begin any implementation of a new practice or
innovation in an educational setting
3.Initial Implementation Stage
 This stage is known as the “awkward stage”. After
working though the Installation Stage, the outcome is
an Implementation Action plan for the first generation
implementers to begin this new work. 
   The motto is to “get started and then get better”. The
support of leadership and Implementation Teams is
critical during this stage since new challenges emerge
from staff due to fear of change, inertia, and
investment in the status quo. 
 Hand-in-hand with success is the willingness to learn
from mistakes and develop system solutions when
appropriate, rather than allowing problems to re-
emerge and re-occur. 
4.Full Implementation Stage
 Full implementation of an innovation can occur once
the new learning becomes integrated into local,
district, regional and state practices, policies, and
procedures.
s
 Over time, the innovation becomes “accepted practice”
and a new oprationalization of “business as usual” takes
its place.  To reach Full Implementation typically takes
two to four years, depending on the complexity of the
practice and the size of the organization.