BUSINESS POLICY AND STRATEGIC ANALYSIS (UNIT-3) ALISH PATEL

STRATEGY IMPLEMENTATION:-The implementation tasks put to test the strategists' abilities to allocate resources design
structures and systems, formulate functional policies, take into account the leadership styles required and plan for operational
effectiveness, besides dealing with various other issues.

Aspects of Strategy Implementation:-The different aspects involved in strategy implementation cover practically everything that is
included in the discipline of management studies. A strategist, therefore, has to bring to his or her task a wide range of knowledge,
skills, attitudes, and abilities.
The implementation tasks put to test the strategists' abilities to allocate resources, design structures and systems, formulate
functional policies, take into account the leadership styles required, and plan for operational effectiveness, besides dealing with
various other issues.
The strategic plan designed by the organization proposes the manner in which the strategies could be put into action. Strategies, by
themselves, do not lead to action. They are, in a sense, a statement of intent: implementation tasks are meant to realize the intent.
Strategies, therefore, have to be activated through implementation.

The implementation structure is somewhat like that depicted in the following exhibit.
(1) Strategies lead to several plans.
(2) Each plan leads to several programs.
(3) Each programs results in several projects.
(4) Projects are supported by funds through budgets
(5) The administrative mechanism of policies, procedures, rules and regulations support
the working of the organization while it implements the projects, programmes, plans and strategies.
In this manner, strategy sits at the top of a pyramid that has projects as its base.

Pyramid of Strategy Implementation:-

Issue In Strategy Implementation:-

 Implementation task tests strategist ability to allocate resources, design, structures, formulate functional policies,identify
leadership style.
 Strategies have to be activated through implementation and realize the intent
 Strategies leads to plans, plans result in different kinds of programmes which includes goals policies, procedures, rules and
steps to be taken in putting them into action.
 Programs leads to formulate of the project which is time scheduled and costs are predetermined. It requires allocation of
funds based on capital budgeting of the organization.
 Project creates need for infrastructure for day to day operations in organization. Resources allocation key to successful
project
 Processes in which strategy implementation issues are to be considered:
a) Project Implementation
b) Procedural implementation
c) Resource Allocation
d) Structural Implementation
e) Functional implementation
f) Behavioral Implementation
 These activities are not performed in the same order (can be performed simultaneously, can repeated etc.)
  Transition from strategy formulation to strategy implementation requires shift in responsibility from strategist to divisional
and functional managers and their involvement should be maximum during strategy formulation
 Management issue central to strategy implementation includes establishing annual objectives, devising policies, allocating
resources, altering a existing organizational structure, restructuring, reengineering, revising rewards and incentives plans,
minimizing resistance to change, matching manager with strategy, developing strategy supporting culture, adapting
production and operation processes, developing effective human resource function and downsizing to give the firm a new
direction.
 Strategy implementation is key, top down communication must be clear for developing bottom up support, competitors
intelligence gathering and benchmarking effort of employees is very important and challenges for a strategist. Provide
training to all to be world class performances.

Nature of Strategy Implementation-

Once the strategy is formulated the next practical stage is its implementation. All the efforts of strategy formulation bear the fruits in
this phase.

Structural

Strategy Implementation

Functional Behavioral
Strategy Implementation Setting
The real test of strategy is in its implementation. Only implementation can determine the success or failure of a strategy. A perfect
strategy or plan may fail if it is not properly implemented. It is rightly said that imperfect plan implemented effectively may deliver
better results. But there is close connection between strategy formulation and its implementation.

Strategy Formulation Strategy Implementation

Strategy formulation to strategy implementation is forward Whereas strategy implementation to strategy formulation is
linkage backward linkage.

It is an intellectual process It requires more practical and field skills.

It involves organizing before action It involves managing during the action

It emphasizes on effectiveness It focuses on efficiency.

Strategy implementation depends on three sets of organizational factors, namely, the structure of the organization, various
functional areas and operations and behavioural aspects. Strategic analysts distinguish three types of implementation; structural
implementation, functional or operational implementation and behavioral implementation.
Strategy implementation is concerned with the managerial exercise of putting a freshly chosen strategy into place. The
characteristics listed below highlights the nature of strategy implementation:
• Action Orientation: Strategy implementation is essentially an action oriented process. It involves putting the strategy into actual
use. While implementing strategy manager uses their skills, intellectuals and knowledge and techniques of management process.
• Comprehensive: Implementation is wide in scope as it involves everything that is included in the discipline of management.
• Demands skills: As implementation involves a wide range of activities, a strategists has to have knowledge, skills, attitudes and
abilities of different kinds.
• Involvement: Strategy formulation involves top management on the contrary strategy implementation requires the involvement of
middle level managers. For effective implementation of strategy the plan must be properly communicated to and understood by the
middle level managers.
• Integrated Process: Implementation is not a process in isolation. It requires a holistic approach. Each task and activity performed is
related to another, which creates interconnected network.

Barrier to Strategy Implementation:-

Research studies found that it is much difficult to implement strategy than to formulate it. Majority of the time a good strategy fails.
Why it fails? There are many reasons behind it which can be treated as barriers in effective strategy implementation.
A good strategy without proper implementation is like a poor strategy or no strategy at all, however having a good strategic plan is
half the battle won, and the other half is won through effective strategy implementation. Effective implementation of strategies is
important to the success of every entity. In many of the studies, it is stated that strategy implementation is much more difficult than
strategy formulation. A study in the Indian context done with 145 mangers working in companies in and around Delhi attempted to
uncover the reasons why strategy implementation in unsuccessful. This study listed 11 most frequently cited reasons of which the
major ones are : inadequate management skills, poor comprehension of roles, inadequate leadership, ill defined tasks and lack of
employee commitment. Hrebiniak’s finding suggested that there are some general and overarching issues that impede strategy
implementation. He stated that mangers are trained to plan and not to execute strategies, thus the top mangers are reluctant to
interfere in the task of implementation .As formulation and implementation of strategies are interdependent , they are being done
by two other groups of people in an organization. this makes the implementation phase takes a longer time than formulation thus
putting more pressure on the mangers to show results. His findings pointed out the following major barriers:
• An inability to manage change • Poor or vague strategy
• Not having proper guidelines • Poor or inadequate information sharing
• Unclear responsibility and accountability • Working against the organizational structure

Models of Strategy Implementation:-

The following figure presents a model of strategy implementation that attempts to capture the major themes in strategy
implementation and the activities that make each theme (discussed in the following paragraph). The forward linkage from strategic
plan guides the implementation process and connects it to the proceeding phase of strategy formulation. The feedback flowing in
the reverse from the following step of strategy evaluation and control moves through the implementation phase and goes back to
strategy formulation establishing the backward linkage.

Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and
objectives. Strategy implementation is also defined as the manner in which an organization should develop, utilize, and amalgamate
organizational structure, control systems, and culture to follow strategies. Such implementation leads to competitive advantage and
a better performance. Organizational structure allocates special value developing tasks and roles to the employees. It also indicates
how these tasks and roles can be correlated so as maximize efficiency, quality, and customer satisfaction-the pillars of competitive
advantage. But, organizational structure is not sufficient in itself to motivate the employees.
An organizational control system is also required. This control system equips managers with motivational incentives for employees
as well as feedback on employees and organizational performance. Organizational culture refers to the specialized collection of
values, attitudes, norms and beliefs shared by organizational members and groups
Excellently formulated strategies will fail if they are not properly implemented. Also, it is essential to note that strategy
implementation is not possible unless there is stability between strategy and each organizational dimension such as organizational
structure, reward structure, resource-allocation process, etc.
The major themes in strategy formulation are:
1. Activating Strategies: It serves to prepare the ground for managerial tasks and activities of strategy implementation.
2. Managing change: Managing change is one of the core activity in the strategy implementation. It deals with managing change in
complex situation.
3. Achieving effectiveness: The last theme in strategy implementation is the outcome of the process. It covers functional and
operational implementation.

PROJECT IMPLEMENTATION:- (((https://www.invensislearning.com/blog/5-phases-project-management-lifecycle/)

To implement a project means to carry out activities proposed in the application form with the aim to achieve project objectives and
deliver results and outputs. Its success depends on many internal and external factors. Some of the most important factors are ; well
organized project team and effective monitoring of project progress and related expenditures. Overall management has to be taken
over by the project manager, who is often employed or engaged by the lead partner. The project management has to have an
efficient management system and always has to be flexible to current needs and changed situations, as the project is rarely
implemented exactly according to the initial plan.
Strategic planning is the act of creating short- and long-term plans to guide an organization to continued and increasing success in
the marketplace. Project managers oversee specific projects ultimately designed to make progress toward strategic planning
objectives. Implementing projects — putting planned projects into action — is important to both strategic planning efforts and
project managers in a number of ways. All managers can benefit from understanding the importance of project implementation to
strategic planning and the project manager.
Project planning and implementation are two important aspects. Many managers put all of their energy and efforts into ambitious
planning. But they do give enough thought to how goals actually will be achieved. Strategic planning efforts essentially take place in
a laboratory devoid of the range of uncontrollable variables present in the real world. Certain things are beyond control and
everything will not go as per what organization thought it will be. In this sense, even the best laid plans need correction and
adjustment on-the-fly, making project managers’ jobs that much more important. Implementing projects is important for project
managers and the strategic planning process because it can reveal new issues and challenges that planner may not have anticipated,
ultimately resulting in more refined strategies, products and processes.
The fact is that the principles and techniques of project management have a high relevance to the tasks of strategy implementation
and it is actually a techno-managerial function. The principles and techniques of project management (knowledge of project
formulation, implementation and evaluation) can be applied to large scale as well as minor project within organization

Strategies lead to plans, programmes, and projects. A project management life cycle is a five-step framework planned to assist
project managers in completing projects successfully.
The primary competency of a project manager is to gain a thorough understanding of project management stages. Knowledge and
planning for the five project management steps will help you plan and organize your projects so that it goes off without any hitches.
It is simpler for a project manager to handle all the current details of the project when the project is broken down into various
phases. Each phase of the cycle is goal-oriented having its own set of characteristics and contains product deliverables, which are
reviewed at the end of the project management steps.
According to the Project Management Book of Knowledge, the project management life cycle should define the following aspects:
➣What work needs to be achieved?
➣ What are the project deliverables?
➣ Who will be involved in the team?
➣ How to monitor the performance of each phase
Let us take a look at the various project management stages and the purpose they serve.

1. Project Initiation
Project initiation is the phase where the project starts. It provides an overview of the project, along with the strategies required to
attain desired results. It is the phase where the feasibility and business value of the project are determined.
The project manager kicks-off a meeting to understand the client and stakeholders requirements, goals, and objectives. It is essential
to go into minute details to have a better understanding of the project. Upon taking a final decision to proceed, the project can
move on to the next step: that is, assembling a project team.
The Project Charter is considered to be the most important document of any project as it comprises:
 Business vision and mission
 Project goals and benefits
 List of stakeholders
 Project scope
 Project deliverables
 Project risks
 Project budget and resources
The project initiation phase comprises:

1- Undertake a Feasibility Study, 2- Identify the Project Scope, 3- Identify the Project Deliverables, 4- Identification of
Project Stakeholders, 5- Develop a Business Case

2. Project Planning
A lot of planning related to the project takes place during this phase. On defining project objectives, it is time to develop a project
plan for everyone to follow.
The planning phase frames a set of plans which helps to guide your team through the implementation phase and closing phase. The
program created at this point will surely help you to manage cost, quality, risk, changes, and time.
The project plan developed should include all the essential details related to the project goals and objectives and should also detail
how to achieve it. It is the most complex phase in which project managers take care of operational requirements, design limitations,
and functional requirements.
The project planning phase includes the following components:
1-Craeting a project plan, 2-creating a resource plan, 3-Budget Estimation, 4-Gathering Resource, 5-Anticipating Risks & potential
quality roadblocks

3. Project Execution
Project execution is the phase where project-related processes are implemented, tasks are assigned, and resources allocated. The
method also involves building deliverables and satisfying customer requirements. Project managers or team leaders accomplish the
task through resource allocation and by keeping the team members focused.
The team involved will start creating project deliverables and seek to achieve project goals and objectives as outlined in the project
plan. This phase determines whether your project will succeed or not. The success of the project mainly depends on project
execution phase. The final project, deliverable also takes shape during the project execution phase.
There are a lot of essential things that are taken care of during the execution phase. Listed below are a few among them:
1- Reporting Progress of a project, 2-Hold regular meetings,3-Manage Problems

4. Project Monitoring and Control

The project monitoring and control phase is all about measuring the performance of the project and tracking progress. It is
implemented during the execution phase. The main goal of this phase is to check whether everything aligns with the project
management plan, especially concerning financial parameters and timelines.
It is the responsibility of the project manager to make necessary adjustments related to resource allocation and ensure that
everything is on track. To aid this, a project manager may conduct review meetings and get regular performance reports.
Monitoring project activity after project execution phase will allow the project manager to take corrective actions. Meanwhile,
considering the quality of work will also help to make the necessary improvements. Keeping an eye on the budget will help to avoid
unnecessary expenses resources

5. Project Closure
With much time and effort invested in the project planning phase, it is often forgotten that the final stage of the project is equally
important.
Project closure phase represents the final phase of the project, which is also known as “follow-up” phase. Around this time, the final
product is ready for delivery. Here the main focus of the project manager and the team should be on product release and product
delivery. In this stage, all the activities related to the project are wrapped up. The closure phase is not necessarily after a successful
completion phase alone. Sometimes a project may have to be closed due to project failure.
Upon project completion and timely delivery to clients, it is the role of the project manager to highlight strengths, list the takeaways
of the project, identify the ambiguities and suggest how they could be rectified for future projects. Taking time to recognize the
strengths and weaknesses will help to handle projects with more dedication; this, in turn, builds the project manager’s credibility.
Once the product is handed to the customers, the documentation is finalized, the project team is disbanded, and the project is
closed.
Given below are the detailed steps covered during the closure phase of the project management life cycle:
1-Analyze Project Performance, 2-Analyzing Teams Performance, 3-Document Project Closure, 4-Coduct Post-Implementation
Review, 5-Accounting for used and unused budget.

PROCEDURAL IMPLEMENTATION:-
Procedural Implementation deals with the different aspects of the regulatory framework that Indian companies have to consider.
Any organisation which is planning to implement strategies must be aware of the regulatory framework within which the plans,
programmes, and projects have to be approved by the government (central and state). The regulatory elements to be reviewed are
as below
Regulatory Mechanism in India: No firm can plan its strategies without giving due consideration to the procedural framework
prevailing in the country where its willing to operate. Plans, programmes and project have to be prepared and need to be approved
by the government at the local, state and central levels. The procedural framework consists of a number of legislative enactments
and administrative orders. Commerce and industry in India is governed by Constitution of India, the Directive Principles, Central,
State and General Laws.
1- Securities Contracts (Regulation) Act, 1956- To prevent undesirable transactions in securities by regulating the business
2- The Foreign Exchange Management Act (FEMA),1999- To facilitate external trade and payments and top remote the orderly
development and maintenance of the foreign exchange market
3- The Foreign Trade (Development and Regulation) Act, 1992- To provide for development and regulation of foreign trade by
facilitating imports into and augmenting exports from India and for matters connected herewith
4- The Industries Act, 1951- To empower the Government to take necessary steps for the development of industries; to regulate the
pattern and direction of industrial development; and to control the activities, performance and results of industrial undertakings in
the public interest
5- The Indian Contract Act, 1872- Governing legislation for contracts, which lays down the general principles relating to formation,
performance and enforceability of contracts and the rules relating to certain special types of contracts like Indemnity and
Guarantee; Bailment and Pledge; as well as Agency
6- The Sale of Goods Act, 1930- To protect the interest of buyers and sellers
7- Indian Patents Act, 2005- To grant significant economic exclusiveness to manufacturers of patented products with some inbuilt
mechanisms to check extreme causes of competition restriction
8- The Company Act, 1956- To regulate setting up and operation of companies in India: it regulates the formation, financing,
functioning and winding up of companies
9- Competition Act, 2002- To ensure a healthy and fair competition in the market economy and to protect the interests of
consumers: aims to prohibit the anti-competitive business practices, abuse of dominance by an enterprise as well as regulate various
business combinations such as mergers and acquisitions
10- The Trade Marks Act, 1999- To amend and consolidate the law relating to trademarks, to provide for registration and better
protection of trade marks for goods and services and for the prevention of the use of fraudulent marks
11- The Information Technology Act, 2000- To provide legal recognition for transactions carried out by means of electronic data
interchange and other means of electronic communication, commonly referred to as “electronic commerce”, which involve the use
of alternatives to paper-based methods of communication and storage of information; to facilitate electronic filing of documents
with Government agencies
12- The Consumer Protection Act, 1986 (amended 1993, 2002) COPRA- To protect consumer rights and providing a simple quasi-
judicial dispute resolution system for resolving complaints with respect to unfair trade practices
13- The Industrial Disputes Act, 1947- To facilitate investigation and settlement of all industrial disputes related to industrial
employees and employers
14- The Factories Act, 1948- Umbrella legislation to regulate the working conditions in factories.
15- The Indian Trade Unions Act, 1926- To facilitate the registration of trade unions, their rights, liabilities and responsibilities as well
as ensure that their funds are utilized properly: it gives legal and corporate status to registered trade unions and also seeks to
protect them from civil or criminal prosecution so that these could carry on their legitimate activities for the benefit of the working-
class
16- The Bureau of Indian Standards Act, 1986- To set standards (quality, safety etc) for various kinds of products to protect
consumer safety
17- Labor Legislation Requirements- An essential part of procedural implementation in any project or in a going concern is that of
labor legislation. For a company Labour Act as one of the major resource for the purpose of strategy implementation. It is the
responsibility of the government to protect the interest of the labor force. More than 150 laws are prevailing in India which relates
to labor. They are mainly classified as:
 Labor laws related to the weaker sections such as women and children.
 Labor laws related to specific industries
 Labor laws related to specific maters such as wages, social security, bonus etc
 Labor laws related to trade unions
Government policies, laws, rules and regulations and procedures are constantly under change, especially under the dynamic
conditions as India is adapting to international environment.
Over and above there are many rules and regulations relating to :
1. Licensing procedures
2. Securities and Exchange Board of India requirements
3. MRTP requirements
4. Foreign Collaborations procedures.
5. Import and Export Requirements.
6. Patenting and Trade Marks requirements.
7. Environmental Protection and Pollution Control requirement and so on.

BEHAVIOURAL IMPLIMENTATION
It is vital to bear in mind that organizational change is not an intellectual process concerned with the design of ever-more-complex
and elegant organization structures. It is to do with the human side of enterprise and is essentially about changing people’s
attitudes, feelings and – above all else – their behavior. The behavioral of the employees affect the success of the
organization. Strategic implementation requires support, discipline, motivation and hard work from all manager and employees.

Influence Tactics: The organizational leaders have to successfully implement the strategies and achieve the objectives. Therefore the
leader has to change the behavior of superiors, peers or subordinates. For this they must develop and communicate  the vision of the
future and motivate organizational members to move into that direction.

Power: it is the potential ability to influence the behavior of others. Leaders often use their power to influence others and
implement strategy. Formal authority that comes through leaders position in the organization (He cannot use the power to influence
customers and government officials) the leaders have to exercise something more than that of the formal authority (Expertise,
charisma, reward power, information power, legitimate power, coercive power).
 Empowerment as a way of Influencing Behavior: The top executives have to empower lower level employees. Training, self
managed work groups eliminating whole levels of management in organization and aggressive use of automation are some of the
ways to empower people at various places.
Political Implications of Power: Organization politics is defined as those set of activities engaged in by people in order to acquire,
enhance and employ power and other resources to achieve preferred outcomes in organizational setting characterized by
uncertainties.   Organization must try to manage political behavior while implementing strategies. They should;
 Define job duties clearly.
 Design job properly.
 Demonstrate proper behaviors.
 Promote understanding.
 Allocate resources judiciously.

Leadership Style and Culture Change: Culture is the set of values, beliefs, behaviors that help its members understand what the
organization stands for, how it does things and what it considers important. Firms culture must be appropriate and support their
firm. The culture should have some value in it . To change the corporate culture involves persuading people to abandon many of
their existing beliefs and values, and the behaviors that stem from them, and to adopt new ones. The first difficulty that arises in
practice is to identify the principal characteristics of the existing culture. The process of understanding and gaining insight into the
existing culture can be aided by using one of the standard and properly validated inventories or questionnaires that a number of
consultants have developed to measure characteristics of corporate culture. These offer the advantage of being able to benchmark
the culture against those of other, comparable firms that have used the same instruments. The weakness of this approach is that the
information thus obtained tends to be more superficial and less rich than material from other sources such as interviews and group
discussions and from study of the company’s history. In carrying out this diagnostic exercise, such instruments can be supplemented
by surveys of employee opinions and attitudes and complementary information from surveys of customers and suppliers or the
public at large.

Values and Culture: Value is something that has worth and importance to an individual. People should have shared values. This
value keeps the everyone from the top management down to factory persons on the factory floor pulling in the same direction.

Ethics and Strategy: Ethics are contemporary standards and a principle or conducts that govern the action and behavior of
individuals within the organization. In order that the business system function successfully the organization has to avoid certain
unethical practices and the organization has to bound by legal laws and government rules and regulations.

Managing Resistance to Change: To change is almost always unavoidable, but its strength can be minimized by careful advance. Top
management tends to see change in its strategic context. Rank-and-file employees are most likely to be aware of its impact on
important aspects of their working lives. Some resistance planning, which involves thinking about such issues as: Who will be
affected by the proposed changes, both directly and indirectly? From their point of view, what aspects of their working lives will be
affected? Who should communicate information about change, when and by what means? What management style is to be used?

Managing Conflict: Conflict is a process in which an effort is purposefully made by one person or unit to block another that results in
frustrating the attainment of the others goals or the furthering of his interests. The organization has to resolve the conflicts.

STRUCTURAL IMPLEMENTATION
An organization structure is the outline of authority and responsibility relationship among different job positions. It is a formal
arrangement of tasks and sub – tasks which are needed to implement strategies. An organisation structure has two broad
dimensions; namely–
1. Vertical Dimensions: The vertical structure is planned to facilitate superiors to implement control over the work of subordinates.
Vertical structures are known as tall structures. Such structures are suitable for companies which produce standardized products /
services on a large scale with the help of mass production systems and well established technologies. The vertical dimension is
characterized by
i. Specialization of tasks
ii. Chain of command
iii. Formal reporting relationships
iv. Grouping of individuals into departments
v. Upward and downward communication
2. Horizontal Dimensions: The horizontal dimension is designed to make certain cooperation and coordination among employees
working at the same level of authority. Horizontal structures are also known as flat structures. Such structures are more vital for
companies making differentiated products. Medium sized manufacturing and service enterprises and nonprofit orgainsation which
present specific social services are examples of these orgainsations. The main characteristics of horizontal dimensions are
i. Sharing of tasks
ii. Sharing of information
iii. Decentralized decision making
iv. Focus on learning

Strategy and Structure:-

There is close interdependence between strategy and structure. There are two types of interdependence on forward and backward
relationship.
i. Forward Relationship: A suitable organizational structure is required for effective implementation of strategy. A growth strategy
requires a different structure then stability structure. Organizational structure is a means for strategy implementation. When there is
a significant change in strategy the structure has to be redesigned. New organizational structure creates changes in corporate
strategy.
ii. Backward Relationship: Strategy is also influenced by Structure. Structural consideration affects the implementation of present
strategy and the formulation of future strategies. There is a reciprocal relationship between strategy and structure. Structural
implementation is in fact an ongoing process of matching the structure of an organization with its strategy. Whenever there is a
mismatch between the two, changes in structure have to be made. Otherwise strategy implementation becomes difficult and
performance suffers. An effective structural framework helps to deal with confusion, chaos and duplication of efforts arises at
different levels.

Relating Structure to Strategy

The close association of structure with strategy suggests that the organisation should relate its structure with its strategy. It should
design the structure according to the needs of the strategy for- its effective implementation. Without coordination between strategy
and structure, the most likely outcomes are confusion misdirection, and splintered efforts within the organisation. The structure is a
means to implement a particular strategy and, therefore, the good structure is one which best fits with the strategy. In evaluating
whether the structure is designed properly to meet the needs of the strategy, two questions can be posed:
1. What functions and activities should be performed for the success of the strategy?
2. Is structure adaptable to the pressure of the external environment
The answer of these two questions should point squarely at the functions essential to strategic success. However, in applying the
test of consistence of strategy and structure

Mechanism for Relating Structure to Strategy

The first aspect of structure-strategy fit relates to the type of functions that the organisation structure should facilitate to
perform. There are tests which any good organisation structure should satisfy. First -implement the strategy properly, certain
functions must be performed. Therefore, the structure should ensure that all the necessary activities are performed and there is no
duplication in the performance of the -activities. Second, an activity’s contribution to strategy should determine its rank and
placement in the organisational hierarchy. Thus key activities should never be subordinated to non-key activities. Revenue earning
or result-producing activities should never subordinate to support activities. By making success causing for -the major building blocks
for the structure, the chances are greatly improved that strategy will be effectively implemented.
The second aspect of structure-strategy fit relates to the adaptive -character of the environmental pressure on the organisation.
Organisation has to interact continuously with its environment and this interaction some sort of changes are brought continuously in
the organisation. If the change is a minor one and comes within the purview of established programmes of action, the change will be
absorbed within the system; major or rapid changes throw the organisation out of equilibrium seriously affecting its functioning.
New equilibrium is reached by taking new programmes. Therefore, the organisation structure should be able -absorb these changes.
In relating structure to strategy, following strategic principles organizing may be helpful. These principles are not strictly in
accordance -with traditional principles of organizing. These principles are considered be specially pertinent for a firm with multiple
products and multiple industry-market opportunities. These should also suit the smaller but growing firms in a dynamic volatile
environment.
Stage I: Entrepreneurial Stage: This stage represents the small business, generally operated by the owner – manager. The market of
the firm is limited to a specific geographical area.
Stage II: Functional Development: When the company grows in its size, the owner manager cannot perform increased volume of
managerial functions. A functional form of organization structure will be adopted. But the problem of functional structure will come
to the surface with the further increase in the company’s operations. These problems include; delay in getting approval for new
products and other innovations. This problem may push the company to the next stage.
Stage III: Decentralization: Organization will be restructured either based on product or geographic or customers. Control may
become difficult when each division develops its own view of product quality, pricing etc.
Stage IV: Staff Proliferation: To regain control of the organization, management may employ additional human resources to assist
top management.
Stage V: Recentralization: This stage involves increasing involvement of top management in strategic decision making. This move to
recentralization may be a part of a cutback and turnaround strategy
Various forms of organization structure and their suitability to strategies suggest that no one form is suitable for all situations.
Therefore, many companies opt for combination of more than one form.

Structural Change
If the present organisation structure does not adequately fit the need of chosen strategy in the light of the above strategy-structure
fit and strategic principles of organizing, top management should look for reorganization. Many companies have reorganized their
structures recently because of the change in their strategies due to the following factors:
1. rapid growth leading to problems of manageable size and communication;
2. excessive diversification of product lines;
3. increasing competition and environmental changes;
4. changes in managerial styles particularly from centralized family decisions to decentralized decision making;
5. change in organisational climate and managerial commitments; and
6. unsatisfactory work performance because of structural conflicts.

However, before taking reorganization, it is constructive for management to check off the following questions to ensure whether the
firm can function efficiently without the reorganization:
1. Has firm clarified its mission and responsibilities to all concerned under- the existing structure?
2. Are there significant opportunities for improved direction and motivation in day-to-day operations?
3. Can procedures and practices be improved within the existing structure?
4. Should any key personnel reassignments be made?
5. Having exhausted the above, what, if any, organizational changes should be made?

If the change is required, it should be total package of articulated and efficient structure, effective back-up systems, and motivated
people dimensions. Initially, the process reorganization was the responsible of line management, usually the chief executive. It was,
therefore, a highly intuitive process largely inspired by management’s desire to solve certain existing problems, make key personnel
changes, or take up the fad of the time. However, the trend has channel. Now most of the large organizations have either
organisation development department or take the help of external consultants because the emphasis is on planned change. Since
the organisation is a complex system of mutually dependent parts, it is logical that organisational change involves an alteration or
modification of one or more parts of the system. Thus what is needed is an operational scheme of organisation of parts so that the
focus and the direction of the change sought may be clearly identified for any given situation and the extended and interactive
effects of a change in anyone part of the system or on the other parts may be anticipated and traced. Thus structural reorganization
should be in the context of other interactive subsystems of the organisation, viz. technology, behavioural, technical and procedural,
goals and values, and managerial. Therefore, mere restructuring of organisational relationships is not sufficient but an integrated
approach is required.

RESOURCE ALLOCATION
Resource Mobilization- Resource mobilization involves, procurement of resources that may be required to implement a strategy,
and depending on the nature of the strategy, type and volume of resources will be determined. For example, a strategy involving
substantial expansion of business will require huge resources of different types as compared to a strategy involving market
development. An organization’s capacity to mobilize resources has reciprocal relationship with strategy. On the one hand, a strategy
determines what type of resources will be required, on the other hand, resource mobilization capacity determines what type of
strategy will be selected. For example, high competence of Reliance Industries to mobilize financial and human resources has
enabled it to go for highly investment-oriented strategies.
Resources can be owned, leased, or rented. What emphasis will be put on different sources depends on the nature of resources and
resource procurement strategy of the organization. Traditionally, companies owned and controlled most of the resources that
entered their business. But this situation is changing. Companies are finding that some resources are not performing as well as those
that they could obtain from outside. Many organizations have decided to outsource less critical resources if these can be obtained at
better quality or lower cost from outside the company.

Resource Allocation- After resource mobilization, resource allocation activity is undertaken. This involves allocation of different
resources-financial and human-among various organizational units and subunits. In order to understand the rationality of resource
allocation, it is essential to understand commitment principle because resource allocation is a kind of commitment.
Commitment Principle-
Commitment involves adhering to a thing for which a person is committed. In the context of planning, commitment principle implies
planning for the future impact of today’s decisions. Since the futurity of different decisions varies, risk involved in respective
decisions also varies. Applying the concept of commitment principle in resource allocation implies that when resources are
committed to a unit or a project, the organization takes a risk. The risk involved depends on the time taken to recover resource cost.
Since a unit requires resources for varying periods-long-term for creation of physical assets; short-term for inventory, debtors, etc.,
cost recovery period also varies. Therefore, while allocating resources, commitment principle should be taken into consideration.

Basis for Resource Allocation-

While allocating the resources, an organization may take two alternative steps: (i) resources should be allocated at a place where
these have their maximum contributions, or (ii) resources should be put according to the needs of various organizational
units/subunits. Both these alternatives may become complementary to each other if there is an objective evaluation of the resource
requirement of various units.
Budgeting is the means through which resources ‘are allocated to various organizational units. However, the traditional budgeting
which focuses just on the past resource allocation as the basis is not useful for resource allocation in any way because the
conditions, both external as well internal, change making the past practices of resource allocation meaningless. Therefore, when
budgeting is used as a tool for resource allocation, it has to be oriented to the objectives of the organization and the way each unit
of the organization will contribute to the achievement of these objectives. From this point of view, following types of budgeting are
more relevant:
1. Capital Budgeting
Capital budgeting is the planning of deployment of financial resources of an organization for the purpose of maximizing the long-
term profit ability of the organization. In this budgeting, various techniques like average rate of return, payback period, internal rate
of return, and net present value, are used to determine where a rupee put will earn maximum profit. This method, however, is more
useful at the stage of considering the various alternative project proposals. From strategic management point if view, it does not
offer much help. At the strategy implementation level. Also if does not consider the allocation of human resources who’ really
matter in making a project successful.

2. Performance Budgeting
A performance budgeting is an input/output or cost/result budgeting: It emphasizes non-financial measurement of performance,
which can be related to financial measurement in explaining changes and deviations from planned performance. Historical
comparisons of non-financial measurements of an activity are particularly helpful in justifying budget proposals and in showing how
resources are being used. These measurements are useful for evaluating past performance and for planning future activities.

3. Zero-base Budgeting
Zero-base budgeting (ZBB) is based on a system where each function, irrespective of the fact whether it is old or new, must be
justified in its entirety each time a new budget is formulated. It requires each manager to justify his entire budget in detail from
scratch, that is zero base. Each manager states why he should spend any money at all. The process’ of ZBB involves the four basic
steps: (i) identification of decision units, that is cluster of activities or assignments within a manager’s operations for which he is
accountable; (ii) analysis of each decision unit in the context of total decision package; (iii) evaluation and ranking of all decision
units to dev-clop the budget request; and (iv) allocation of resources to each unit based upon ranking.
Thus, emphasis is placed upon resource allocation according to the contributions of each decision unit.

ZBB results into a number of benefits over traditional budgeting. Such benefits may be in the form of (i) effective allocation of
resources, (ii) improvement in productivity and cost effectiveness, (iii) effective means to control costs, (iv) elimination of
unnecessary activities. (v) better focus on organizational objectives, and (vi) saving time of top management. However, ZBB may
result into some problems if not followed properly. For example, it may result into extra paper work, difficulty in identifying decision
packages, tendency to establish minimum level of efforts, etc. However, these problems can be overcome when an organization
gains experience of ZBB.

4. Strategic Budgeting
Strategic budgeting is comparatively a newer concept as a tool of resource allocation among various SBUs and units of an
organization. Under strategic budgeting, in determining the resource needs of an organizational unit, the basic question that is put
is: ‘What sort of performance and results do we want to generate?’ This should be followed by another question: ‘What key
activities, organizational units, tasks, and jobs need to be set up and organized to produce these results?’ The answer should suggest
the kinds of skills, expertise, and funding which will be needed to allow the various organizational units to accomplish the designated
results. Therefore, jobs and tasks should be defined in terms of the desired strategic results and performance rather than in terms of
the functions to be performed. Specific objectives should be developed not only for the organization as a whole but for each major
organizational unit, and through the efforts of subordinate managers, for each job. Every manager in the organization needs to have
his job spelled out in terms of expected results and the resources that may be required to accomplish those results. One of the
major advantage of setting up of careful network of verifiable results to be achieved and a requirement of resources for achieving
these effectively is the opportunity to tie up the resources with results which ultimately helps in implementing the strategy. In
strategic budgeting, there are two stages of budget- preparation:(1) preparation of position papers and (2) preparation of budget.

Factors affecting Resource Allocation:

The resource allocation cannot be done on uniform basis. There are many factors which affect the resource allocation, which are:
1. Objectives of the Organization: Setting up of objectives is complex process. Objectives can be either explicit or implicit. The
importance of a particular goal / tasks or objectives is judged by the employees on the basis amount of resources allocation made by
the firm. Operative objectives tend to affect the pattern of resource allocation.
2. Preference of Strategists: The resource allocation is majorly affected by the attitude of the strategists. Their preferences
determine the amount of resource allocation.
3. Internal Politics: Resource allocation is always considered as possession power. Those department or businesses which are
powerful may get extra resource allocation.
4. Internal policies: Resources area a symbol of power. Internal policies based on negotiations and bargaining affects resources
allocation.
5. External influences: The demands of stakeholders also affect resource allocation. They can be owners, suppliers, customers,
employees, bankers and community. Legal requirements may require additional resources allocation. For example pollution control,
safety and labor welfare requirement.
Difficulties in Resource Allocation
Resource allocation is a central management activity that allows for strategy execution. Strategists have the power to decide which
divisions, departments, or SBUs are to receive how much money, which facilities, and which executives. The primary tool for making
resource allocations is the budget process. Functional strategies are derived from business strategy and provide directions to key
functional areas within the business in terms of what must be done to implement strategy.
In economics, resource allocation is the assignment of available resources to various uses. The resources can be allocated by various
means, such as markets or central planning. In project management, resource allocation or resource management is the scheduling
of activities and the resources required by those activities while taking into consideration both the resource availability and the
project time.
After resource mobilization, resource allocation activity is undertaken. This involves allocation of different resources financial and
human among various organisational units and subunits. In order to understand the rationality of resource allocation, it is essential
to understand commitment principle because resource allocation is a kind of commitment.

1. The first problem of resource allocation arises with the major question of what to produce and in what quantities. This involves
allocation of scarce resources in relation to the composition of total output in the economy

2. Scarcity of Resources: The main difficulty in resource allocation is its availability. The resources like finance, material, manpower
and finance are available in scarce. Even the finance is available the cost of finance is the major constraint. Physical resources like
land machinery and equipment needs to be imported. Though there are less burden or restrictions from the government but import
may increase the cost of the company. Though India has demographic dividend but the problem is available labour is either not
skilled or appropriate to suit the requirement of the industry.

3. Internal Restrictions: When firm wants to allocate resources for new businesses it becomes very difficult issue as the firm has to
also allocate resources to the existing SBUs or department. The usual budgeting practices creates problem for new units.

4. Competitors: Many firm copy its competitors when it comes to resource allocation. They never pay attention to the internal
capabilities. This is a imitation tactic adopted by the firm. This does not really make a sense. This affects the capability to develop
competitive advantage.