SAI SUDHIR DEGREE & PG COLLEGE

SUBJECT : Business Policy & Strategy

Class: BBA 3rd year (VI) sem

UNIT 5:
Strategy Implementation & Corporate Ethics
5.1 Strategy Implementation:
Definition:
“Strategy Implementation refers to the execution of the plans and
strategies, so as to accomplish the long-term goals of the
organization. It converts the opted strategy into the moves and
actions of the organization to achieve the objectives”.
Meaning:
Simply put, strategy implementation is the technique through
which the firm develops, utilizes and integrates its structure,
culture, resources, people and control system to follow the
strategies to have the edge over other competitors in the market.
Strategy Implementation is the fourth stage of the Strategic
Management process, the other three being a determination
of strategic mission, vision and objectives, environmental and
organisational analysis, and formulating the strategy. It is
followed by Strategic Evaluation and Control.
❑ Process of Strategy Implementation:

1. Building an organization, that possess the capability to put the

strategies into action successfully.
2. Supplying resources, in sufficient quantity, to strategy-essential
activities.
3. Developing policies which encourage strategy.
4. Such policies and programs are employed which helps in continuous
improvement.
5. Combining the reward structure, for achieving the results.
6. Using strategic leadership.

The process of strategy implementation has an important role to play in

the company’s success. The process takes places after environmental
scanning, SWOT analyses and ascertaining the strategic issues.
❑ Role of Top-Management In Strategic
Implementation :

1. Establishing Objectives
2. Designing Policies
3. Revising reward & Incentive System
4. Matching managers with strategy
5. Developing a strategy supportive Culture
6. Adapting production/ operations and processes
7. Effective Implementation
8. Design of information system
Strategic Evaluation & control
❑Meaning:
Strategic Evaluation & control constitutes the final phase of
strategic management.

❑ Strategic Evaluation operates at two levels:

• Strategic level: wherein we concerned more with the
consistency of strategy with the environment.
• Operational level: wherein the effort is directed at assessing
how well the organization is pursuing a given strategy.
• Definition:
“Strategic Evaluation & control could be defines as the process of
determining the effectiveness of given strategy in achieving the
organisational objectives and taking corrective actions whenever
required”.
❑Purpose:
The Purpose of Strategic Evaluation is to evaluate the
effectiveness of strategy in achieving organisational objectives.
Nature of Strategic Evaluation & control
• Nature of the strategic evaluation and control process is to test
the effectiveness of strategy.
• During the strategic management process, the strategists
formulate the strategy to achieve a set of objectives and then
implement the strategy.
• There has to be a way of finding out whether the strategy
being implemented will guide the organisation towards its
intended objectives. Strategic evaluation and control,
therefore, performs the crucial task of keeping the organisation
on the right track.
• In the absence of such a mechanism, there would be no
means for strategists to find out whether or not the strategy is
producing the desired effect.
Importance of Strategic Evaluation
• Strategic evaluation can help to assess whether the decisions
match the intended strategy requirements.
• Strategic evaluation, through its process of control, feedback,
rewards, and review, helps in a successful culmination of the
strategic management process.
• The process of strategic evaluation provides a considerable
amount of information and experience to strategists that can
be useful in new strategic planning.
❑ Participants in Strategic Evaluation

• Shareholders
• Board of Directors
• Chief executives
• Profit-centre heads
• Financial controllers
• Company secretaries
• External and Internal Auditors
• Audit and Executive Committees
• Corporate Planning Staff or Department
• Middle-level managers
Process of Strategic Evaluation
1) Fixing benchmark of performance
• While fixing the benchmark, strategists encounter questions
such as - what benchmarks to set, how to set them and how to
express them.
• In order to determine the benchmark performance to be set, it
is essential to discover the special requirements for
performing the main task.
• The organization can use both quantitative and qualitative
criteria for comprehensive assessment of performance.
• Quantitative criteria includes determination of net profit, ROI,
earning per share, cost of production, rate of employee
turnover etc. Among the Qualitative factors are subjective
evaluation of factors such as - skills and competencies, risk
taking potential, flexibility etc.
2) Measurement of performance :
• The standard performance is a bench mark with which the actual performance
is to be compared.
• The reporting and communication system help in measuring the performance.
• For measuring the performance, financial statements like - balance sheet,
profit and loss account must be prepared on an annual basis.

3) Analyzing Variance :
• While measuring the actual performance and comparing it with standard
performance there may be variances which must be analyzed.
• The strategists must mention the degree of tolerance limits between which
the variance between actual and standard performance may be accepted.

4)Taking Corrective Action :

• Once the deviation in performance is identified, it is essential to plan for a
corrective action.
• If the performance is consistently less than the desired performance, the
strategists must carry a detailed analysis of the factors responsible for such
performance.
Strategic Control :
• Strategic controls take into account the changing assumptions
that determine a strategy, continually evaluate the strategy as
it is being implemented, and take the necessary steps to adjust
the strategy to the new requirements.
• Most commentators would agree with the definition of
strategic control offered by Schendel and Hofer:

• "Strategic control focuses on the dual questions of whether:

(1) the strategy is being implemented as planned; and
• (2) the results produced by the strategy are those intended.“
Types of Strategic Control :
1) Premise Control
Every strategy is based on certain planning premises or predictions. Premise control
has been designed to check systematically and continuously whether or not the
premises set during the planning and implementation process are still valid. It
involves the checking of environmental conditions. Premises are primarily concerned
with two types of factors: a. Environmental factors (for example, inflation, technology,
interest rates, regulation, and demographic/social changes). b. Industry factors (for
example, competitors, suppliers, substitutes, and barriers to entry)
2) Implementation Control :
Implementing a strategy takes place as a series of steps, activities, investments and
acts that occur over a lengthy period. The two basis types of implementation control
are: a. Monitoring strategic thrusts (new or key strategic programs): Two approaches
are useful in enacting implementation controls focused on monitoring strategic
thrusts: (1) one way is to agree early in the planning process on which thrusts are
critical factors in the success of the strategy or of that thrust; (2) the second approach
is to use stop/go assessments linked to a series of meaningful thresholds (time, costs,
research and development, success, etc.) associated with particular thrusts.
3) Strategic Surveillance :
Strategic surveillance is designed to monitor a broad range of events inside and
outside the company that are likely to threaten the course of the firm's strategy.
The basic idea behind strategic surveillance is that some form of general
monitoring of multiple information sources should be encouraged, with the
specific intent being the opportunity to uncover important yet unanticipated
information.
Strategic surveillance appears to be similar in some way to "environmental
scanning." Strategic surveillance is designed to safeguard the established
strategy on a continuous basis.

4) Special Alert Control :

Another type of strategic control is a special alert control. "A special alert
control is the need to thoroughly, and often rapidly, reconsider the firm's basis
strategy based on a sudden, unexpected event."
The analysts of recent corporate history are full of such potentially high impact
surprises (i.e., natural disasters, chemical spills, plane crashes, product defects,
hostile takeovers etc.).
An example of such event is the acquisition of your competitor by an outsider.
Such an event will trigger an immediate and intense reassessment of the firm's
strategy. Form crisis teams to handle your company's initial response to the
unforeseen events.
❑ Corporate Culture and Promoting SMART governances :

Meaning:
Corporate governance is the system by which companies are
directed and controlled. Boards of directors are responsible for
the governance of their companies. The shareholders’ role in
governance is to appoint the directors and the auditors and to
satisfy themselves that an appropriate governance structure is in
place.
The responsibilities of the board include setting the company’s
strategic aims, providing the leadership to put them into effect,
supervising the management of the business and reporting to
shareholders on their stewardship
• In essence, corporate governance is about balancing
profitability with sustainability
• The corporate culture guides how the employees of
the company act, feel, and think. The corporate
culture is also the social and psychological
environment of an organization. It symbolizes the
unique personality of a company and expresses the
core values, ethics, behaviors, and beliefs of an
organization.
Concept of corporate governance

1. It improves strategic thinking at the top by inducting

independent directors who bring a wealth of experience, and a
host of new ideas.
2. It justifies the management and monitoring of risk that a
firm faces globally.
3. It limits the responsibility of senior management and
directors, by carefully articulating the decision making process
4. It assures the integrity of financial reports.
5. It has long term reputational effects among main
stakeholders, both internally and externally.
❑Objectives of corporate governance :
1. A properly structured Board proficient of taking independent and
objective decisions is in place at the help of affairs.
2. The Board is balanced as regards the representation of suitable
number of non-
executive and independent directors who will take care of the interests
and well-being of all the stakeholders.
3. The Board accepts transparent procedures and practices and arrives
at decisions on the strength of adequate information.
4. The Board has an effective mechanism to understand the concerns
of stakeholders.
5. The Board keeps the shareholders informed of relevant
developments impacting the company.
6. The Board effectively and regularly monitors the functioning of the
management team.
7. The Board remains in effective control of the affairs of the company
at all times.
The Four Types of Organizational Culture:

1. The Clan Culture: This culture is rooted in collaboration.

Members share commonalities and see themselves are part of one
big family who are active and involved. Leadership takes the form
of mentorship, and the organization is bound by commitments and
traditions. The main values are rooted in teamwork,
communication and consensus.
2. The Adhocracy Culture: This culture is based on energy and
creativity. Employees are encouraged to take risks, and leaders are
seen as innovators or entrepreneurs. The organization is held
together by experimentation, with an emphasis on individual
ingenuity and freedom. The core values are based on change and
agility like Facebook .
3. The Market Culture: This culture is built upon the dynamics of
competition and achieving concrete results. The focus is goal-
oriented, with leaders who are tough and demanding. The
organization is united by a common goal to succeed and beat
all rivals. The main value drivers are market share and
profitability.

4. The Hierarchy Culture: This culture is founded on structure and

control. The work environment is formal, with strict institutional
procedures in place for guidance. Leadership is based on organized
coordination and monitoring, with a culture emphasizing
efficiency and predictability. The values include consistency and
uniformity. Think of stereotypical large, bureaucratic organizations
such as Mc Donald’s, the military, or the Department of Motor
Vehicles.
❑ SMART Governance :
Introduction :
SMART Governance is about using technology to facilitate and support better
planning and decision making. It is about improving democratic processes and
transforming the ways that public services are delivered. It includes e-
government, the efficiency agenda and mobile working. E.g. : National Institute
of Smart Governance.

• Concerns the efficiency of public services of a smart city and their

improvement through innovations without forgetting the democratic
inclusiveness of its residents.
• The process of governance based on using ICT tools and the Internet to
provide information and public services, on communication and
collaboration between government and citizens and on the principles of
good governance.
• Smart governance is about the use of technology and innovation for
facilitating and supporting enhanced decision making and planning. It is
associated with improving the democratic processes and transforming the
ways that public services are delivered.
SMART captures the important attributes of Good Governance
i.e. Simple, Moral, Accountable, Responsive and Transparent
government.

• Simple -Citizen expects a user-friendly government with the

simplicity of laws, rules, regulations, processes. To achieve
simplicity, in the delivery of services. The government is
implementing Single Window one-stop services through CSC to
facilitate delivery of services to a common citizen under its e-
governance framework.

• Moral - The word Moral in SMART governance denotes

emergence of a new system of governance based on moral
values. The cleaning up process is very slow but it is very
essential for the survival of values cherished by Good
Governance. Some of the processes like systematic changes in
electoral reforms, downsizing of government, enhancing
literacy, increasing awareness and participation can take a
longer duration to show its effects. However, such programs
should not be overlooked
Accountability - It is the soul of a democratic government and
the very cornerstone of public administration.

Responsiveness: - It refers to the quality of being attentive to the

needs of common man. A responsive administration shows
urgency in responding to different problems faced by the
common man. Citizen Charter developed in 1990's in the UK can
be used to improve the responsiveness of the government.
Citizen's Charter is a set of assurances given by the government
agency on the quality of service and time limit for delivery.

Transparency - Transparency brings some of the essential virtues

into public life such as equity, level playing field and the rule of
law. These virtues confer social benefits to the people with no
discretion and no scope of corruption. Transparency arises out of
the citizen's Right To Information (RTI), the right to know why
certain decisions were taken.
Re- Designing Organisatinal Structure & Controls:
Meaning:
Organization structure refers to the role-responsibility relationships of
different employees in an organization along with their pre-defined
interaction patterns. It facilitates the flow of information both vertically and
horizontally in an organization.
Definition:
“An organizational structure defines how activities such as task allocation,
coordination and supervision are directed toward the achievement of
organizational aims”.

The various types of organization structures include –

• Functional
• Divisional
• matrix
• horizontal
• hybrid structures.
• The functional structure is characterized by grouping people based on
their expertise and skills.
• In the divisional structure, the divisions are formed based on an
organization's product range, the specific markets the organization caters
to, or the geographic locations in which it operates.
• The matrix organization tries to integrate the desired features of both
the functional and divisional structures. In this structure, an employee
reports simultaneously to two different supervisors. One of these
supervisors represents a functional department and the other represents
the division, product, market, geography, or project.
• The horizontal structure prevents the rigidity and departmentalization
existing in a vertical system by grouping the managers and employees
into synergistic teams for problem solving.
• When organizations use a combination of any two structures (say,
functional and divisional or functional and horizontal), the resulting
structure is called a hybrid structure. It combines the strengths of the
structures being merged.
• 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 goals and
then develops plans to implement the new changes.

Organizational Design have six key elements:

• Work specialization.
• Departmentalization.
• Chain of command.
• Span of control.
• Centralization and decentralization.
• Formalization.
1. Work specialization: Work specialization or division of labor is the
degree to which activities in the organization are subdivided into
separate jobs. Work specialization creates efficiency and
productivity, but can also result in boredom, fatigue, stress, low
productivity, poor quality, increased absenteeism, and high
turnover.
2. Departmentalization : Departmentalization is an aspect of
organizational design that includes the subdivision of a business into
units based on their function or other criteria. Most companies,
including restaurants, are likely to use two or more types of
departmentalization simultaneously.
Departmentalization are as follows:
• Functional.
• Geographical.
• Product.
• Process.
• Customer.
A. Functional departmentalization :
In functional departmentalization, an organization is organized
into departments based upon the respective functions each
performs for the organization.
B. Geographical departmentalization :
Grouping jobs on the basis of territory or geography.
D. Process Departmentalization :
Grouping activities on the basis of product, services or
customers. Process departmentalization allows homogenous
activities to be categorize in which each process requires
different skills.
E. Customer Departmentalization :
Grouping activities on the basis of common customers or types of
customer. Different departments are made to serve the common
type of customers. The assumption is that the customers of each
department have common problems or need which is fulfilled by
the departments. These departments are under supervision of the
specialist who meet the problems and needs of the customers
2. Chain of command:
Chain of command is the authority, communication and
responsibility along which orders are passed in the organization.
We can say that the order from top management to the lowest
rank is the chain of command.
• Elements: Authority. Responsibility. Unity of command.
3. Span of Control:
Span of control is that a manager can handle how many
employees in organization efficiently and effectively. Manager is
how much capable enough to direct the employees. Whether
employees are following his command or not.
• Skills and abilities of the manager.
• Employee characteristics.
• Characteristics of the work being done.
• Similarity and complexity of tasks.
• Standardization of tasks.
• Strength of the organizations culture.
• Preferred style of the manager.

4. Centralization and decentralization :

• Centralization : Centralization refers that decision making in the
organization can be done by only top management. It is the
formal authority that top management will give decisions which
will be followed by every one without any changes.
• Decentralization: Decentralization refers that decision making
is not only restricted to top management. Decisions are also
made by lower level employees because they are more towards
the action of performance. Decentralization make employees
feel that organization is trusting on them and giving right to
make decisions.
5.Formalization :
Standardization of job within the organization is called
formalization. The rules and regulations within the organization are
strictly followed. It is very clear that what is to be done, when it is
to done and how it is to be done.
Example: Every one should be on their desk at 8:00 am sharp and
salary will be deducted Rs 200 on every absent who ever has more
than 3 absent in a month
Crafting Social Responsibility:
Meaning:
CSR requires companies to acknowledge that they should be
publicly accountable not only for their financial performance but
also for their social and environmental record. CSR encompasses
the extent to which companies should promote human rights,
democracy, community improvement and sustainable
development objectives throughout the world.
• CSR is about how companies manage the business processes to
produce an overall positive impact on the society.
• CSR is the responsibility of corporations to go above and beyond
what the law requires them to do.
• CSR is the responsibility of corporations to contribute to a better
society and cleaner environment.
Some of the most common examples of CSR include:
• Improving labor policies.
• Participating in fair trade.
• Charitable giving.
• Volunteering in the community.
• Corporate policies that benefit the environment.
• Socially and environmentally conscious investments
Steps to Effective Corporate Social Responsibility

1. Define your messaging: Come up with causes that resonate with

your business culture, research the kind of support they need, then
pick one and stick with it. One is enough for a small business – and
don’t feel pressured to donate more funding or assistance than you
can afford.

2. Involve your customers. If you haven’t picked a cause yet, come up

with a list of alternatives and ask your web site visitors and
Facebook fans to vote on which one they would like to see you
support. Or actively seek their assistance, such as bringing old but
usable technology into your store so that you can donate them to
students in underfunded schools. Make sure you offer a potential
reward, such as holding a raffle for all participants.

3. Create a scorecard. Make sure it features achievable and

measurable goals and keep it visible on your site, tracking your
progress. Be honest about any setbacks – you want the tone to be
authentic, not promotional.
4. Use social media. Don’t just tell your customers what you’re doing;
solicit their ideas, experiences, and concerns to get them invested in
your projects. Make sure you use multiple digital platforms – such as
blogs, Facebook, Twitter, and a YouTube channel – to reach people
with different media preferences.
5. Partner with a third party. Forming an alliance with a non-
profit will not only lend credibility to your efforts, but let you benefit
from the non-profit’s greater experience in fundraising and
philanthropy. The alliance will also offer an opportunity to blend
customers and networks.
6. Seek publicity. If you’ve never sought media coverage for your
business before, this might be the time to start. Send out a press
release about any contests, events or fundraising drives – and reach
out to media outlets that present on green topics as they’ll be apt to
give you positive coverage.
7. Repurpose your CSR reports. Using charts, stories, and photos in
your annual reports and newsletters will appeal to stakeholders and
shareholders alike.
 ❑ Social & Ethical responsibilities of
Corporate Ogranisation:
• Meaning:
Social responsibility is a means of achieving sustainability. Adopting key
social responsibility principles, such as accountability and transparency, can
help ensure the long-term viability and success of any organization or
system.
• Definition:
“The responsibility of an organization for the impacts of its decisions and
activities on society and the environment, through transparent and ethical
behavior that:
• Contributes to sustainable development, including health and the welfare
of society
• Takes into account the expectations of stakeholders
• Is in compliance with applicable laws and consistent with international
norms of behavior
• Is integrated throughout the organization and practiced in its
relationships”
SOCIAL RESPONSIBILITY IN BUSINESS
• Social responsibility in business, also known as corporate social
responsibility (CSR), pertains to people and organizations behaving
and conducting business ethically and with sensitivity towards
social, cultural, economic, and environmental issues. Striving for
social responsibility helps individuals, organizations, and
governments have a positive impact on development, business, and
society.
• Smart business decisions are not just a matter of counting short-
term dollars and cents. Wise decision makers consider the future
impact of today’s choices on people, on the community, and on
customers and their opinions.
• While business results, investment, free enterprise, and other
traditional economic forces continue to drive industry,
organizations’ reputations and their ability to compete effectively
around the world depend on them integrating social responsibility
efforts into decision making and performance improvement.
❑ ISO 26000-2010: Guidance on Social
Responsibility identifies seven core social responsibility subjects:
1. Organizational governance
2. Human rights
3. Labor practices
4. Environment
5. Fair operating practices
6. Consumer issues
7. Community involvement and development

In addition to the core subjects, ISO 26000 also defines seven key principles of socially
responsible behavior:
1. Accountability
2. Transparency
3. Ethical behavior
4. Respect for stakeholder interests
5. Respect for the rule of law
6. Respect for international norms of behavior
7. Respect for human rights
Ethical responsibilities of Corporate Ogranisation:
A business owner must make ethical decisions, including hiring and
contracting decisions, to demonstrate the company's social
responsibility.
• Responsibility to Employees
A business should administer employee behavior and HR decisions in a
manner that fits the law and establishes social responsibility. By
establishing policies and applying them fairly to all employees, a
business owner creates a climate of fairness and equity. Alternatively,
offering advantages to some employees, or playing favorites, exposes a
business owner to scrutiny over his company's ethics.
• Responsibility to Customers
Inside the business, the owner must look at the obligations to
customers. There are people who directly consume the goods or
services that the business sells and people who buy them downstream
in the after-market. All these people have consumer rights that must be
satisfied to a reasonable degree by the company.
• Responsibility to Supply Chain
A business might belong to a supply chain. If the organization is a
producer, it receives raw materials from suppliers and then uses them to
make a product. The organization has relationships with distributors and
retailers who offload the finished product to consumers. In this chain of
relationships, a business owner has an ethical responsibility to act
honestly in all transactions. For example, the owner should give a fair
price to the supplier for materials, study his costs and then determine a
price per unit to charge the distributor or retailer. At the end of the
supply chain, the consumer will get a price, but will only pay a reasonable
one.
• Responsibility to Environment
A business does not exist in a vacuum, but it maintains an open system of
relationships with internal and external stakeholders. Because the
organization is open, it is vulnerable to changes in the environment. The
responsible business owner can make decisions to respond to those
changes, such as adjusting terms of employment with workers or the
terms of business transactions with suppliers and customers. A business
must remain profitable in order to survive.
Assignment Questions?

1. What is strategy. Explain the features of strategy?

2. Describe the Macro- Environmental factors in detail?
3. Explain the tailoring strategy to fit the specific Industry?
4. What is Outsourcing. Describe the drivers of Outsourcing?
5. What is Strategic control . Explain types of Strategic control ?