Strategy Implementation & Evaluation

Module:4

What is Strategy Implementation?

Strategic implementation can be defined as turning strategy into action for attaining the strategic
objectives and goals. Since, implementing the strategy is more important than selecting it, hence,
it is very important for the strategists to consider various factors while implementing. The
strategy selected has to be well performed for the purpose of attaining the strategic objectives.
Even a superior strategy tends to fail in the absence of efficient implementation. In other words,
strategy implementation can be defined as a procedure which enables putting the chosen strategy
into action. Implementing a strategy requires carrying-out various actions.
Definition of Strategy Implementation
• According to Steiner :
"The implementation of policies strategies is concerned with the design. and management of
systems to achieve the best integration of people, structures, processes, and resources, in
reaching organizational purpose".
• According to Mc Carthy :
"Strategy implementation may be said to consist of securing resources organizing this resource
and directing the use of these resources within and outside the organisation".

Nature of Strategy Implementation

The characters or scope of strategy implementation can be described as follows :

1) Action-Oriented :
Strategy implementation is action-oriented in the sense that it helps in materializing the things.
The ability of management to bring about organisational changes is a part of it. It strives to attain
enhancement operations and in business procedures on an ongoing basis. It progresses towards
operational superiority. Strategy implementation helps in creating and nurturing culture which
supports the strategy. It seeks to meet the performance objectives.

2) Require Leadership :
A proficient leadership is required for the implementation of a new strategy in order to persuade
others in favor of it. It makes an effort to eliminate the probability of suspicion through
motivation and encouragement. It can be regarded as the safe commitment of the parties
involved. Harmony and zeal are established by skillful leadership only. It helps in organizing and
coordinating all the parts of the implementation.

3) Employee Involvement :
The entire management group and official staff are included in implementation and execution of
strategy. Just like every part of a clock has to perform in order to function smoothly, all the parts
of an organisation have to unite and work, in order to ensure proper execution of strategy.

4) Varied Contexts :
Different environment required for every implementation situation, each of which is affected by
varied business practices and competitive scenarios, working culture environment, incentives and
compensations policies, blend of personnel and the history of the organisation, etc.
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5) Challenging Management Job :

Implementing strategy can be regarded as a difficult management task because of the following
reasons :
 Extensive range of challenging managerial activities which have to be executed.
 Several ways for dealing with every activity.
 Numerous problem causing issues which have to be sorted out.
 Calls for efficient management skills by experts.
 Need for introducing and managing a number of ideas all together.
 Difficulty in uniting the efforts of several teams in order to attain smooth functioning of
the entire group as a whole.

Steps in Strategy Implementation

Indeed, there is an essential relation between implementation and chosen strategy. Since, the
chosen strategy has to be materialized, thus it raises an alarm for its ability to change previous
resource obligations, structures of the organisation, policies involved and system of
administration. If the changes in these areas are required by the organisation, in such a case, the
strategy should be capable enough to plan out for bringing changes in them. In order to make the
strategy process efficient, it should go along with the implementation process. Following 6 steps
are involved in the process of strategy implementation :
1) Building an Organisation which is able to execute the Strategy :
The structure of an organisation should be such that it can turn the strategy into practical
implementation. Moreover, the employees of the firm should be proficient enough in skillful
execution of the strategy. For this purpose, the responsibility. for attaining the major
implementation, job should be allotted to the suitable candidates or teams only.

2) Establishment of a Strategy-Supportive Budget :

For the purpose of attaining strategic targets, the firm should have the employee, equipment,
amenities and assets needed for the successful accomplishment of the strategic plan. Moreover,
the decision about the strategy has to be followed by recognizing the chief jobs to be done, the
types of decisions to be taken, and the development of formal plans. The jobs to be done have to
be organised in an order which consists of action plans lying within the objectives to be attained
till a particular date.

3) Installment of Internal Administrative Support Systems :

Internal systems can be defined in terms of policies and processes which are required to ascertain
desirable behavior, information systems, providing strategically critical information on time, and
all the aspects which are required for giving significant strategy-executing ability of the firm
such as inventory, cost accounting, customer service, materials management, and other
administrative systems. These internal systems should help in supporting the management
process, the manner in which the managers in a firm coordinate, along with monitoring strategic
progress.
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4) Rewards and Incentives

The next step deals with the planning that helps in associating the rewards and incentive with
strategy and objectives. The personnel of various departments should be motivated to work
towards accomplishing the strategy. The organisation should motivate its employees with the
help of rewards, incentives, constraints, etc. control, standards.

5) Giving Shape to the Corporate Culture for Fitting it in the Strategy

A corporate culture which supports strategy is the major reason behind the diligence and
intelligence of the organisations in attaining the strategy. Strategists should make an effort to
focus on, the prevalent aspects that help in supporting the planned new strategies. It is desirable
to recognize and change the feature of the prevalent culture which opposes planned strategy. It
has been found through extensive researches that new strategies. are usually market-oriented and
competitive. forces mostly define them. This is the main reason for which, altering the culture of
the firm. for making it suitable for a new strategy is generally more efficient than changing the
strategy to suit it with the prevailing organisational culture. There are a number of techniques
available for changing the organisational culture, such as training, recruitment, transfer,
restructuring and re modeling of organisational design along with positive motivation.

6) Exercising Strategic Leadership:

Dedicating and accomplishing strategy are the parts of strategic leadership. Constructive
utilization or politics and power are involved in it, where politics help in establishing consent for
supporting the strategy. Strong leadership skills are desirable in the managers in order to
persuade the personnel to enthusiastically embrace the changes coming into the organisation and
work for attaining the organisational objectives. It is a common consent that change can bring
about success, in case the leaders have highly optimistic attitude towards its success.

Aspects of Strategy Implementation

1) Resources Plans/Resources Allocation:
Resource allocation can be defined as a procedure which involves assigning organizational
resources to different departments, Strategic Business Units (SBUs) and divisions. It is mainly
concerned with securing and assuring physical, financial as well human resources as per the
strategic tasks for the purpose of attaining organizational goals. Allocation of resources can be
regarded as an efficient device for the purpose of communicating strategy as it gives the much-
needed indication to the people involved. It helps in revealing the real face of the operational
strategy. If the shifting of resources is not in accordance with the official strategy, it would not
come into practice. The decisions regarding the allotment of the resources are related to the
organizational goals, involving many questions such as-what sources have to be explored for
acquiring resources? Which facts affect the process of resource allocation? What are the different
approaches which could be adopted for allocating resources?

2) Project Implementation:
Project implementation (or project execution) can be regarded as the stage, which involves
actualization of visions and plans. It is a logical conclusion drawn after evaluation, decision
making. decision making, visualizing, scheduling, applying for the capital, and finally deciding
about the financial resources for a project. The Project Management Institute of the U.S. has
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defined the project as, "a one-shot, time limited, goal-oriented, major undertaking, requiring the
commitment of varied skills and resources". This means that prior decisions about time
scheduling and costs help in making the project a specified activity. The projects help in creating
the condition and facilities needed for implementation of the strategy, which is the part of project
management.

3) Procedural Implementation:
For the purpose of strategy implementation, execution of the strategy is required on the basis of
set rules, regulations and procedures as directed by the government. Despite the simplification of
process done by liberalization, globalization, and i privatization, many of the procedures are yet
applicable in the process of implementation of strategies. Hence, the study of the subsequent
procedural features should be undertaken by the strategists before implementing the strategy.

4) Organizational Structure:
The structures of the organisations are built on the basis of their strategies Organisations can be
structured in several ways or methods. The simple structure is required for the simple strategies,
while flexible structure is required for the growth strategy and matrix structure is essentially built
on the basis of complex strategies. Practically, to implement stable strategies, the organisation
structure should be mechanistic in which the different parts work for the welfare of whole
organisation. While to implement growth strategies, the organisation structure should be organic
in which the whole organisation work towards its different parts.

5) Behavioral Implementation:
The features of strategic implementation that affects the behavior of the persons in organisation
are dealt through behavioral implementation The behavior and activities of the personnel has to
be directed in the desired directions as the human resources are a fundamental part of the
organisation. Formulating a strategy successfully. does not assure its successful implementation,
as practical execution is always a difficult task. Discipline, motivation, diligence and support on
the part of the managers and personnel are some of the necessary elements required for
successful implementation of strategy.
6) Functional Policies and Implementation:
The development of a plan and policy related to various areas or functions undertaken by the
organization deals with functional implementation. Production, finance, marketing and personnel
are some key functions of the organization. The key functions of the firm include production,
marketing, finance, personnel. The guidelines to operational managers are given by functional
policies, for the purpose of:
 Ensuring coordination across functional units. The decision regarding the strategy of the
firm has to be essentially followed by modification of functional policies in order to meet
the growing demands emerging out of new business.
 Execution of the strategies.
 Reducing the time taken by the mangers in decision-making.
 Handling of the similar situation unfailingly.
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Barriers to Strategy Implementation

The following key issues arise from implementation of the strategy and their relationship with
empowering system, which should be kept in mind by the mangers. Six barriers or issues in
strategy implementation are as follows:
1) Time Horizon:
The organisation that believes in empowerment, is based both on long-term well as short term
dimensions For example, the short term dimension can be in form of rewarding incentives like
bonus based on efficiency by measuring quantitative performance. Whereas, it is quite apt to
relate long term rewards with qualitative performance as well as some appropriate quantitative
measures.
2) Risk Considerations:
A qualitative measure of performance can be more useful in case it is. desirable to have risk
prone behavior, e.g rewards in the forms of stock options or the bonuses. The reason for this is
that quantitative measures tend to avoid the risk. in order to eliminate the chances of failure,
instead of taking the risk to attain the results.
3) Bases of Individual Rewards:
The systems of rewards should be related to the ability, diligence and job satisfaction of the
individual. Accelerating the rewards to only one part of the performance may adversely affect
the other parts of the performance
4) Bases of Group Rewards:
One of the significant issues involve in the reward systems is the choice between individual and
group reward. It would be quite tough to reward individuals for their performances and efforts if
the structure of the organisation doesn't permit to segregate individual's performance from that of
the other people.
For example, in case of contributions by the managers to enhance the performance of the
organisation can be regarded as useful as well as suitable, because contribution by the individual
is comparatively independent from that of the others. In case the contributions given by the
individual are dependent upon each other's performance, rewarding scheme formed on the basis
of group performance would be more suitable.
5) Corporate and SBU Perspectives:
In case of the organisations with several divisions, a system of rewards based on both corporate
as well as Strategic Business Units interests has to be formulated, giving more freedom and
autonomy to the business units. Similarly, unit based rewarding system would be more useful in
case SBUs are unlikely to affect performance of the organization. But it is important to note here
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that, a balance authority scenario has to be formulated, if general managers and directors are
shouldering the dual role of attaining corporate as well as unit’s objectives.
6) Vision Barrier:
A large number of personnel fail to understand the strategy of the organization. Such a scenario
was quite suitable at the beginning of the 20th century, when the employees were mainly parts of
the industrial mechanism and the value was drawn by efficient use of the organizational
resources. On the other hand, in the present scenario the knowledge or information-based values
are created on the basis of non-material resources such as organizational culture and inter and
intra relationship between employees and the higher authorities. Several organizations are still
following the age-old tradition of authority and control, which are otherwise inappropriate in the
present scenario.
Guidelines for Overcoming Barriers in Strategy Implementation

Following are the tools which can help to overcome the obstruction coming in the way of
strategic implementation:
1) Focus:
Having a lot of priorities implies lack d action as everything cannot be regarded as a priority.
Distraction is quite obvious in case there are several priorities. Hence, it is the duty of the leaders
to ascertain the point of focus for the organisation by limiting it to two or three major action
plans which are agreeable to the objective of the organisation.
2) Clear Communication:
It is essential for part of the leaders to clearly define the objective of the organisation to the
subordinates and they are also expected to explain them their roles in attaining the desired
objectives. At every level of leadership, the tasks to be accomplished have to be recognized
which should be followed by laying emphasis on the employees' efforts towards the
accomplishment of major actions.
3) Teamwork:
The leaders at the senior level have to recognize the possible conflicts that might emerge while
attaining the top organisational goals and they have to find-out the ways for resolving them. It
might involve dealing with the situation by compensation or negotiation, which may involve
conducting intense discussions regarding allocation of roles and what is expected from each
personnel.
4) Regular Check-Ins:
Keeping an alarming deadline for a specific project acts as a great motivation for
accomplishment of the task. Regularly examining the work done by the employee helps to
ascertain the completion of assigned tasks within the stipulated time.
5) Accountability:
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For ensuring the implementation of major objectives, it is essential to hold the employees
responsible for not accomplishing the works assigned to them. The staff should be aware about
their responsibilities and the consequences which might emerge in case they are not fulfilling the
desired duties.

Resource Allocation Definition:

Resource allocation refers to assigning and distributing available resources, such as financial
capital, human capital, equipment, and time, among different activities, projects, or departments
within an organization.

Resource allocation is a fundamental management process that efficiently utilizes limited

resources to achieve organizational goals. It is a strategic tool that enables organizations to
optimize operations, make informed decisions, and drive sustainable growth and success.

Resource allocation plays a crucial role in determining the success and sustainability of a
business or project. Effective resource allocation allows organizations to:

1. Optimize productivity: By strategically allocating resources, organizations can

maximize output and productivity, ensuring that resources get utilized most efficiently.
2. Prioritize initiatives: Resource allocation enables organizations to prioritize projects or
activities based on their strategic importance, urgency, or potential return on investment.
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It helps identify and focus on high-priority initiatives, avoiding waste or misalignment of

resources.
3. Manage risks: By allocating resources appropriately, organizations can mitigate risks
and uncertainties associated with projects or activities. It allows for contingency planning
and ensures that resources are available when needed, reducing the likelihood of delays
or failures.
4. Enhance decision-making: Resource allocation provides a structured framework for
decision-making. It helps stakeholders evaluate trade-offs, analyze cost-benefit ratios,
and make informed choices regarding the allocation of resources.
5. Foster innovation and growth: Effective resource allocation supports innovation and
growth by directing resources toward research and development, new initiatives, and
strategic opportunities. It enables organizations to adapt to changing market dynamics
and invest in future success.

Resource allocation benefits organizations, including increased efficiency, reduced costs, and
improved project success rates. Let us look at them in detail.

 Increased efficiency: By allocating resources strategically, organizations can ensure their

resources get used to their full potential. This leads to better efficiency and productivity,
as tasks can get completed more quickly.
 Reduced costs: Proper resource allocation can help organizations minimize unnecessary
expenses. By avoiding overallocation or underutilization of resources, organizations can
save money on things like excess inventory, idle workforce, and redundant equipment.
 Improved project success rates: Resource allocation is essential for successful project
management. By allocating the right resources to suitable projects, organizations can
boost the chances of project success. This involves assigning resources with the
necessary skills and expertise to specific tasks and ensuring that projects are adequately
staffed and equipped.
 Improved employee morale: When employees get the resources, they need to do their
jobs effectively, they are more likely to be motivated and engaged. This can lead to
improved productivity, decreased turnover, and increased customer satisfaction.
 Enhanced decision-making: By having a clear understanding of the availability and
capabilities of their resources, organizations can make useful decisions about how to
allocate them. This can indeed result in improved strategic planning and execution, as
well as more efficient use of resources.
 Increased agility: Effective resource allocation can help organizations respond more
swiftly to changes in the market or the environment. It can give them a competitive
advantage and help them achieve their goals more quickly.
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Resource Allocation Methods

Resource allocation methods provide structured approaches to distributing resources within an

organization effectively. Here are four commonly used methods:

Critical Path Method (CPM):

You may define the critical path and the order of work that determines the minimal project
length using the critical path method. CPM works by analyzing task dependencies, durations, and
resource requirements. This helps you identify the optimal allocation of resources to critical
tasks. By allocating resources efficiently, you can minimize project delays and maximize
productivity.

Here are the steps involved in CPM:

 Identify all the tasks in the project.

 Determine the dependencies between tasks. This means identifying which tasks must
get completed before other tasks can start.
 Estimate the duration of each task.
 Calculate the critical path. You do this by finding the longest sequence of tasks that
must get completed on schedule for the project to get completed on time.
 Allocate resources to critical tasks. You can do it by ensuring that there are enough
resources available to complete the critical tasks on time.

Earned Value Management (EVM): It is a technique that integrates cost, schedule, and scope
to track and measure project progress. EVM compares the value of work completed against the
planned budget and schedule. This helps project managers identify deviations from the plan and
take corrective actions to ensure that the project concludes on schedule and within the allotted
budget.

EVM works by tracking three key metrics:

 Planned value (PV): This is the budgeted cost of the work that has gotten scheduled for
completion at a given point in time.
 Earned value (EV): It is the value of the work that you have actually completed at a
given point in time.
 Actual cost (AC): This is the actual cost of the work completed at a given time.

Earned Value Analysis (EVA) is also called “Budget cost of work performed”. It is
considered a refinement of the cost-monitoring technique. This analysis was first carried out
USA’s Department of Defence (DOD). In this analysis, a “value” is assigned to each track or
work package based on the expenditure forecast. The value assigned is known as the “planned
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value (PV)”. The work that has not yet begun is given a value known as the “earned value of
zero”. The total value credited to a project is called “earned value(EV)”, which is also
represented as “money value”.

Methods For Earned Value Analysis

 0/100 Technique: The technique where a task is assigned a value of zero until such
time that is completed when it is given a value of 100% of the budgeted value.
 50/50 Technique: The technique in which a task is assigned a 50% value as soon as
it is started and then given a value.
 75/25 Technique: The technique where a task is assigned 75% on starting and 25%
on completion.
 Milestone Technique: The technique where a task is given a value based on the
achievement of milestones that have been assigned values as part of the original
budget plan.
 Percentage Complete: In some cases, there may be a way of objectively measuring
the amount of work completed.
Stages in Earned Value Analysis
 Creating the baseline budget: This is the first stage in setting up EVA. This
budget is based on the project plan. It predicts the earned value through time.
Normally, it is measured in person hours or workdays, for example: in a software
development project.
 Monitoring Earned Value: The second stage is monitoring the earned value as the
project progresses. This is achieved by monitoring the completion of each
task. Actual cost(AC) is the actual cost of each task and it can be analyzed and
collected.
 Schedule Variance(SV): This is the third stage which is measured in cost as EV-
PV which is the deviation between planned work and completed work.
Example: Consider these values,
PV =40000
EV=35000
SV=35000-40000 = -5000

Here the calculated SV value is negative and hence we conclude that the project is
behind the original schedule.
 Time variance(TV): The difference between the current time and the time when
the achievement of the earned value was planned to occur.
 Cost Variance(CV): This value is the difference between the actual cost and the
earned value. Using this value we can estimate the accuracy of the original cost
scheduled for the project. If the CV values are found to be negative, we conclude
the project is over cost.
Advantages of Earned Value Analysis (EVA)
 Project Performance Measurement: EVA provides a comprehensive method for
measuring and assessing the performance of a project. It helps project managers
gain a clear understanding of how well a project is progressing in terms of cost and
schedule.
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 Objective Performance Metrics: EVA relies on objective metrics, making it less

susceptible to subjective interpretations. This can lead to more accurate assessments
of project performance .
 Integration of Cost and Schedule: EVA combines cost and schedule performance,
allowing project managers to see the relationship between these two critical aspects
of project management. This integration can help in identifying issues early and
making informed decisions.
 Early Issue Identification: EVA can highlight problems in project execution early,
enabling project managers to take corrective actions promptly. This can prevent cost
overruns and schedule delays.
 Benchmarking: EVA allows for benchmarking project performance against
planned targets and historical data. It helps project managers assess whether their
project is on track compared to similar projects.
 Effective Communication: EVA provides a standardized way to communicate
project performance to stakeholders. Charts and reports generated from EVA data
can make it easier for stakeholders to understand the project’s status.
Disadvantages of Earned Value Analysis (EVA)
 Complexity: EVA involves complex calculations and terminology,
which can be challenging for project teams to understand, especially for
smaller projects or teams with limited expertise.
 Resource-Intensive: Implementing EVA requires tracking detailed data
and maintaining comprehensive records. This can be resource-intensive,
and some organizations may lack the necessary tools or resources for
effective EVA implementation.
 Subjectivity in Earned Value Calculation: The “earned value” itself
can be subject to interpretation, especially in situations where there are
gray areas regarding the completion of work packages or milestones.
 Assumption of Linear Progression: EVA assumes linear progression,
which means that it may not work well for projects with irregular or
non-linear progress patterns, such as research and development projects.
 Time-Consuming: Calculating and updating EVA metrics can be time-
consuming, which may not be suitable for projects that require quick
decision-making and frequent changes.
 Focus on Metrics vs. Problem Solving: Overemphasis on EVA metrics
can sometimes lead to a focus on numbers rather than addressing the
underlying issues causing performance problems.

Resource Leveling: Resource leveling is a project management methodology that helps you
balance the demand for resources with the available supply. It does this by adjusting task
schedules or adding or removing resources. The goal of resource leveling is to optimize resource
allocation while maintaining project constraints and deadlines.

Resource leveling can be used to:

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 Avoid resource overloading: This can lead to errors, accidents, and burnout.
 Avoid resource underutilization: This can waste resources and lead to cost overruns.
 Minimize conflicts: This can improve morale and productivity.
 Maximize resource utilization efficiency: This can save money and time.
Resource leveling can be a complex process, but it is an extremely valuable tool for project
managers. If you are a project manager, I encourage you to learn more about resource-leveling.

Resource Smoothing: Resource smoothing focuses on maintaining a constant resource

utilization rate by adjusting the project schedule. It aims to minimize resource fluctuations by
redistributing tasks within the available time frame while considering resource constraints.
Resource smoothing helps avoid resource peaks and valleys, prevent resource bottlenecks, and
ensure a more stable and balanced allocation of resources.

What Is an Organizational Structure?

An organizational structure is a system that outlines how certain activities are directed in order
to achieve the goals of an organization. These activities can include rules, roles, and
responsibilities.

The organizational structure also determines how information flows between levels within the
company. For example, in a centralized structure, decisions flow from the top down, while in a
decentralized structure, decision-making power is distributed among various levels of the
organization. Having an organizational structure in place allows companies to remain efficient
and focused.

Types of organization structure

According to complexities of processes of organization, they can be classified into two types
1. Basic organizational structure
 Simple structure
 Functional organization
 Divisional Structure
 Conglomerate Structure

2. Advanced organization structure

 Matrix organization
 Team-Based Organization Structure
 Network Organization Structure
 Boundary less Organization Structure
 Cellular/Modular organization Structure

Simple structure: A simple organizational structure is the default operating system used by
most small businesses, because it centralizes decision-making with the owner. Unlike other
organizational structures, the simple, or flat, structure doesn’t have formal departments and
layers of management. This method of running a company has advantages and disadvantages,
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and understanding them will help you operate under this system more effectively, so that you
can prepare for a transition to a more formal structure.

Strengths of a Simple Organizational Structure

 Complete control of business operations in owner’s hand.
 Centralized Decision Making.
 No hesitation from employees.
 Free flow of information.
 Increased responsibility

Weaknesses of a Simple Organizational Structure

 Increased owner responsibilities – In an organization with no mid or lower-level

managers, the leader is left to make all the decisions and instruct the employees. That

leaves the Founder to shoulder more responsibility than any other company employee.

 Reduced employee autonomy – While it might be flexible for employees to react

quicker, a simple structure centralizes power with a single leader. That prevents

employees from expressing ideas and creativity required in dynamic situations.

 Potential confusion – In a flat organization, employees are likely to be confused when

managing complex tasks because there’s no elaborate management structure to specify

each individual’s roles and responsibilities.

Functional organization structure

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A functional organizational structure is a corporate structure that organizes individuals according

to their expertise, skill, or related roles. It is organized into layers of hierarchy that encompass
several departments and are led by authorized leaders. Businesses typically utilize functional
structures because it groups individuals with a comparable knowledge and, when used in a team
setting, helps organizations achieve their goals
It is a sort of organizational structure in which the organization is divided into smaller units
based on specific functional areas such as information technology, finance, human resources, or
marketing.

Features of Functional Organization

1. The organizations entire work is separated into several functions.

2. An expert performs each function.

3. The functional head controls his functions actions throughout the organization.

4. Functional heads have a great deal of autonomy.

Benefits of a Functional Structure

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Better efficiency
Because individuals with common abilities and expertise are grouped by duties performed,
functional departments may increase operational efficiency. As a result, each group of specialists
may work autonomously, with management serving as the point of contact between functional
areas. This configuration allows for more specialization.

Specialization
The most apparent benefit of a functional organization is that grouping people by specialty
assures consistent departmental expertise. This is especially true in large businesses with many
functional levels within a department — for example, a specific tech group that follows up on
tech issues not handled by the primary telephone tech support group.

Speed of Operation
Another advantage of this type of organizational specialization is operational speed. In general, a
senior tech will resolve a support issue faster than someone with less expertise. They're also
likely to train new employees more quickly.

Clarity in Operations
Segregating the workforce based on function clarifies organizational accountability and job
distribution. This reduces assignment duplication, which wastes time and effort, and makes it
simpler for management to send work to appropriate staff.

Workload production
It lightens the load on the senior executives. In the company, there is focused supervision, and
each function in charge is only responsible for its functional area.

Professional Development for Executives

A functional manager must be an expert in only one function. Better executive development is
facilitated as a result of this.

Expansions Scope
It provides more room for growth than a line organization. It does not have the problem of a few
line managers having limited competencies.

Better Control
The functional managers specialized knowledge enables improved control and oversight in the
enterprise.

Disadvantages of Functional Organizational Structures

Segregation
Teams become siloed when departments are inhabited by people who specialize in certain job
areas. Employees in separate teams do not have the chance to interact and share opinions, which
can be detrimental to the business' long-term success.
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Weakening of Common Bonds

A shared organizational purpose boosts employee morale and performance and is a key predictor
of organizational success. When each group of experts in a functional organization is largely
isolated, the common link that highlights a single overall organizational objective is nearly
always weaker than in an organization where diverse personnel work closely regularly.

Lack of Coordination
In an ideal functional organization, each functional groups activities would require no input from
other functional groups; nevertheless, this is not often the case. As communication becomes
more prevalent in businesses, isolated groups may underperform or even fail because they lack
an institutionally recognized method of expressing requirements and difficulties to other
functional groups that may have assisted.

Managers from other functional groups may not reply constructively or promptly in some cases
because "its not our problem." The period when collaboration would have been most successful
may have gone by the time the necessity for cooperation has been identified.

Territorial Conflicts
Another downside of a functional organization is the likelihood of territorial conflicts, which is
strongly tied to the failure of functional groups to cooperate. These arguments might be over
objectives, budgetary competitiveness, or any number of other difficulties that arise from a clash
of egos that occurs when each department has its separate functional organization or when there
is a lack of a strong sense of a single purpose.

Complexity
Because of its varied intricacies, the functioning of the functional organizational structure is
complicated to understand. Workers are taken aback by a slew of directives from various
functional heads.

Perspective Is Limited
A functional manager tends to set boundaries around himself and focuses primarily on their
department rather than the entire organization.

Decision-Making Delay
There is a widespread lack of coordination among the functional executives, which causes
decision-making to be delayed.

Companies should make decisions based on what is most urgently needed. Working with other
areas may result in unhealthy rivalry for the functional organization.

Divisional Structure
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The literal meaning of division is ‘an action performed to separate certain things into a number
of parts. We often see organizations divided into several groups on different grounds such as
regional, product or service. Any organization that divides its employees and other resources into
different groups based on regional and product differences, such that each group is responsible
and answerable for its own actions, has a divisional structure.

For example, the electronics department of Samsung is completely responsible for its own
actions. The smartphones department is responsible for its own actions. Moreover, a firm’s city
division might be completely independent of its other city’s division. Each division would have
its own advertising, sales, production, clerical, accounting, and development staff. The divisional
structure tends to ease the tasks of each level of management. It becomes easier for them to
evaluate staff and divisional performances and base their compensations on their success rate.

Advantages of Divisional Structure

Accountability

The divisional organizational structure allows each division of a firm to be accounted for in
isolation. It can easily be seen which department is successful in making profits while which are
bearing losses. Loss bearing divisions can be shut down completely while more investments can
be made in profit earning divisions.

Team working

The divisional organizational structure allows people in a single division to interact with each
other. When all of them are working towards a single goal, the success of their division, the
motivation is higher than ever.

Responsiveness to external changes

When in a divisional organizational structure, a division focuses just on its own product, service
or region. This helps them focus better on external factors that can affect their operations.
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Organizational culture

Organizational culture is the values and the practices that persist in an organization. The
divisional structure allows this type of culture to persist in a division. The organizational culture
can help people interact better with each other. It also helps create bonds between them. A better
understanding of each other helps in achieving the pre-set goals and targets, no matter how
difficult they are.

Leadership

In the divisional structure, each division has its own leader. The leader sets goals along with
his/her employees and works alongside them to achieve those goals. The direct control from the
top leadership of the firm is no longer a necessity. The upper leadership can indulge in strategic
decisions. Divisional leaders also become experts in their areas of work and work very
efficiently.

Disadvantages of divisional structure

Divisional structure is not a possibility in small organizations.

The organization may produce a variety of goods and services, and they might be operating in
several regions, but they still do not have the resources to run so many different divisions and
have the employees of same level in each division. This also causes duplication of work.
Competition: healthy or not?
Competition is good until it becomes cruel. Healthy competition among divisions is good and
bears good fruit for the entire organization, but when the competition becomes so severe that
division heads start holding grudges against each other, it can be extremely harmful for the
organization as a whole.

Related products

Organizations producing products that are relation with each other might find it difficult to
integrate divisions producing those complementary (related) products. For example, a smart
phone manufacturer that also manufactures accessories for smartphones might find it difficult for
their mobile phones and accessories divisions to stay on the same ground and integrate on their
future prospects. As a result, organizations may bear heavy losses if the products in relation to
each other are not effectively syncing.
Lack of communication amongst divisions
When divisions would not communicate amongst each other, they would not know each other’s
objectives and goals. This lack of knowledge might hamper the organization in the form of extra
taxes, fines, lack of finance available because a division might have spent extra on CSR
(corporate social responsibility) and so on.
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Economies of scale are the cost savings when an organization produces goods or services in a
large quantity. Divisional structure prevents organizations from getting the most out of
economies of scale. As a single division does not produce enough to take great benefits out of the
economies of scale.

Conglomerate Structure

Conglomerate Structure: This structure is an association of several distinct businesses. In a

conglomerate structure, a portion of stake of small firms is owned and controlled by one single
company. These small firms operate on an individual basis. All the subsidiary businesses of
conglomerates work separately from other business divisions. However, the management of
subsidiaries constantly report their activities to the top management authorities of the
conglomerates.

In a conglomerate organisational structure, all the available resources of an organisation are

diverted from that business division, which is entitled to get the investment to the other divisions
which are not capable to utilise those resources efficiently. As a result, the consistency and
efficiency of an organisation is reduced.

Other risk factors which weaken the clarity in an organisation are organisational demands and
accounting.
Usually, organisations pay excessively for acquiring other businesses and also have other
expenses for which they need to sell-off small portions of the organisation.

Structure in which each Business is Placed in a Self-contained Division and there is no Contact
between Divisions
Here, the headquarters of an organisation only needs to have a small staff since there is no need
to coordinate activities various business divisions. The flow of communication in the
organisation is from top to bottom and usually takes place on issues associated with bureaucratic
costs, i.e., the decisions related to the level of financial expenses which is essential to seek the
opportunities for new value creation. For example, Hanson Trust, a conglomerate had a staff of
120 personnel with whom it managed 50 different companies. It basically functioned upon the
rules that regulated bureaucratic costs. The trust had a rule had a specific amount can only be
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approved by a corporate executive. Other than this, Hanson Trust did not make an effort to
interfere in the operations of other business divisions.

2. Advanced organization structure

matrix structure

A matrix structure is an organizational structure that combines employees from two or more
different functional disciplines without removing them from their actual positions. It is a
complex and unique organizational structure that combines two organizational structures to solve
organizational problems or achieve specific objectives.

Matrix organization is formed with people having different skills and expertise from different
departments. Usually, a matrix organization is formed by combining a project management
structure and a functional structure.

Characteristics of Matrix Organizational Structure

The following are main features of matrix organization mentioned below:

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Hybrid Structure

It is a hybrid organizational structure as it combines two or more organizational structures. There

is a combination of functional organization the project organization. Thus, in a matrix
organization, there are pros and cons of both functional and project structures.

Complex Structure

One of the notable characteristics of the matrix organization is that it is complex in nature. It
requires more time to understand how it works and experts are required to successfully
implement this organizational structure.

Functional Manager

In a matrix organization, the functional manager works on the technical aspect of the project. He
is responsible for making work-related decisions, allocating tasks to subordinates, managing the
project’s operational components, and ensuring on-time completion.

Project Manager

A project manager has administrative authority on a project. He decides the work and
responsibilities among members, schedules project works, and assesses the performance. The
project manager holds the right to use financial and physical resources as per needs and
situations.

No Unity of Command

Unity of command ensures effective reporting practice in the organization where one employee
receives a command from only one boss and reports to only him at a time. But in a matrix
organization, every employee receives commands from two managers, namely project and
functional managers at a time.

Specialization

There is a specialization within this organizational structure. While the functional manager
focuses on the technical parts of the project, the project manager focuses on its administrative
components.

SuitabilityMatrix organization is a suitable option for the organization having to manage

different projects.

The following are the notable pros and cons of a matrix organization. They are:
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Advantages:

 Benefits of Specialization – The matrix organization facilitates the benefits of

interdisciplinary specialization. Where functional managers have to only focus on
technical aspects and project managers have to on administrative aspects of the
project.
 Promotes Teamwork – In the course of the project completion, the functional
and project managers interact with each other and develop mutual relations
between them. Often they coordinate with each other to achieve common
objectives.
 Dynamic Structure – The matrix organization is adaptive to changing business
settings. It facilitates quick decision-making.
 Optimum Use of Resources – In a matrix system, numerous projects are handled
simultaneously. As a result, it is possible to utilize additional resources, including
labor in a much more effective way.
 Free Time to the Top Management – The matrix structure makes it easier to
give project managers authority. This gives top-level management enough time to
develop strategic plans and policies as opposed to being involved in operational
tasks.
 Develops Employee Skills – It also helps employees to develop new skills. This
means employees from one background should perform the different functions of
other areas as well.
Disadvantages:

 Complex Structure – The matrix organization is complex in nature. It is a

complex and difficult type of organizational structure.
 No Unity of Command – Because of the lack of unity of command in the matrix
organization an individual employee has to work under more than one boss at a
time. This creates reporting problems and inefficient work completion.
 Difficult to Balance – High interpersonal engagement and interpersonal skills are
required in matrix organizations. Both functional and project specialists must be
involved. Additionally, maintaining balance among these authorities is crucial for
ensuring consistency in organizational performance.
 Overload on Team Members – Since team members frequently have project
workloads in addition to their regular functional responsibilities, the matrix
organizational structure can occasionally result in work overload for team
members. Due to time constraints, employees may become burnt out, overlook or
fail to complete duties, or their job quality may degrade.

Team-Based Organization Structure

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This particular type of system veers away from the more traditional, top-down hierarchy
commonly seen in businesses. It revolves around the concept of grouping employees into teams
or groups, typically around projects or products, each with a specific purpose and goal.

In a team-based organizational structure, teams are usually cross-functional, pooling together

employees with varying skills and expertise to address all aspects of the project. This encourages
a holistic approach to problem-solving where different perspectives, knowledge areas, and skill
sets unite to drive growth and innovation.

More than just an operational blueprint, this structure signifies a significant shift in company
culture. It values every member's contribution regardless of rank or title. In the process, it
champions diversity and fosters an inclusive work environment that encourages everyone to
participate in decision-making processes. As such, employees in these structures often report
higher job satisfaction and commitment.

The formation of teams can be permanent, temporary, or even dynamic in nature. Permanent
teams are ongoing and may revolve around specific business functions or products. Temporary
teams, on the other hand, exist for a limited time period, primarily focusing on accomplishing
specific projects or tasks. Dynamic teams consist of members who fluidly move in and out based
on the expertise needed at any given time.

Advantages of Team-Based Organizational Structures

 Improved Communication: Team-based structures naturally promote robust

communication by encouraging team members to work closely together. In this type of
organizational structure, regular team meetings and open dialogues become the norm,
paving the way for clear, concise, and effective communication.
 Increased Flexibility: Unlike rigid hierarchical structures, team-based ones offer much-
needed flexibility. These structures have an inherent ability to adapt quickly to changing
market conditions or business dynamics, due to the distributed authority and the lack of
bureaucratic red tape. Furthermore, as teams are usually built around projects or products
rather than rigid department lines, it's easier to scale up or down, restructure, or even
pivot entirely in response to business needs.
 Higher Productivity: By grouping diverse skills and perspectives together, team-based
structures often witness a boost in productivity levels. The collaboration fosters an
environment where tasks are divided according to each member's strengths, thereby
maximizing efficiency.
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 Enhanced Innovation: The essence of innovation lies in combining different

perspectives, experiences, and skills – which is exactly what team-based structures do.
By bringing together cross-functional individuals, these structures cultivate a rich
breeding ground for innovative ideas and fresh thinking.

Disadvantages of Team-Based Organizational Structures

 Conflict: Group dynamics can be complex and unpredictable. Differences in

opinions, working styles, or personal values can lead to disagreements or conflicts
within the team.
 Unequal Work Distribution: While the aim of team-based structures is to divide
tasks based on individual strengths, there can be instances where workload
distribution becomes unbalanced. Some team members may end up shouldering more
responsibility than others, leading to feelings of resentment and decreased morale.
 Resistance to Change: Change is often met with resistance, and transitioning from a
traditional hierarchical structure to a team-based one is no exception. Employees
accustomed to clear-cut job roles and well-defined hierarchies might find the shift
challenging.

Network Organization Structure

Many experts call this a virtual corporation. The central organization is connected to outside
firms via the internet. The outside firm can be a vendor, client, or associate. This structure helps
businesses achieve corporate growth and greater profit. The organization keeps its core business
while adjunct processes are outsourced in a network structure.
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In a network structure, more than one organizations combine to produce a good or provide a
service. These organizations might form a partnership, or one might hire others to work for them
on different functions. A famous example of a firm following a network structure is H&M, the
famous clothing manufacturer. H&M outsources much of its production and processing in
different countries including Bangladesh, Pakistan, China, Denmark, France Germany, India,
Indonesia, Italy and more.

What is a boundaryless organization structure

A boundaryless organization is an organization that actively removes boundaries to innovation,

meaning it has less hierarchy and functional separation and is more integrated. This allows for a

free flow of information, ideas, and innovations.

A boundaryless organization has four dimensions. Reducing boundaries for each dimension is

one of the key characteristics of a boundaryless organization.

 Vertical. This is the traditional, hierarchical structure. Reducing management layers

allows ideas to travel freely through the organization, and new initiatives can be

implemented without managers stifling potential innovation. The aim here is to create a

“healthy hierarchy”.

 Horizontal. This is the functional separation, including departments and other silos. By

removing horizontal boundaries, ideas can easily be shared and implemented cross-

functionally.

 External. This is separation within the value chain. By working closely with customers

and suppliers, implementing innovations will be more effective.

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 Geographical. This refers to the separation between countries or geographies and is a

specific form of horizontal separation. By integrating different geographies, innovations

will spread more easily and can be implemented faster.

Characteristics of a boundaryless organization

Boundaryless organizations remove obstacles to innovation and promote the generation and

implementation of new ideas. The goal is to permeate boundaries so that ideas can travel through

the organization with little hindrance.

Boundaryless organizations have more agility, flexibility, and a higher degree of integration.

This means that the organization can better marshall resources into new products and services.

The result is more innovation potential.

What are the advantages of boundaryless organizations?

Advantages of a boundaryless organization for the employee include:

 increased autonomy

 increased engagement

 and higher job satisfaction

Advantages for the organization are increased performance, agility, flexibility, and innovation

potential.
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What are the disadvantages of boundaryless organizations?

The main disadvantage of a boundaryless organization is the difficulty of implementing it in

certain industries. Some industries, like the biochemical industry, are highly regulated and

require standardized processes which don’t always allow for highly permeated boundaries.

Additionally, a boundaryless organization may not work for all employees. Some employees

prefer structure over freedom, and operating in an environment with fewer boundaries may not

be easy for them.

Cellular Organizational Structre

A Cellular Organizational Structure is a model of organizational design characterized by

the division of an organization into smaller, self-contained units or cells. Each cell operates
autonomously and is responsible for specific tasks, functions, or projects. This structure is
designed to promote agility, decentralization, and innovation within an organization.
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The Cellular Organizational Structure is defined by the following key features:

 Decentralization: In a cellular structure, decision-making authority is distributed

among the individual cells or units. Each cell has a degree of autonomy and can make
decisions related to its specific responsibilities.
 Specialization: Cells are often specialized in their functions or tasks, allowing them to
focus on specific areas of expertise. This specialization enhances efficiency and
effectiveness.
 Cross-Functional Collaboration: While cells operate autonomously, they are also
encouraged to collaborate with other cells when necessary. This cross-functional
collaboration promotes innovation and problem-solving.
 Scalability: Cellular structures can be easily scaled up or down by adding or removing
cells as needed. This scalability makes them adaptable to changing organizational needs.
 Clear Objectives: Each cell typically has well-defined objectives and goals, aligning its
activities with the overall mission of the organization.
Principles and Practices of Cellular Organizational Structure

Principles and Practices of Cellular Organizational Structure

1. Autonomy: Cells have a high degree of autonomy and decision-making authority

within their areas of responsibility.
2. Clear Objectives: Each cell has well-defined objectives and goals that align with the
organization’s mission.
3. Cross-Functional Collaboration Cells are encouraged to collaborate with other cells when
their responsibilities overlap or require cross-functional expertise.
4. Transparency and Communication: Transparent communication between cells and with
leadership is essential to ensure alignment and coordination.

5. Scalability: The structure is designed to be scalable, allowing for the addition or removal
of cells as needed.

6. Feedback and Learning: Continuous feedback and a culture of learning help cells adapt
and improve over time.

7. Accountability: Cells are held accountable for their performance and outcomes.

Benefits of Cellular Organizational Structure

Cellular Organizational Structures offer numerous benefits to organizations and their employees:

1. Agility and Flexibility:

 Cellular structures enable organizations to adapt quickly to changing circumstances

and market conditions.
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2. Innovation:

 Smaller, autonomous cells are more likely to innovate and explore new approaches.
3. Efficiency:

Specialized cells can operate with high efficiency, focusing on their specific tasks.
4. Empowerment:

 Employees within cells often have a greater sense of ownership and empowerment.
5. Adaptability:

 Scalability allows organizations to adjust their size and structure to match their current
needs.
6. Risk Mitigation:

 Distributed decision-making can help organizations mitigate risks and prevent single
points of failure.
7. Cross-Functional Collaboration:

 Collaboration between cells promotes knowledge sharing and innovation.

Challenges and Considerations

While Cellular Organizational Structures offer significant advantages, they also come with
challenges and considerations:

1. Coordination:

 Coordinating activities between cells can be challenging, requiring effective

communication and alignment.
2. Consistency:

 Maintaining consistency in processes and standards across cells may require careful
oversight.
3. Cultural Shift:

 Transitioning to a cellular structure may require a cultural shift and new ways of
working.
4. Resource Allocation:

1. Allocating resources to cells and ensuring equitable distribution can be complex

5.Leadership Development:

 Developing leaders who can effectively manage and lead cells is essential.
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6. Accountability

 Ensuring accountability within cells and across the organization is crucial.

Designing Organisational Structure

Organisational design can be defined as the design of the organisational structure. The term
structure is used here in the broadest sense. Organisational structure can be regarded as emerging
out of the order of functions and positions in the firm. Organisational structure and designing of
organisational processes, especially decision-making, are the two constituents of organisational
design.
Although the organisations are not similar to each other due to variation in their individual fields
and types, yet there are some fundamental aspects which have to be taken into account while
formulating or changing organisation structure.

It can be regarded as the procedure that facilitates the managers to select the dimensions of
organisation structure and culture. Organisational designing seeks to control the activities that
are needed to accomplish organisational goals. Organisational design helps to know how and
why different means are selected. The design and principles lying behind the operation of the
organisation result in organisation's behaviour. It is a job which calls for maintaining a balance
by the managers between the internal pressures coming out of chosen technology and the
external pressure from the organisational environment. Attaining a fine balance between the two,
helps in ensuring sustainability in the organisation.

Thus, organisational designs can be related with allotment and structuring of assets and
employees to attain particular goals or objectives.

Objectives of Organisational Design Structure

Following are the objectives of organisation design:

1) To Remain Adaptable to Organisational Changes: In order to remain competitive, it is

essential that the organisation should have the ability to respond to environmental changes
coming in the form of technology, competition, globalisation and changing needs of the
consumers as well as difficulties in embracing change due to internal environment of the
company. An example of the company which become competitive is Hewlett-Packard. In some
cases, embracing the change might affect the employers a well.

2) To Incorporate new Aspects: An organisation never remains static, it keeps on progressing,

evolving, responding to change and keep on adding new positions and departments, in order to
address the strategic needs and to deal with the factors in external environment. While doing so,
the organisations are expected to allow smooth transition, i.e., incorporating the new aspects in
the structure of the organisation, without any obstruction. This may call for adding or
restructuring of the departments of the organisation. In such cases there arises the strategic needs
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for providing high quality customer service, which calls for breaking down the functional
departments into sub-departments, creation of teams and re-allotment of authority.

3) To Ensure Collaboration with the Components:

It is not sufficient to simply introduce a new department as it should be well integrated with all
the departments by the managers, in order to ensure departmental collaboration coordination. In
absence of this objective, the departments may fail to coordinate. In order to meet the customers'
needs and for the purpose of avoiding problems and conflicts, the departments has to collaborate
anyhow, which might be through teams, reporting relationship or taskforces.

4) To Promote Flexibility: Flexibility is another objective of the organisational design. What

designers want to establish in the organisation is flexibility in decision-making power, for the
purpose of giving response and redirection of energies and for the purpose of highlighting the
talents of the people, with respect to its system of authority, command chain and on the base of
departmentalisation. Flexibility in terms of decision-making power varies from that of the
objectives of giving response to change.

5)To Supply Required Information: Organization design makes it easy to collect the
information needed by the managers for decision- making.

Steps in designing organizational structure

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1) Determining the Objectives: The first and foremost step in the process is determining the
objectives to identify the reasons or purposes for the establishment of the organisation. It also
decides the nature of work undertaken by the organisation.

2) Division of Work: After determining the objectives, the next step is to divide the jobs into
smaller tasks. These jobs are assigned to different departments according to the functions. In a
typical organisation, the work is divided into few major departments such as production, finance,
sales, marketing, purchasing, human resources, etc.

3) Grouping of Activities: The subdivided similar tasks are grouped and assigned to a certain
department. Now, these departmental tasks are again subdivided into smaller activities. Various
principles are considered for dividing and subdividing the tasks into groups. Primary grouping is
performed on the basis of activities, such as sales, production, finance, etc. After that, the factors
which form the basis for secondary grouping are geographical areas, types of consumers,
processes undertaken, etc.

4) Assigning the Responsibility: At this stage, the sub-divided smaller jobs are assigned to
different employees in the department so that the tasks can be completed efficiently.

5) Delegation of Authority: In this stage, authority is delegated to the responsible employees.

Authority without responsibility can be risky or harmful. Similarly, responsibility without giving
the necessary authority can prove to be of no use. Thus, when responsibility is given,
correspondingly authority also needs to be given to enhance the work performance.

6) Coordination: The final stage is achieving coordination among various departments. It is an

essential function which integrates the entire organisation into a single entity. It is required to
ensure the coordination among various departments so that individual and overall performance
can be assessed and the common organisational goals can be achieved.

Designing strategy control system

Strategic control is a way to manage the execution of your strategic plan. As a management
process, it’s unique in that it’s built to handle unknowns and ambiguity as it tracks a strategy’s
implementation and subsequent results. It is primarily concerned with finding and helping you
adapt to internal or external factors that affect your strategy, whether they were initially included
in your strategic planning or not.

The various components of the strategic control process generate answers to these two questions:

1. Has the strategy been implemented as planned?

2. Based on the observed results, does the strategy need to be changed or adjusted?
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The Strategic Control Process

1. Determining What to Control: Prioritize evaluation of elements that relate directly with the

mission and vision of the organization and which can affect the organization’s goals.

2. Setting Standards: Past, present and future actions must be evaluated. Setting qualitative or
quantitative control standards help in determining how managers can evaluate progress and
measure goals.

3Measuring Performance: Measuring, addressing and reviewing performance on a monthly or

quarterly basis can help determine a strategy’s progress and ensure that standards are being met.

4.Comparing Performance: Performance comparison is done to determine if an organization is

falling short of the set benchmark and if these gaps between target and actuals are normal for that
industry.

5. Analyzing Deviations: If there are deviations, managers have to analyze performance

standards and determine why performance was below par.

6. Corrective Action: If a deviation is due to internal factors such as resource shortage, then
managers can act to sort them out. But if it’s caused by external factors that are beyond one’s
control, then incorrect actions can worsen the outcome.
Traditional control concepts have to be replaced by the strategic control process, as it recognizes
the unique needs of long-term strategies.

Matching structure and control to strategy

Introduction

The performance of a firm is greatly affected by the organisational structure and the controls.

Organisational performance tends to go down when its strategy does not match with the structure
and controls. A properly matched structure and strategy helps in achieving the organisational
goals. The progress towards the goals can be analysed with the help of control systems and
corrective actions can be made in the strategy and structure. There must be an internal
consistency i.e. a balance between the strategy, structure, and control systems of an organisation
in order to be successful.

There is a close relationship between the structure and control which acts like a chain which is
locked to itself.

Decision-making authority, procedures, controls are determined on the bases of the structure of
the firm. There must be a match between the organisational structure and its strategy. The main
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objective of the structure is to regulate the day-to-day operations of the firm, finding new
resources, distribute resources and identifying new competitive possibilities.

Structure and Control at the

Functional Level

Functional-level strategy of the company can help in achieving four distinctive competencies,
i.e., superior efficiency, quality, innovation, and customer. There are mainly two elements of
functional decisions - ne is selecting vertical differentiation level and the other is of monitoring
and evaluation the system. There is no significance of choice of horizontal differentiation as each
function is considered at the functional-level strategy. The factors like manufacturing, research
and development, and sales largely influence the coordination between structure and strategy.
These are discussed below:

1) Manufacturing: While forming the functional strategy the rain focus in manufacturing remains
on the implovement of quality, efficiency, responses to customers. A series of organisational
managers should be developed by the firm who must be able to learn from the experience-curve
effect for analysing the economic costs.

Companies are trying to rapidly reduce the experience-curve by building lean oranisational
structure and by exercising intensive control.

Firms are trying to control outputs and behaviour for incurring lowest possible costs and raising
efficiency. For example, recruitment and training procedures are used for standardising human
resources so that manpower skills of can be improved, costs can be reduced with the help of
standardized work processes or programmes and proper production of output can be ensured by
adopting quality control techniques.

Research and Development (R&D):

Developing a unique competence in innovation and developing technologies for producing

products which are capable of meeting the requirements of the customers are mainly associated
with the functional strategies for R&D division. Structure of R&D department and the control
system should support the coordination between scientists and engineers for producing the
products at minimum time for generating market sales.

Additionally, higher level of motivation should be given to the R&D department by the structure
and control system for exercising product and process innovation.

Sales: The flat organisational structure is also used by the sales department similar to the R&D
department. A flat organisational structure is used as the organisation does not depend on direct
supervision for monitoring and control the department activities. The sales persons perform
complex activities as most of the time is spent in field and thus monitoring is not so easy. The
main focus of sales function remains on the outputs and control behaviour. in order to motivate
the sales force, reward bonus system can be linked with control outputs.
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Detailed reports regarding files that describe interactions of salesmen with customers can be used
for controlling the behaviour and can also be used to standardise the sales folde behaviour.

Performance can be quite easily evaluated by the supervisors by implementing behaviour control
techniques.

Structure and Control at Business Level

Functional level can be seen as the initial point from where the competitive advantage can be
created with the help of organisational design. Structured and control should be linked at the
business level for successful implementation of the strategy. The key to effective strategic
implementation is linking the organisational anilities and skills with the oganisational structure.
One the three generic strategies strategy (cost leadership, differentiation, or focus) can be used
by the organisation at the business level.

A cost leadership strategy requires functional organisational structure and the integrated
mechanism is focused on manufacturing. Here the company tries to control the cost by
controlling the output on a large scale, while behavioural control is maintained with the help of
standardisation and budgeting. Organisational control is exercised through quality control
groups.

In case of differentiation strategy, a firm selects matrix or product-team organisational structure

for successful strategy implementation. The main focus of integration mechanism remains on the
marketing or R&D. It uses various control output (e.g., the goals of quality) with greater control
of behaviour and develops organisational culture through norms and values at a large scale

Structure for Business Strategies

1) Cost Leadership Strategy: Strong centralised authority for directing different actions
supported by strict controls for costs control is required in a cost leadership strategy. Employees
will be having lesser freedom and a strong leadership will be formed. In a staff function, there
will be a centralization of decision making authority so that the cost reduction can be obtained in
all functional areas.

2) Differentiation Business Strategy: The main focus of the firms which are implementing the
differentiation business strategy remains on producing such a product which the customer can
treat as different from others and they can pay higher price for that product.

A learning approach to organisation design will be the requirement of a differentiation strategy.

This strategy requires flexibility in the organisational structure. Decentralisation in decision
making is important in order to have a quick response to the rapid changesin external
environment.

Empowerment of the employees is important for finding out new ways to produce innovative and
differentiated products and services and a close connection can be established between markers
and customers.
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Structure and Control at Corporate Level

Organisational structure must be selected by the strategic managers at the corporate level and it
can be implemented for the various businesses so as to increase the overall efficiency. In most of
the cases multidivisional structure is selected as an organisational structure at the corporate level.
There will be the requirement of greater motivational organisational structure in case of larger
product portfolio in different business enterprises. The main reason for this is that the support of
the parent organisation will be required by each business division to operate efficiently.
Operations of these divisional should be evaluated and monitored by the central staff in offer to
ensure the accomplishment of overall corporate objectives. Once a multidivisional structure is
selected by the manager, then they should identify the nature of mechanism and control system
in order to ensure efficient functioning of the structure.

Structures for Corporate Strategies

Different organisation designs and structures are needed for fulfilling the requirements of
integration, diversification, internationalisation, cooperation, and retrenchment.

1) Structure for Concentration Strategy: In the Concentration strategy, the firm follows its
existing plans and no additional strategic plans are formulated and thus there is no requirement
of any change in the structure. The main focus will be on marketing in case of market penetration
while in case of R&D and other operations, the focus remains on product development strategy.

2) Structures for Integration Strategies: The commitment to the adjacent business remains in the
case of Horizontal integration. In order to adjust these adjacent businesses, some changes are to
be made in organisation design and structure. A geographical or product structure can be
developed apart from the existing structure for fulfilling the needs of the horizontal integration.
In case of vertical integration, either backward integration towards raw material or forward
integration towards the customer takes place. These requirements can be satisfied by adopting a
diversification strategy.

3) Structures for Diversification Strategies:

Multidivisional and BU structures will be implemented as per the requirements of related or

unrelated diversification. Retaining the connection among the functions and departments within
the firm is needed in case of related diversification. While in case of unrelated diversification
which follows multi-dimensional structure, these types of relations can be neglected for ensuring
the autonomy of department to looking for a new business line.

4) Structures for Internationalisation Strategies:

International, multi-domestic, global, and transnational are the four different types of
internationalisation strategies. Each of the strategies have different requirements for organisation
design and structure.
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i)While adopting international strategy the firm would require a hybrid structure as it generates
value by exporting products and services in foreign markets.

il) multi-domestic strategy mainly attempts to have a similarity in the products and services with
the marketing conditions where these have to be sold. The requirements of multi-domestic
strategy can be fulfilled by global geographic structure.

iii) In order to offer low-cost standardised products and services around the globe, a low-cost
approach is implemented by the firms with the help of global strategies.

Hence, such a strategy would require a global product structure.

iv) The most difficult strategy is the transnational strategy and it is the most challenging
internationalisation strategy which unites the local responsiveness and low-cost approaches and
can be dependent upon the global matrix structure.

5) Structures for Cooperative Strategies: Friendly mergers and acquisitions, joint ventures, and
strategic alliances all are a part of cooperative strategies. The suitable organisational design and
structure for the execution of cooperative strategies can be seen in the form of network
organisation structure within and along with the network of outside organsiations.

Implementing strategic change

Introduction

Any alteration occurring in the overall work environment is called change. Usually, people are
familiar with a fixed way of life and any kind of deviation or variation from it can be referred to
as change. An organisational change includes any change in the attitude, interest, and nature of
employees; environmental and technical changes associated to the organisation; and alterations
of rules and guidelines that affect the organisation.

Strategic change refers to the change in the vision, objectives, and mission of the organisation,
and also includes change in the strategy adopted for achievement of those objectives. It can also
be described as the difference in the state, form, or quality in the alignment of an organisation
with the external environment.

According to Hofer and Schendel, strategic change can be defined as "changes in the content of a
firm's defined strategy as by its scope, resource deployments, competitive advantages, and
synergy".
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Dimensions of Strategic Change

The following three strategic change dimensions:

1) Content (Goals, Objectives, and Purpose): The question of "what" is aimed in the content
dimension of change.

2) Process (Implementation): The question of "how" is aimed in the process dimension of

change.

3) Context (Internal and External Environment): The question of "where" is aimed in the context
dimension of change.

Strategic change and its types

Strategic change is the movement of a company away from its present state toward some desired
future state to increase its competitive advantage. It is an approach to congruence among the
organization’s strategy structure, human resource systems, and the larger environment.

3 Types of Strategic Changes

Restructuring.

Reengineering.

Innovation.

1. Restructuring

Managers often choose ‘restructuring’ of the organization to implement strategic change. This
they do to improve performance.
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Researches imply that environment is an- important determinant of organization structure which
is also subject to the ‘by-plays of interpersonal power and politics.’ In practice, the
appropriateness of organizational structure is determined by situations.

2. Re-engineering

In reengineering, the managers focus on the ‘business processes rather than on ‘business
functions.’ What is done in reengineering is that managers radically redesign the business
processes.

The objective is to reduce costs, improve quality, bring superior service, and achieve dramatic
improvements in speed (of doing things throughout the organization).

A business process, such as product designing or inventory control, requires cross-functional

coordination for success.

For example, you can think of a firm that produces cards – birthday cards, marriage cards,
greetings cards, and valentines’ cards.

The company originally established the card-design process so that all workers (artists, writers,
and editors) worked in different functions to produce all types of cards, as mentioned above.
After reengineering, the workers are now working in cross-functional teams.

Each of them now works on a specific type of card. As a result, the firm can now introduce new
cards in the market within a few weeks, compared with a few months before reengineering.

3. Innovation

innovation is primarily an improvement over existing products or services.

Thus, innovation requires extensive research and development efforts. Innovation implies that
organizations use their existing skills, competencies, and resources to create new goods, services,
or technology. This is what organizations do to better respond to the customers’ needs.

Innovation may be wonderful in achieving spectacular success, but it may lead to disaster if the
research and development efforts fail to bring desired results. Although innovation involves high
risks, it has the greatest prospects for long-term success.

Steps of Strategic Change Process

1. Determine the need for change

When pursuing strategic change, an organization must identify what must change. In some
situations, the necessary change may seem apparent to leaders immediately. Let's say that a
competitor releases a new product that outsells your organization's offerings. Your leaders may
realize they should pursue strategic change through innovation to remain competitive. Similarly,
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if the business encounters a crisis and needs to cut costs, then restructuring or downsizing may
represent the most appropriate option.
2. Perform a stakeholder analysis
Organizations consist of stakeholders with various interests and roles. While planning strategic
change, you should analyze how it will impact these different groups. You can begin your
analysis by identifying the internal and external stakeholders affected by the change, then
prioritizing them. These priorities will vary but may consider the stakeholders' influence, role or
responsibilities. Setting these priorities can help you assess how much to involve and
communicate with different stakeholders.
3. Build support for change
Now that you understand your stakeholders, you can begin building support for the strategic
change you want to make. There are several methods you may use to accomplish this goal, which
involves educating and motivating others. One way is to create a sense of urgency. You can
implement this method by identifying threats facing the organization and demonstrating the
importance of these changes to combat them. When possible, try to describe the risks associated
with not making changes.
4. Create a change network
Establishing a change management team or network can help make the implementation
smoother. The team should include individuals who have the power and skills required to
introduce the change. This team makes up part of a change network, often serving as a liaison
between various stakeholders and ensuring that everyone understands the change and its goals.
5. Prepare a change management plan
Now that you have identified the necessary change and the individuals to guide its
implementation, you can develop a plan and assign activities. A change management plan
provides direction for your team during this process
6. Identify and manage obstacles
The implementation process may not always go exactly as planned. Again, developing
contingency plans can prepare your team to navigate potential challenges. When you encounter
additional obstacles or issues, you need to stay flexible and adjust your plan as needed.
7. Evaluate the change
Once your team implements the change, monitor its impacts to determine its effectiveness. You
can compare pre- and post-change processes or situations to assess the differences. Depending on
the change, you may have data to provide information regarding performance or financial results.
If you see improvement, it may prove an effective change.
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Politics

According to Cropanzano et al., "Organisational politics can be defined as strategically designed

behaviours that maximise self-interest"

According to Mayes and Allen, "Organisational politics is the management of influence to obtain
ends not sanctioned by the organisation or to obtain sanctioned ends through non-sanctioned
means".

According to Tushman, "Politics refers to thestructure and process of the use of authority and
power to affect definition of goals, direction and the other major parameters of the organisation.
Decisions are not made in a rational way but rather through compromise, accommodation and
bargaining"

Nature of Politics

Following points describe the nature of politics in the organisation:

1) Use of Power: Organisational power in the organisation is utilised in both direct and indirect
manner. People having the authoritative position in the organisation practice direct power
whereas people having close relation with the authoritative people practice indirect power in the
organisation.

2) Self-Serving: Although self-servicing is not favoured by the organisational policies or norms,

it is the salient feature of the organizational In this, different benefits are offered to others just for
the betterment of the self. Even the organisational resources are consumed for the personal
benefit.

3) External to Job Expectations: Politics exhibited by the employees or authorities is essentially

external to the job descriptions. None of the organisations desire such kind of deeds. People
exhibit such behaviours on their own. These are not included in the organisational rules and
norms.

4) Impacts Behaviour of Others: As different tasks in an organisation are inter-connected, people

appointed for such tasks also come under the contact of each other. Sometimes the objectives of
a department are dependent on the activities of the people of other department, in such cases,
people use politics to speed-up their actions. They affect the behavior and actions of the others
through using different political tactics.

5) Irrational Decisions: Politics encompasses several irrational decisions which become harmful
for the growth of the organisation. People take decisions based on their own perception and
interest so as to improve their position and power in the organization.
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Power

Generally, power is the ability to cause or prevent an action, make things happen; the discretion
to act or not act. Ability conferred on a person by law to determine and alter (by his or her own
will) the rights, duties, liabilities, and other legal relations of himself or others.

The ability to do something or act in a particular way, especially as a faculty or quality. The
capacity or ability to direct or influence the behavior of others or the course of events. “Power
refers to a capacity that A has to influence the behavior of B so that B acts following A’s
wishes.”

According to Kingsley Davis, “Power is the determination of the behavior of others following
one’s own end.”

According to Sheriff, “Power denotes the relative Weights of behavior by a member in a group
structure.
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Formal Power

Formal power is based on an individual’s position in an organization. Formal power can come
from the ability to coerce or reward formal authority or from control information.

The formal power is based on rank—for example, the fire chief or the captain.

Legitimate Power

In formal groups and organizations, one’s structural position is probably the most frequent access
to one or more of the power bases. This is called legitimate power.

Expert Power

Expert power is influence wielded due to expertise, special skill, or knowledge. Expert power is
derived from possessing knowledge or expertise in a particular area.

Organizations highly value such people for their problem-solving skills.

Referent Power

Referent power is based on identification with a person who has desirable resources or personal
traits.

If I like, respect, and admire you, you can exercise power over me because I want to please you.
It is derived from the interpersonal relationships that a person cultivates with other people in the
organization.

Coercive Power

Coercive power is derived from a person’s ability to influence others via threats, punishments, or
sanctions.

Reward Power

The opposite of coercive power is reward power. People comply with the wishes or directives of
another because doing so produces positive benefits; therefore, one who can distribute rewards
that others view as valuable will have power over those others.

Informational Power
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Informational power is where a person possesses needed or wanted information. It comes from
access to and controls over information. This is a short-term power that doesn’t necessarily
influence or build credibility.

Connection Power

It is where a person attains influence by gaining favor or simply acquaintance with a powerful
person.

This power is all about networking. If I have a connection with someone I want to get to, that
will give me power.

Political Power

This power comes from the support of a group. It arises from a leader’s ability to work with
people and social systems to gain their allegiance and support

Charismatic Power

Charismatic power is an extension of referent power stemming from an individual’s personality

and interpersonal style.

Charismatic leaders get others to follow them because they can articulate an attractive vision,
take personal risks, demonstrate environmental and follower sensitivity, and are willing to
engage in behavior that most others consider unconventional.

Conflict

Conflict refers to demonstration of anger, revolt, negative behaviour,violence,enmity

andmisconception.It is a result of differences inopinions of people or groups working within an
organisation. Reasons can be numerous, ranging from allocation of resources to division of work,
to overall functioning of the organisation. Diversity within the organisation in terms of goals,
objectives, philosophies and viewpoints results in conflict.Conflicts can arise within an
organisation or between two organisations or between organisation and their external
environments. It crops up when one party gets the notion that the other party might adversely
affect its wellbeing.

According to Joe Kelly, Conflict is defined as opposition or dispute between persons, groups or
ideas",

According to Follett, "Conflict is the appearance of difference, difference of opinions, of

interests"
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According to Peterson, "Conflict is defined as an interpersonal process that occurs whenever

actions of one person interfere with the actions of another"

According to Stephen Robbins, "Conflict is a process in which efforts are purposefully made by
a person, unit, or group to block others that results into frustration either in attaining goals or
furthering his/her interests".

Types of conflict

1. Individual Level Conflict

A person joins any organization basically to satisfy his varying needs. He faces a conflict within
himself when he perceives that organization is not satisfying his needs in accordance with his
perceived standards. The analysis of conflict may start at the individual level itself. Since an
organization is composed of various individuals, many conflicts develop at individual level. The
individual level conflicts may be analyzed in two ways: intra-individual and inter-individual or
interpersonal.

a) Intra-individual Conflicts

Intra-individual conflicts arise within a person and are of psychological nature. Many times, the
individual remain conflict-hidden, but he fails to perceive it. However, they may be latent or
overt. Such conflicts are generally related to the goals a person wants to achieve or roles in the
manner he wants to achieve. Hence, intra-individual conflicts are of two types:
i) Goal Conflict

Goal conflict occurs when two or more motives block each other. In other words, an individual
in the organization faces a goal conflict when he discovers many alternatives of goals which he
wants to achieve, being equally attractive, but actually exclusive. He is caught in his own web
and faces a serious intra-personal conflict.
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ii) Role Conflict

An individual performs a number of roles. Role conflict arises when a person has alternative
ways of achieving organizational goals and he is asked a behavior which may ensure the
achievement of goals. A superior is respected to get things done but he is internally in tension
whether to apply autocratic, participative or free night technique of direction.

b) Inter-individual Conflicts

Inter-personal conflicts arise between two individual having competition for achieving scarce
things, such as status, power, position, promotion or resources or they may pick up conflict due
to their divergent opinions, attitudes or values. Disagreement among individuals in an
organization may arise for variety of reasons such as: personal differences, value of interest
differences, perceptual differences, power and position differences, resource constraints.
2. Group Level Conflicts

A group constitutes two or more persons who interact in such a way that each person influences
and is influenced by others. Group level conflicts refer to the disagreement, competition or clash
between two groups of the organization, say between supervisory staff and the workers or
between management and trade unions. Group level conflicts further can be classified as inter-
group conflicts and intra-group conflicts.
a) Inter-group Conflicts

Inter-group conflict arises out of the interaction of various groups. There are many factors in the
organization which determine the inter-group relationship. Inter-group conflicts over authority,
jurisdiction and resources are exceedingly common. Every group is in at least partial conflict
with every other group it interacts with. Most of the departments in the organization compete for
the allocation of scarce resources and power. They differ in goals, act, work activities, power and
prestige. The seeds of inter-group conflict are shown in these differences. Research findings
generally confirm the following sources of inter-group conflicts:
 Incompatible goals
 Task interdependence
 Resource allocation
 Competitive incentive and reward system
 Line and staff conflicts
 Differences in value and perception
 Heterogeneity of members
 Communication distortion
b) Intra-group Conflict

Intra-group is the group consisting of a number of persons whose interactions at a given time
generate a system of values, norms and sanctions appropriate to the nature of the task on which
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they are working, which has created a set of well defined role and status relations which are
interdependent. Intra-group conflict may arise in three situations:
 When group faces a novel problem of task.
 Where new values are imported from the social environment into the group.
 Where a person's extra-group role comes into conflict with his intra-group role.

3. Organizations Level Conflict

Conflict at individual level and at group level takes place within the organizational setting.
Conflict at organization level may be intra-organizational and inter-organizational. Individuals in
the organizations have many conflicting organizational cross pressures operating on them. The
following examples indicate the source of potential conflict:
types of organization level conflicts are as follows:

a) Intra-organizations Conflict

The reasons of conflicts in an organization are many but mainly three kinds of internal strains
can be identified:

i. The Horizontal Strain: The competition between different functional sub-systems.

ii. Vertical Strain: The competition between various level in three hierarchy for power,
privilege or reward and

iii. Line and Staff Conflict: Line and staff conflict further can be classified as horizontal
conflict and vertical conflict.

b) Inter-organizations Conflict

The basis of inter-organizations conflicts are essentially the same as three basis of inter-group
conflict. Most commonly cited reasons for inter-organizations conflicts like incompatible
objectives, over status, prestige and money are present in inter-organizations conflicts also. In
other words, inter-organizations conflict is more extensive, more diffusing than the conflicts
amongst persons or groups.

STRATEGIC EVALUATON AND CONTROL

MEANING: Strategic evaluation and control is the process of determining the effectiveness of a
given strategy in achieving the organizational objectives and taking corrective actions whenever
required. Control can be exercised through formulation of contingency strategies and a crisis
management team.
Nature / Framework of Strategic Evaluation
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Effective evaluation systems tend to have certain qualities in common, which are as follows:

1) Suitable :
The strategic evaluation needs to be tailored to the needs of the organisation.
Strategic Evaluation Example, the evaluation process needs to be different for the marketing
and the HR functions in the organisation.

2) Simple :
The strategic evaluation process needs to be simple to understand and follow. It should be easy
to execute. If the strategic evaluation process is complex then people will not be able to
understand the process. This will cause frustration and
conflict in the organisation and people will make errors in the implementation of the process. On
the other hand, when the process is well-defined and understood by all the employees, the level
of motivation in the organisation is very high and employees are able to execute the evaluation
system.

3) Selective :
The evaluation process cannot be all encompassing. It needs to be selective in its approach. It
needs to select the key and critical factors in the organisation which are absolutely essential for
the survival of the organisation. By doing so, the time of the managers is optimally spent and
they can focus on the core activities of the organisation.

4) Flexible :
An organisation needs to constantly examine its strategies and plans in the face of changes in the
external activities. These changes can be political, technological, competition and other factors.
Therefore the strategic evaluation process cannot make the mistake of being rigid. It needs to
change according to the demands of the environment and and take advantage of opportunities
that are on offer.

5) Forward-Looking :
The strategic evaluation process should take the future into account and have the capability of
predicting events before they become problematic for the organisation. It is only then that they
can be helpful to the organisation. It needs to be able to point out deviations to the managers so
that they can take the necessary corrective action.

6) Reasonable :
According to Robbins, strategic evaluation processes should be reasonable. They need to be fair
to the employees. If they set unrealistic goals then they will end up de-motivating employees. On
the other hand, they should also not be too easy and give the employees no challenge. The
strategic evaluation process therefore needs to be reasonable. They should involve the right
amount of stretch so that employees are challenged and at the same time should not be daunting.

7) Objective:
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There can be no room for vagueness in the strategic evaluation control systems. They should be
seen as being objective by the employees. It should apply equally to all. This will help in getting
employees to accept the evaluation parameters. On the other hand, if the standards are vague and
arbitrary then it will cause mistrust in the eyes of the employees and they will not have faith in
the evaluation and control process.

8) Responsibility for Failures:

The strategic evaluation process must fix responsibility for failures. It is not enough, just to know
about deviation in the organisation but also the reasons for its occurrence. The strategic control
system needs to point out the remedial action that the organisation needs to take to overtake the
weaknesses that have been identified.

9) Acceptable:
It is very important that the strategic evaluation and control system has the cooperation and the
trust of the employees. It must be accepted by all. This is only possible if the standards are well-
defined, objective, free from bias and reasonable.

Measures for Strategic Evaluation

The most critical aspect of strategic evaluation process is to measure the output of the
organisation in terms of the set goals. These comprise both quantitative as well as qualitative
criteria. The strategists need to know the various methods of exercising control so that they are
able to choose the most suitable set of criteria for the organisation. These techniques of control
are a mix of traditional techniques as well as techniques (Strategy evaluation tools) which have
been developed recently. These can be divided into two types :

1) Quantitative Factors :
These contain the following criteria :

i) Return on Investment :
This measures the return as a percentage of the investment done. These can be used to compare
various products or businesses in the organisation. A major drawback of the ROI method is that
it relies very heavily on accounting data which are staggered, not accurate and do not help the
management in decision-making. A control based on the ROI method makes the organisation too
cautious and averse to risk-taking

ii) Return on Equity (ROE) :

ROE expresses the return as a percentage of the equity of the organisation. The ROE measures
the amount of profit generated from the equity investment of the shareholders.

iii) Profit Margin :

The profit margin as criteria evaluates the financial well being of the organisation. It is the ratio
of the profits generated to the sales of the organisation. It is the profit which gets generated for
each unit of sales revenue of the organisation. It can also be considered as a measure of
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efficiency as it examines the conversion of the revenue of the organisation to profits. Obviously
organisations which have a greater cost structure will have a lesser profitability margin for the
same sales revenue.
iv) Market Share :
It is the percentage of the industry's sales that is done by the company's products and services. It
is computed for a period and is the ratio of the total sales of the company and the total sales of
the industry. It gives an idea of the size of the company in the industry.

v) Debt-to-Equity :
The debt to equity measures the relative contribution of the creditors and the shareholders of the
company. It is computed by dividing the total debt of the company by the total equity.

vi) Earnings per Share :

It is the ratio of the total earnings of the company and the total number of outstanding shares.
The higher the EPS the greater is the profitability of the company.

2) Qualitative Factors :
Rumelt mentions the following qualitative factors which can be considered in strategic
evaluation:

i) Consistency :
The strategy that the organisation chooses has to be consistent with the goals and the policies of
the organisation. The role of strategy is to provide a guideline or a framework for the functioning
of the organisation.
ii) Consonance :
The strategy has to be flexible in nature and ready to adapt to changes which occur in the
external and internal environments of the organisation. Rumelt has developed a test of
consonance which measures the adaptability of the organization to internal and external
environment and also how the organization fares vis a vis other organizations in the industry.
iii) Advantage:
The strategy adopted by the company must be either a source of competitive advantage for the
company or maintain an existing one. Competitive strategy aims at creating competencies in the
organisation that are unique, stand the test of time and difficult to copy by competitors. Rumelt
mentions that strategy should result in the creation of competitive advantage from three sources -
superior skills, superior resources and a superior position.
iv) Feasibility:
The strategy should not lead to an over exertion in the resources of the organization or create
fresh problems for the organization. Remelt has given one more test of feasibility. This measures
the feasibility of the strategy.

There can be the following types of control:

• Operational control: It is aimed at allocation and use of organization resources through
evaluation of performance of organizational units, divisions, SBU;’s to assess their contribution
in achieving organizational objectives.
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• Strategic control: It takes 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.
The four basic type of strategic control are:
• Premise control: It identifies the key assumption and keeps track of any change in them to
assess its impact on strategy and implementation. The goal is to find if the assumptions are still
valid or not. It is generally handled by the corporate planning staff considering the environmental
and organizational factors.
• Implementation control: It includes evaluating plans, programs, projects to see if they guide the
organization to achieve predetermined organizational objectives or not. It consists of
identification and monitoring of strategic thrusts.
• Strategic surveillance: It aims at generalized control. It is designed to monitor a broad range of
events inside and outside the organization that are likely to threaten the course of the firm.
Organizational learning and knowledge management system capture the information for strategic
surveillance.
• Special alert control: It is a rapid response or immediate reassessment of strategy in the light of
sudden and unexpected events. It can be contingency strategies and a crisis management team.

STEP 1. Setting standards of performance: It must focus on question like: • What standards
should be set? • How should the standards be set? • In what terms should these standards be
expressed? PROCESS Taking corrective actions Setting standards of performance Analyzing
variances Measurement of performance the firm must identify the areas of operational efficiency
in terms of people, process, productivity and pace. Standards set must be related to key
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management tasks. The special requirement for performance of these tasks must be studied. It
can be expresses in terms of performance indicators.
STEP 2. Measurement of performance: Standards of performance act as a benchmark in
evaluating the actual performance. Operationally it is done through accounting, reporting and
communication system. The key areas which must be kept in mind are difficulty in measurement,
timing of measurement (critical points) and periodicity in measurement (task schedule).
STEP 3. Analyzing variances: The two main tasks are noting deviations and finding the cause
of deviations. • When actual performance is equal to budgeted performance tolerance limit must
be set. • When actual performance is greater than budgeted performance one must check the
validity of standard and efficiency of management. • When actual performance is less than
budgeted performance, we must pinpoint the areas where performance is low and take corrective
action.
STEP 4. Taking corrective actions: It consists of the following: • Checking of performance: It
includes in depth analysis and diagnosis of the factors that might be responsible for bad
performance. • Checking of standards: It results in lowering or elevation of standards according
to the conditions. • Reformulate strategies, plans, objectives: Giving a fresh start to the strategic
management process.
IMPORTANCE OF STRATRGIC EVALUATION AND CONTROL:
• There is a need for feedback, appraisal and reward
• To check on the validity of strategic choice
• Congruence between decisions and intended strategy
• Creating inputs for new strategic planning.
Importance of Strategic Evaluation

Strategic evaluation helps the organisation to find the flaws in the current implementation and to
make suitable changes where necessary. Following points determine the importance of strategic
evaluation :

1) Performance Measurement :
The strategic evaluation process provides the organisation a set of both qualitative and quantitative
criteria against which the performance of both individuals as well as the organisation can be
measured. The qualitative criteria contain soft factors like skills, competencies and flexibility
whereas the quantitative criteria contain more hard factors like the return on equity, ROI,
profitability, etc.

2) Helps in Analysis :
The basic premise of strategic evaluation is that the environment of the organisation is dynamic.
Some amount of variability between the performance and the standard is natural and expected.
Regular exercise of 'strategic evaluation helps the organisation to gauge the success of the adopted
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strategy and to incorporate any changes where required. A positive difference between the
performance and the standard will show that the strategy is working and the organisation needs to
carry on what it is doing whereas a negative difference will mean that there is a shortcoming in the
strategy and that changes need to be made.

3) Corrective Actions :
The organisation can take remedial action on the points which are identified weak areas by strategic
evaluation. For example, if it emerges that the lack of skills of the employees is a major hurdle
behind the failure of the strategy to meet objectives, then a massive training program can be initiated
by the organisation. Similarly, if it is found that the organisation has set unrealistic sales targets, then
course correction can be attempted.

4) Reassessing Goals :
The evaluation of the performance of the organisation could also lead to a questioning of the goals
and objectives of the organisation. For example, the under performance of a team to implement the
strategy could be due to factors like lack of team support, change in market dynamics or faulty
strategy definition.

5) Alerts from Threat :

Strategic evaluation also makes the organisation future ready. It identifies issues and problems in the
initial stage so that the organisation can take steps to tackle the same in the first step itself before they
become too big to conquer. Strategists need to combine the virtues of patience and rapid action.

Guidelines for Strategic Evaluation and Control

To make proper strategy evaluation and control there are following guidelines:
1.Timely Control: The controls should be such that they are timely and provide the organisation
to implement necessary changes.organisation should utilise steering controls so that it gets
advance warning of the problems for taking remedial action.
2) Both Long-term and Short-term Control should be Used: The organisation should employ
both short-term and long-term measures so that the right mix is found otherwise the measures
may end up being skewed.
3) Pinpointing Exceptions: The measures should aim at pointing out the exemptions i.e.
activities which fall outside the tolerance limit. Only these activities call for an action plan.
4) Accurate: The information generated should be accurate so that that the right decisions can be
taken by the managers.
5) Objective and Comprehensible:
The information system should be objective and easily understood be all. A complex
management information system will create unnecessary complications in the minds of the
managers and frustrate employees.
 Strategy Implementation & Evaluation
Module:4

6) Focused on Strategic Control Points: The strategic evaluation and control should focus on
the critical areas where the maximum chances of deviations are there and which can cause the
maximum damage to the organisation.
7) Economically Realistic: The benefits that accrue from a control system should outweigh the
costs of implementing it.
8) Organisational Realistic: The control system has to be in sync with the realities of the
organisation and the targets set have to be realistic and not fantastic.
9) Prescriptive and Operational: The evaluation and control systems also need to be
prescriptive.They need not to just point out the shortcomings, but also how they can be
overcome.
10) Accepted by Organisation Members: The evaluation and control systems need accepted by
all to the employees of the organisation. This is only possible if they relate to achievable and
realistic goals.