WELCOME TO:

Chapter Five
Strategic Implementation

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 I. what is strategy implementation ?
• Strategy implementation requires a firm to
establish annual objectives, devise policies,
motivate employees, and allocate resources so
that formulated strategies can be executed;
• strategy implementation includes developing a
strategy-supportive culture, creating an
effective organizational structure. Redirecting
marketing efforts, preparing budgets,
developing and utilizing information systems,
and linking employee compensation to
organizational performance.
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 Strategy implementation

• Strategy implementation often is called the

action stage of strategic management.
• Implementing strategy means mobilizing
employees and managers to put formulated
strategies into action.
• Often considered to be the most difficult stage
in strategic management, strategy
implementation requires personal discipline,
commitment, and sacrifice.
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 Strategy implementation…

• Successful strategy implementation hinges upon

managers’ ability to motivate employees, which is
more an art than a science.
• Interpersonal skills are especially critical for
successful strategy implementation AND Strategy-
implementation activities affect all employees and
managers in an organization.
• Every division and department must decide on
answers to questions such as “What must we do to
implement our part of the organization’s strategy?”
and “How best can we get the job done?”
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After strategy formulation the strategy needs to be
implemented which is useful in the attainment of
goals with the use of organization structure
implementing the strategy formulated
Implementing strategies requires such actions as
• altering sales territories,
• adding new departments,
• closing facilities,
• hiring new employees,
• changing an organization’s pricing strategy,
• developing financial budgets,
• developing new employee benefits,
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 Cont…

• establishing cost-control procedures,

• changing advertising strategies,
• building new facilities,
• training new employees,
• transferring managers among divisions, and
building a better management information system.
These types of activities obviously differ greatly
between manufacturing, service, and
governmental organizations.

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 Contrast b/n strategy formulation &
implementation

Strategy formulation Strategy implementation

is positioning forces before is managing forces during the

the action action

focuses on effectiveness focuses on efficiency

requires coordination among requires coordination among

few individuals many individuals

Requires good intuitive& Requires special motivation &

analytical skills leadership skills

Is primarily an intellectual Is primarily an operational

process process

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 Nature of Strategy Implementation
SI problems can arise because of the shift in responsibility,
especially if SF decisions come as a surprise to middle- and
lower-level managers. Therefore, it is essential to involve
divisional and functional managers in SF.
• Shift in responsibility
Divisional or
Strategists Functional
Managers

Copyright © 2011 Pearson Education, Inc.

Publishing as Prentice Hall
Ch 7 -8
 Strategic Implementation
 comprised of ,
 setting policies,
 designing the organization structure,
 and developing a corporate culture, which
helps to meet the organizational objectives
Activity
Think of your organization’s structure, culture,&
system for 1 minute. Tell us how they helped
you for successful implementation.

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 II. Alarmed Issues
I. Management Issues Central to Strategy Implementation

• Establish annual objectives • Match managers to strategy

• Devise policies • Develop a strategy-supportive
• Allocate resources culture
• Alter existing organizational • Adapt production/operations
structure processes
• Restructure & reengineer • Develop an effective human
• Revise reward & incentive resources function
plans • Downsize & furlough as
• Minimize resistance to needed
change • Link performance & pay to
strategies
Copyright © 2011 Pearson Education, Inc.
Publishing as Prentice Hall
Ch 7 -10
 II. Marketing Issues
Two marketing variables centrally important to strategy implementation are:
1. Market segmentation 2. Product positioning
• Market segmentation is the subdividing of a market into
distinct subsets of customers according to needs and
buying habits

Product positioning is the schematic representations that reflect how

products/services compare to competitors’ on dimensions most
important to success in the industry
Product
Positioning

Customer Wants Customer Needs

Copyright 2007 Prentice Hall Ch 8-11

 III. Finance/Accounting Issues

Financial/Accounting issues are

central to strategy implementation

Examples of financial/accounting
issues essential for implementation
 Acquiring needed capital
 Developing projected financial statements
 Preparing financial budgets
 Evaluating worth of a business

Copyright 2007 Prentice Hall Ch 8-12

 Finance/Accounting Issues
Decisions based on Finance/Accounting

• Raise capital – short-term, long-term, preferred, or common

stock
• Lease or buy fixed assets
• Determine appropriate dividend payout ratio
• LIFO, FIFO, or market-value accounting approach
• Extend time of AR
• Establish % discount on accounts for terms
• Determine the amount of cash kept on hand

Copyright 2007 Prentice Hall Ch 8-13

IV. Research & Development Issues

New products and improvement of existing products

that allow for effective strategy implementation

Examples of strategy implementation actions in R & D:

 Transferring complex technology
 Adjusting processes to local raw materials
 Adapting processes to local markets
 Altering products to specific customer preferences and
tastes

Copyright 2007 Prentice Hall Ch 8-14

 Research & Development Issues
R & D policies can enhance strategy implementation efforts to:
• Emphasize product or process improvements
• Stress basic or applied research
• Be leaders or followers in R & D
• Develop robotics or manual-type processes
• Spend a high, average or low amount on R&D
• Perform R&D within the firm or to contract it outside
• Use university researchers or private-sector researchers

Copyright 2007 Prentice Hall Ch 8-15

 V. Management Information Systems (MIS)
Issues
 Firms that gather, assimilate, and evaluate external and
internal information more effectively gain competitive
advantage over other firms
 Information is the basis for understanding the firm. It
is one of the most important factors differentiating
successful from unsuccessful firms
 Strategic management process is greatly facilitated
greatly in firms having an effective information system

Copyright 2007 Prentice Hall Ch 8-16

 iii. Features of strategy implementation

 Action orientation
• The indispensable nature of strategy implementation is, it involves action.
 Comprehensive in scope
• Strategy implementation is composed of several aspects and extensive
range of activities& functions.
 Demanding varied skills
• Strategy implementation process deals with an extensive range of
activities,
 Wide ranging involvement
The strategy implementation needs the involvement of middle level
managers
 Integrated process
• strategy implementation must act in holistic manner.

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 iv. Mc Kinsey’s 7-s framework
Strategy implementation requires the 7-S factors
1. Strategy: A set of decision & action which aims to
gain competitive advantage
2.structure: The organizational chart presenting ,who
reports to whom, and how task to be divide.
3. Systems: Sequential activities engaged in the daily
operations
4.Style (leadership)
5. Staff (management):It related to employees
training
6. Shared values (culture):is subjected to commonly
used beliefs ,mindsets &assumptions
7.Skills (management):concerned with organization’s
dominant capabilities & competencies
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v. Major barriers to the process of strategy
implementation
• Inability to effectively deal with change
• Poor or indefinite strategy
• Lack of guidelines or a role model to guide the
implementation
• Vague responsibility and accountability
• Working against the organizational power
structure.

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 Ways to improve the implementation
problems
• Adopting a clear model of strategy implementation
• Implementation activities does well based on the
skills and abilities of the managers involved in those
activities.
• There is a need for clear model of the strategy
implementation, which can provide unambiguous
guidelines for the managers while the implementing
strategy.

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 Implementing strategies: Management issues
1. Matching structure with strategy
 changes in strategy leads to changes in
organizational structure.
 Structure should be designed to facilitate strategic
pursuit of the firm and therefore, follows strategy.
 However, most of the researchers are of the
opinion that there exist reciprocal relationship
between the strategy and the structure.
• The following figure indicates the two way
relationships existing between the structure and
strategy
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 Strategy determine the structure .The structure
.
also has impact on strategy

Strategy

Affects
Determines

structure

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 2. Annual Objectives and policies.
• Annual objective serves as a guideline for action,
directing and channeling efforts and activities of
organizational members.
• Policies refer to specific guidelines, methods,
procedures, rules, forms and administrative practices
established to support and encourage work towards
stated goals.
• Policies set boundaries, constraints, and limits on the
kind administrative actions that can be taken toward
and sanction behavior;
• They clarify what can and can not be done in pursuit
of an organization’s objectives.

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 Some issues that may require a management policy are as follows .

• To centralize or decentralize employee-

training activities.
• To promote on the basis of merit or seniority
• To promote from within or to hire from the
outside.
• To use one or more suppliers.
• To discourage sexual harassment
• To discourage smoking at work.

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 3. Resource allocation
• Resource allocation is a central management
activity that allows for strategy execution.
• Strategic management enables resources to be
allocated according to priorities established by
annual objectives.
• All organizations that at least four types of
resources that can be used to achieved desired
objectives:
• Financial resources, physical resources ,human
resources, and technological resources.
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 Resource

Intangible Human Resource

Tangible Technology Specialized skills,
Financial Reputation knowledge
Physical Culture Communication
motivation

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Factors prohibit effective resource allocation

• Over protection of resources

• To great emphasis on short-run financial criteria.
• Organizational politics
• Vague strategy target
• Reluctance to take risk.
• Lack of sufficient knowledge

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 4. Restructuring and reengineering
Restructuring also called downsizing, rightsizing,
or delayering
• Involves reducing the size of the firm in terms of:
number of employees,
number of division or units,
or number of hierarchical levels in
the organizational structure.
• The reduction in size is intended to improve both
efficiency and effectiveness.
• Restructuring is concerned primarily with
shareholders well-being rather than employee
well being.
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 Reengineering
 Reengineering also called process
management, process innovation or process
redesign
 It involves redesigning work, jobs, and
processes for the purpose of improving cost,
quality, service, and speed.
 It does not imply employee layoffs.
 is concerned more with employee and
customer well-being than shareholder well-
being.
 The focus of reengineering is changing the
way work is actually carried out.
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 5. Managing resistance to change
 No organization or individuals can escape change.
 Resistance in the form of sabotaging production
machine, absenteeism, unfounded grievance, and
unwillingness to cooperate regularly occurs in
organizations.
• People often resist strategy implementation
because they do not understand what is happening
or why changes are taking place.
• Change must view as an opportunity rather than
as threat by managers and employees.
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 Approaches for implement change
Change Advantage
Description Disadvantages
strategies

Force change Giving order Implemented High

& enforcing fast resistance, low
commitment

Educative Convince High Implementatio

change people for commitment, n slow, and
change less difficult
resistance
Rational Convince Implementati
change individual on easy
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 Some Strategies to minimize resistance to change

• Offer training and development workshop

• Communication
• Individuals who affected by change should
participate in decision making of change

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 Approaches of strategic control
• Organizational controls helps to compare the actual
results VS expected outcomes
• Effectively designed organizational controls
 gives clear information
 and makes clear about the behaviors, which improves
the firm’s overall performance.
• While designing the organizational controls, the firm
usually, makes use of
 strategic control
 and financial controls.

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 Difference between strategic control and
financial control.
Strategic control Financial control
evaluating the extent to evaluate the firm’s performance
which the firm is using
adequate strategies
focus on the requirements for measures the firm’s present
implementing its strategies. performance with the past
outcomes as well as with the
competitor’s performance and
industry averages
focus on evaluating the fit focus on evaluating the firm’s
between what the firm might performance with the help of
do and what it can do unrelated diversification strategy
which is concerned with financial
outcomes.

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End of the chapter
Thanks

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