BUSINESS STRATEGY

UNIT- 5

STRATEGY IMPLEMENTATION
VIII Semester
BBA/B.B.M.

Bhairahawa Multiple Campus

 Concept of Strategy Implementation
• Strategy implementation may be defined as the
sum of the total of activities required for
successful execution of the strategy. The
essence of the strategic management lies in the
strategy implementation. Hence, strategy
formulation and implementation should be
viewed as the two side of a coin. Strategy
formulation is the planning of activities whereas
implementation is the actual working of plan. In
a single word strategy implementation is the
process of changing plan into action.
• Definitions:
• Strategy implementation is a term used to
describe the activities within an workplace or
organisation to manage the activities
associated with the delivery of a strategic
plan. (Jump)
• Strategy implementation is the process by
which objectives, strategies and policies are
put into action through the development of
the programs budgets and procedures.
( Wheelen and Hunger)
• McKinsey 7s model of Strategy implementation developed
in 1980 by McKinsey consultations.
• The model point out the 7 elements of the company, they
are: Strategy, Structure, System, Skills, Staffs, Style and
Shared values are aliened together to achieve effectiveness
in the company. All the seven elements are interconnected
and a change in one area requires change in the rest of a
firm for it to function effectively.
• The seven areas of organization are divided into the soft
and hard areas. The strategy, structure and system are the
hard area that are much easier to identified and manage
when compared to soft areas as skills, staffs, style and
shared value. On the other hand soft areas although harder
to manage and are the foundation of the organization. They
are more likely to create the sustained competitive
advantage.
 Process of strategy implementation
Determination Development Development
of annual of functional of program
objectives & strategies & budget &
policies tactics procedures

Structuring Matching Managing

and re- strategy with conflict
engeneering structure

Linking Creating a
Managing
performance strategy
resistance to
and pay to supportive
change
strategies culture
• Determination of annual objectives & policies
• Development of functional strategies & tactics
• Development of program budget & procedures
• Managing conflict
• Matching strategy with structure
• Structuring and re-engeneering
• Linking performance and pay to strategies
• Managing resistance to change
• Creating a strategy supportive culture
 Organizational structure for strategy
implementation
• Organizational structure determines the processes
used to complete organizational tasks to support
the implementation of strategies. When the
strategy is modified, it demands changes in
structure. Strategy and structure are closely related
to each other. It is important that matching each
strategy with a structure enables the use of current
competitive advantages as well as provides
flexibility required to develop future advantages.
Chandler has proposed the following strategy
structure relation presented in next slide.
 Strategy structure relationship

New strategy is New administrative Performance

formulated problem emerged Decreased

Organizational New orgn. Structure

performance is established
improves
 Organizational structure for strategy
implementation
• Entrepreneurial Structure
• It is a simple structure, the owner- manager
makes all major decisions and monitor all
activities.
• The structure is characterised by informal
relationship, few rules, limited task
specialization, and informal information system.
The coordination is relatively high between the
owner –managers and employees. Small firms,
hotel and restaurants, grocessory and other
specialised business using this structure. .
• Advantages
• Simple and minimum hierarchy
• Decision are quick and efficient
• Motivation for the owner
• Direct communication , congenial relationship
• Disadvantages
• Not suitable for dynamic and complex nature
of business
• Lack of professionalism among employees
• Lack of motivation to employees
• Functional structure
• It consists of a chief executive and with
functional line managers in functional areas
such as production. Accounting, marketing,
human resource, R&D etc. It facilitates active
sharing of knowledge within each functional
areas. It enhance professional development in
functional areas. This structure is suitable for
the organization pursuing low level
diversification startegy.
• Advantages
• Responsibility and accountability of the employees are
clear.
• Efficiency increases due to division of labour
• Proper allocation of resources among the units
• Direct communication between the functional manager.
• Disadvantages
• Unnecessary conflict due to coordination problem
• Lack of responsibility for overall performance
• Cannot address the environmental dynamism.
Divisional Structure
It consists of corporate office and operating
divisions which represent a separate business or
profit centre. Under this, the responsibility for day today
operations and following business unit strategy are
delegated to division manager.
Advantages
Suitable for multi product
High coordination increase effectiveness of functional units
Functional units address the environmental components
Encourage management development
Regular monitoring of performance
Comparison of divisions improve the resource allocation
• Disadvantages
• Unnecessary conflict may emerge due to poor
communication
• Lack of coordination among divisions
• Problem in allocations of resources
• Complexity of organization
• Matrix Structure
• A matrix structure is the most complex of all
structure. Functional and divisional structure
depends primarily on vertical flow of authority and
communication. However a matrix structure depends
upon both vertical and horizontal flow of authority
and communication.
• It includes dual lines of budget authority with dual
sources of rewards and punishment, shared
authority, dual reporting channels, and a need for an
extensive and effective communication system. It
facilitates the use of specialised personnel
equipment, and facilities.
• Advantages
• Effectiveness by utilizing the resources in an optimum
level
• Address the interest of stake holders
• Direct coordination between different levels orunits
• Enhancing motivation and commitment of the
employees
• Enhance creativity of the employees
• Disadvantages
• Delay in decision due to involvement of different units
• Problem in responsibility and accountability
• Conflicts among department for resources
• Structure is complex and costly.
• Network structure
• A series of independent business units linked together by
computers information system that design, produces and
markets a products or a service. It provides flexibility to an
organization to cope with rapid technological change and
environmental dynamism.
• Advantages
• This structure is flexible to cope the environmental dynamism
• It allows gathering efficiencies from other firms
• Concentrate in the core competency
• Disadvantages
• It involves many business units which may create conflicts
among them
• Complexity in controlling organizational networks.
 Strategic Leadership
• Strategic leadership are people located in
different parts of the firm using the startegic
management process to help the firm to reach
its vision and mission.(Hitt et, al., 2011)
• It is multifunctional in nature and involves
managing through others, managing an
enterprise rather than a functional subunit,
and coping with change that continues to
increase global economy.
• The crux of strategic leadership is the ability to
manage the firm’s operations effectively and
sustain high performance over time. Strategic
leaders must learn how to deal with diverse and
complex environmental situations.
• Transformational leadership is the most
effective leadership style. It entails motivating
followers to exceed the expectations and enrich
their capabilities, and to place the interest of the
firm above their own. They develop and
communicate a vision for the firm and formulate
a strategy to achieve the vision.
• Role of strategic Leadership
• 1. Determining strategic directions
• 2. Effectively managing the firm’s resources
• 3. Providing the information
• 4. Sustaining an effective organizational
culture and ethical practices
• 5.Establishing balanced control system
• 6. Managing conflicts
• 7. Managing resistance to change
• Leadership and Management
• Leadership is the ability to anticipate, envision,
maintain flexibility, and empower others to create
strategic change as necessary. It is concerned with
setting the direction for organizational change and
about developing and formulating strategies to realize
the vision. The vision should be developed in such a
way that it can be translated to competitive
advantages.
• Management is about coping with complexity and
produces a consistent result. It involved in planning
and budgeting to deal with complexity. The role of
management is to develop a coherent system that
allows plan to be implemented efficiently.
Leadership Activities Management Activities

Dealing with changes Coping with organizational complexity

Developing vision and setting a direction Planning and budgeting
Formulating strategy Implementing strategy
Aligning stakeholders with the Organizing and staffing to achieve
organizational vision strategy
Motivating and inspiring employees Controlling behaviour and problem
Recognizing and rewarding success. solving
 Learning Organization
• Strategic management aims to help the organizations
operate successfully in a competitive, dynamic and
complex environment. In a hyper competitive business
world, companies must develop strategic flexibility, the
ability to shift from one dominant strategy to another.
Startegic flexibility demands a long term commitment to
the development and nurturing of critical resources. It
also demand s that the company become a learning
organization.
• An organization skilled at creating, acquiring and
transferring knowledge and modifying its behaviour to
reflect new knowledge and insights is called learning
organization.
 Organizations where people continually
expand their capacity to create the results
they truly desire, where new and expansive
patterns of thinking are nurtured, where
collective aspiration is set free, and where
people are continually learning to learn
together.”
- PETER SENGE
• The role of strategic leadership in building a
learning organization
• Leader as a designer- It involved building core
values and purposes of the organization into
business decisions.
• Leader as teacher- It involves helping
individuals in the organization to be aware of
their mental models and the assumptions on
which these are based.
• Leader as steward- It involves stewardship for
all the people in the organization that he
directs.
• The following leadership skills are important
for building a learning organization
• Building a shared vision- it involves the leader
sharing his vision with members to ensure
that it accords with their own personal values.
• Surfacing and testing mental model- It
involves ensuring that members of
organization can difference between
generalization and the observable facts.
• System thinking- It requires the leader to
move beyond blame culture.
Emotion Intelligence and Leadership performance
• Different attributes or capabilities that distinguish
effective leader. They are grouped as: technical
skill( accounting, finance analyst) cognitive skill
(analytical reasoning) Emotional intelligence – (ability
to recognized one’s own emotion and the emotion of
others).
• Traditionally focused in first two category, but later on
EI regarded as ingredients of excellent performance of
leaders. EI leaders understand themselves well, have
strong motivation, are empathetic with others and
have effective personal skills. There are five different
components of EI They are :
• 1. Self awareness
• The ability to recognized an emotion as it
“happen” is called self-awareness. Persons
with self-awareness are capable of speaking
openly about their emotions and the impact
of emotion on their work. Self awareness
people are self confident. They play on their
strength and are cautious about their
weakness. They assess the organization
honestly where they are working.
• 2. Self –regulation
• It is the recognition off one’s being driven by
emotion and manage the channel them for
productive purpose. Leaders with self regulation
can create an environment based on trust and
fairness. It is helpful in dealing with complex
environment. Self regulation leaders are
comfortable with change and ambiguity. Self
regulation involves the following
• Self control
• Trustworthiness
• Conscientiousness
• Adaptability
• Innovation
• 3. Motivation
It is the desire to achieve for the sake of
achievement. Motivated leaders are passionate
for their work. They are active in improvement
of their work, constantly measure individual
and group performance, committed toward
organization. Mitivation is made of
Achievement drive- constant striving to improve
Commitment- align with the goals of orgn
Initiative- ready to act on opportunities
Optimism- Pursuing goals persistently despite of
obstacles
• 4. Empathy
• Empathy is the ability to recognize how people feel. It is
important to get success in life and career. The leader
must be capable of sensing and understanding the point
of vies of team members. An empathetic leader excels at:
• Service oriented- recognizing & meeting clients needs
• Developing others- Sensing what others need to progress
and boosting their abilities
• Leveraging diversity- cultivating opportunities through
diverse people.
• Political awareness- Reading a group’s emotion and
power relationships.
• Understanding others- Understand needs and wants of
others
• 5. Social skills
• Social skills are the culmination of self-awareness,
self regulation, motivation and empathy. People
will be socially skill when they have honesty in
evaluating themselves, and can empathize with
others. Social skills involve moving people in a
desired direction. The common social skills are:
• Influence
• Communication
• Inspiring
• Change catalyst
• Collaboration and cooperation
 Leadership Capabilities
• Leadership needs a number of capabilities. According
to Malone and Senge(2007) there are four capabilities,
they are sense making, relating, visioning and inventing
• Sensemaking- Making sense of the context in which
company operate. It is knowing what is happening
inside as well as out side the company.
• Relating- Leaders work with people. Working with
people demand understanding who those people are,
what they care about, what they think, why they think,
and how they view the situation. Communication leads
to know the feelings of people, leads to commitment,
trust and motivation.
• Visioning- It is the capacity to create the possible
picture of future. Leaders should be able to create
the vision, communicate it throughout the
organization and ensure that the organizational
activities and behaviour and heading towards it.
• Inventing
• Inventing is implementation and execution with
creative twist. It is creating structures and
processes, shift the ways people work together to
move toward the vision.
 Impact of Leadership on Vision, Values and
Culture
• The visionary organization encourages employees to
stretch beyond their expectations of accomplishment
and required significant change and progress to be
realize. They have superior long term performance
and make significant impact to the society. Visionary
orgn have a core ideology that comprises their core
value and purpose. The core values are the principles
on which the orgn is founded. They are the bed rock
of the orgn and do not change frequently. The core
value motivate employees through the company’s
heritage. Core values and purposes guide continuity
and provide stimulus for change. values
• The top management checks whether the
orgn is going in the right direction. They shape
the organizational values and lead by example.
They are expert in promotion, protection and
shaping the values. They decide , direct and
signal to shape values. A effective leadership
foster stakeholder’s commitment to orgn
vision and values. Therefore leadership has a
great role to play to develop, promote and
nurture company vision values.
• Leadership and culture
• Organizational culture is a complex set of
ideologies, symbols, and core values that are
shaped throughout the firm. Culture influences
the way business id conducted. Effective orgn
culture shapes employees behaviours towards
successful implementation of startegy. The
strategic leaders take several actions to sustain
an organizational culture based on ethical
practices. A key role of strategic leaders is to
encourage and promote innovation by pursuing
entrepreneurial opportunities.
• An effective strategic leaders recognized when
cultural change is needed. He/she shapes and
reinforces a new culture by communication
and problem solving, along with selecting the
right people, engaging in effective
performance appraisal, and using appropriate
reward systems.
 Corporate culture and leadership
• Corporate culture refers to complete set of
ideologies, symbols, and core values that are
shared throughout the firm and influence the way
business is conducted.
• It influences how the firm conducts its business
and helps to regulate and control employees
behaviours. It is most valuable factors to
differentiate from others, and culture is often
implied.
• Leadership is the ability to anticipate, envision,
maintain flexibility and empower other to creat
strategic change as necessary.
• Leaders set the context within which orgn members
strive for excellence and work together to achieve
orgn. goals. Corporate culture nd leadership are the
two sides of a coin. Hence, they go together, one
cannot flourish without other. A leader always
practice a definite way to doing things, and those are
going to be practiced or followed by all members of
the orgn. The leaders norms , values and preferences
are the first way that the members follow in a shared
way and became culture.
• Therefore leaders are the change agent and create
culture for the organizational settings which
increases efficiency and effectiveness of employees
as well as orgn as whole.
 Leading strategic change
• Strategic change involves changes in the
content of the firm’s strategy as defined by its
scope, resource deployments and, competitive
advantages. It occur when current strategy lose
relevancy in addressing the environmental
issues. It should be managed properly. Change
management involves diagnosing the change
situation in organization. Leading strategic
change involves the following
• 1. Understanding the forces of change
• External environmental forces i.e PESTEL
• Internal environmental forces i.e.
Organizational objectives and policies
Organizational culture
Organizational resources and structure.
2. Diagnosing the change situation
a. Type of strategic change
i incremental change – regular nature
ii big bang- change needed on occasions.
b. The importance of context- Time, scope
Diversity , Capacity , Preservation, Readiness
Power
 C. Organizational culture – shared values,
beliefs and attitudes in an orgn reflected by
common interest of stakeholders, team work
collaboration, autonomy and power in work,
decentralization and centralization and
innovation and risk taking.
d. Forced field analysis- This analysis provides an
initials view of the force for and against the
change. It provides an overview of the change
problems likely to take place in future. It
identifies aspects of the orgn and its culture
that might facilitate change.
The End of Chapter
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