j nit % cer Lies ‘Save fora few additions these lecture notes are entirely based on Ehlers & Lazenby (2010-3195855)”" Learning Outcomes fer completing this Section you should be able to. + Analyse and discus the nse of organisanional design asa drive for strategie ifigleminaion + Realise and evaluate the importance of resource allocation as a driver fortratesy implementation + Apply and discuss the rote of shor-term goals, functional tactic and poicéas intranets fr strategic implementation Introduction " It is important to remember that the various stratégy/iinpleftentation drivers, namely leadership, organisational culture, reward systems, orgaisition stg ‘and resource allocation, are interrelated. A change in any one of these has an impaé[Link] the other drivers. For example, if due to a change in strategy the organisational eulture of the organisation changes, the leadership may also change. In the event of a change in cultufé&nd leadership, it may be necessary to review the organisational structure as well. Organisational structure often serves as a framework for resource allocation, thus @ change in structure necessitates a review of the resource allocation plan. Organisational sttuctire also serves as a framework for the setting of short-term goals and fun naffactics, “A‘change in these two instruments for strategy implementation would then lead to a change in functidnal tactics. Lecturer — Chief Chirango. 0735 697 941 aa Cos BM3 Notes 0774 376 975 chiefehirango@gmailcomORGANISATIONAL DESIGN AS A DRIVER OF STRATEGY IMPLEMENTATION 1, The role of organisational design in strategy implantation The contemporary business environment is a dynamic one characterised by both evolutionary and revolutionary change. A change in the organisation's environment often triggers a change in strategy so that continued success and wealth maximisation for all the organisation's stakeholders can be sustained. In turn, a change in strategy may require a change‘in the organisation’s design. It is important that the organisation’s design remains aligned with the strategy at all times, as organisational design serves as a framework for the setting of short-term goals, tactics and policies, as wel as for resource allocation. Organisatidhal desigivis a formal process that focuses on integrating the different resources of the onganisayionted ensure'strategic success. A key aspect of organisational design is deciding on the stricture lof the organisation. ‘An organisational structure i the framework within which the stralegie Process must operate to achieve the organisation's goals. The organisational'structure aids in identifying the tasks necessary for strategy implementation, groups them/-together and ensures coordination of these c goals‘of the organisation ean be reached. tasks across the organisation so that the stiate Furthermore, an organisatigfial design and oFganisatioal structure are often used interchangeably. . Ina rapidly changing competitive environment, organisational design is becoming increasingly complex. Inge network Sedhomy a design should also allow for engagement and collaboration\yvith thejeRterfal stakeholders of the organisation. Owing to this complexity and the fact ghatit istoftena priprity issue, ofganisational design is a key task of a strategic leader. pA URGG Peet 8 Organisational desigh,cati be a source of competitive advantage if it is aligned with the chosen strategy, geen and difficult to copy and makes it easy for customers to do business with ti the organis ‘Effective organisational design form the stable base on which the organisation can build its strategy implementation efforts, Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefehirango@[Link]2. Structure follows strategy The concept “structure follows strategy” emphasises that a change in the chosen strategy ibsent, the necessitates a change in structure, When a tight fit between strategy and structure i organisation’s performance will decline, as it will experience administrative problems resource allocation problems and conflicting priorities regarding strategy implementation tasks. ‘Yet one should bear in mind that strategy and structure have a reciprocal relationship; in other words, as much as strategy influences structure, structure can also influence the choice’of strategy to some extent. Remember that organisations should consider implementation issues ‘when formulating a strategy. The chosen strategy must be implementable anda strategy completely incompatible with the current organisational structurg!imight have to be revisited. Organisational structures are often difficult andcostly to chee olen ‘even though structure does influence strategy somewhat, this should fot belviewSilas a reason to be complacent and resist change, Research has'hown that stratgey fas a much more important influence on structure than the other way ground. Even thtoligitit does sometimes happen and in spite ots influence on strategy, structure should, asa Fle of thumb, not bea determinant of strategy. 3. The evolution of organisational structures %, As organisations grow and the enyirofiment changes, different types of strategy are selected at different stages to ensure continued sugeess. For example, an organisation in the embryonic stage ofits life [Link] select growth strategies. As structure follows strategy, the organisation will need a need a structure that supports aggressive growth. Should the organisation follow a diversification strategy in its mature life cycle phase, an organisational structure that supports diversification would be required. | In his study of how organisations change over time, Alfred Chandler (1962) found that organisations tend to grow in somewhat predictable patterns. Most organisations tend to grow in somewhat predictable patterns, Most organisations grow first by volume, then by geography, they by integration (vertical or horizontal), and finally through produet/business diversification, Lecturer — Chief Chirango. 0735 697 941 Page. CoE BM3 Notes 0774 376 975 chiefehirango@gmailcomTherefore, as organisations grow, structures generally change from simple (e.g. entrepreneurial or functional) to complex, Matrix and product team structures are examples of complex structures. ‘The building blocks of organisational design Henry Mintzberg, a renowned scholar in the field of strategic management, did extensive research into organisational design. In his well-known work, the structuring of organisations, he explains that organisational design consists of three components: the five basic parts ofan organisation; six basic coordinating mechanisms; and the essential mack ofdesign, 4. Eive basic parts of the organisation A ‘The different parts of an organisation play different rolesin Mien of work, which in turn would impact on strategy implementatiorie. Eagh organisation, regardless ofits size complexity or motive (for example profit seeking, rion-profit d¥ governmental) essentially consists of five parts (Mintzberg, 1979; 247): 1. A strategie apex, which is the home for top'management and strategic leadership in an organisation. o 2. The me tl which incl al the managers indirect line relationships between the strategic apex andthe operating eore 3. The operating core, where the actual operational tasks of an organi prod the productsand services‘f the organisation 4, The fechno-structure, which includes all staff analysts who design the systems by which work procééses and the outputs of others in the organisation are formally designed. 5. The support staff, which includes support for the organisation outside its operating workflow, corporate communications, legal and tax specialists, catering and so forth. Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefchirango@[Link]5. Six basic coordinating mechanisms The second component of organisational design consists of six basic coordinating mechanisms. These describe the ways in which organisations coordinate work, and include the following, 1. Mutual adjustment, This is the informal communication used to coordinate work and achieve tasks, Simple, entrepreneurial organisations use a high level of mutual adjustment. 2. Direct supervision. This is where one person is responsible for coordinating the’ work of ng orders and instructions. Direct supervision typically flows from the top, ee others and for gi down the organisational hierarchy. s & 3. Standardisation of work processes. This refers to the specifications-or provéises Yoverning how the content of the work should be carried out, Thesecould'inelude standatd_ operating procedures and policies. 4. Standardisation of outputs. ‘This focuses on theffesultsto belachieved. In a car manufacturing company, for example, the outputs aré different types of car. The extent of standardisation can be viewed in terms of the rangevof products the company produces. BMW, for example, prddces motorcycles in addon to different series and types of car. 5. Standardisation of skills'gnd knowledge. ‘This is also coordination mechanism, but it is less formal. In thisinstance, the employee possesses a certain set of skills and knowledge and over timé different, ehiges kaiow what to expect from one another, ensuring coordination. ist in an operating room — Mintzberg-usesthe Nathies of a surgeon, a nurse and an anaesthet they‘hardly rieed t, coniyuncate because each one knows exactly what the other is doing and i responsible foR 6. Standatdisationiof norms. This refers to the organisational culture and the shared beliefs « and values Othe employees . For example, ‘one of the organisational values is frugality (doing more with fewer resources), it serves as a coordination mechanism in that all employees who share this value will collaborate and work towards frugality. Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefchirango@[Link]Lecturer — Chief Chirango. 0735 697 941 The essential parameters of design Parameters of design are the elements that influence the division of labour and coordination, The following are the parameters can be enumerated Job Specialisation - focuses on what each person should do, how many distinct tasks the job should contain and how much control a person should have over these tasks. 2. Behaviour Formalisation - refers to the extent to which tasks are specified affd'Haye to be carried out in a certain manner, Behaviour is formalised to reduce variability and ingrease predictability and control. Examples of formalised behaviour include theemergen@y landing procedures that pilots have to follow and the administration process at a university. ingiis requited for different positions and then 3. Training - entails deciding what formal t selecting appropriately trained people to fiff these positions. For example, a formal training requirement for a senior financial manager May be 4 Chartered Accountant qualification, whereas a nursing position would require a\formal nursing. qualificat 4, Socialisation - refers to the process by which a nevyemployee learns and becomes part of the value system, the ngiims and the requied patteins of behaviour in the organisation. It refers to the extent that an employee is integratéd'into the organisational culture, 5. Unit grouping, refers togrouping different positions into units, each under its own managerfaind these units are snap cto together to form another unit again with i own manager, until the whol orgnisation has been grouped into one unit with the CEO at the strategic apex ~ é 6. Unit'size— [Link] the size of each unit and is determined by the extent to which standardisation i§ used and the need for mutual adjustment isation, behaviour formalisation, socialisation, unit grouping and unit size Job speci determine an organisational design framework. To create linkages, planning and control systems and liaison devices are used. Liaison devices include jobs that are created to coordinate the work of two units directly, project teams, committees and so forth. BM3 Notes 0774 376 975 chiefehirango@gmailcom7. Contralisation/decentralisation — In centralisation is when all decision making is concentrated on a single point in the organisation while in decentralised organisations, decision making is dispersed among many individuals. TYPES OF ORGANISATIONAL STRUCTURE The five basic parts, the six coordinating mechanisms and the design parameters all come into play when organisations are designed. They typically determine the type of organisational structure an organisation will have to ensure that its strategy is successfully iggplémented. ‘There are six types of organisational structures as follows eo 1, Entrepreneurial, \ & Functional, ¢ 4 YW Divisional, Strategic business unit, Matrix and standardised to ensure a strong culture. ? % The strategy and size of the organisation, as well nd eogpie dispersion will determine the unit or division sizes. Decigion making and authority are usually more decentralised than in a functional structure, but théy aréalso influenced by other factors, such as the organisational culture and the stratedy'of the organiGytion. It is interesting to note that many organisations decentralisé: decision makingand authotity during boom times and for rapid growth strategies, but will centralise decision making anfl authority during economic downturns and when cost- cutting stéategies are linplemented, Advantages of a divisional structure . There is decentralisation of power and decision making. Divisions are therefore able to respond to changes in their environments more quickly. 2. Divisions are able to focus on particular products, markets or customers. 3._ It facilitates control as each division is responsible for its own performance measurement and profits, Lecturer — Chief Chirango. 0735 697 941 7 BMG Notes 0774 376 975 chiefehirango@[Link]4, Accountability is clear. 5. It can lead to better morale as employees and managers can immediately see the results of, their good or bad performance. 6. It creates career development opportunities for general managers. Disadvantages of the divisional structure 1, There is a loss of economies of scale. . There is duplication of resources, staff, services and faciliti |. Divisional managers may want more autonomy that they have, 2. 3. Itis costly as each division requires its own funetional expertise and. general mandiger. 4 5. It may be difficult to maintain consistency throughout the weet hn Ay Large multinational organisations that have a product pnd related diversification typically use divisional structures. As the organi§ation. a {to grow, the number, size and diversity of divisions increase. The span of control becomes t86 wide and evaluation and strategy implementation become more andsmore complex because the organisation consists of diverse divisions in terms of products, geographical logations and customers. Organisations then turn to the strategic businessunit structure to suppd#’Strategies such as conglomerate diversification, 3. THESTRATEGIGBUSINESS UNIT STRUCTURE ‘The SBU structure is similar to'the divisional structure. An SBU structure groups similar divisions into stig gins units, and delegates authority and responsibility for each unit to a senior executive whéreports directly to the group CEO. These senior executives are often referred to atvice-presidents, There is very little synergy between the various strategic business units, and all opefiitional and business-level strategies are delegated to the business units’ top management teams. Finance, accounting and legal activities are often centralised in a corporate centre, Lecturer — Chief Chirango. 0735 697 941 oy CoE BM3 Notes 0774 376 975 chiefehirango@gmailcomCharacteristics of an SBU Structure In an SBU structure, the strategic apex may be very far removed from the operating core. Mutual adjustment will in most instances be replaced by formal communication across the vertical and horizontal hierarchies. Processes, outputs, knowledge and skills will be standardised and formalised as much as possible — but given the organisational complexity of a conglomerate with different SBUs, it may be difficult to maintain consistency and over standardisation may have a negative impact on organisational flexibility and operational efficiene Group CEO i } central Head Ofce (rrancrsenices_) a OS Marketing \ Advantages of us the SBU structure: Te ensures eealised decision making and enhances responsiveness. 2. Itplaces strategy formulation and implementation closer to each business unit’s unique competitive environment. 3. It provides good training for strategic managers. 4, It increases performance accountability. Lecturer — Chief Chirango. 0735 697 941 2 I2ag0....13 BM3 Notes o774 376 975 chiefchirango@[Link]sadvantages of an SBU structure 1, Itrequires an extra, costly layer of management. ‘The roles of the SBU heads and the central head office are often ambiguous. It is not always clear how much authority and power the business unit heads should enjoy. Distributing over the overhead costs of the corporate head office could be problematic. yeep ‘The duplication of funetions increases costs. 6. There could be inconsistency across the business units in terms of overall corpotate image and policies. 5, THE MATRIX STRUCTURE The most significant characteristic of the matrix structure is its défablines of authority. All the organisational structures discussed previously have Vertical bes i flows of authority? The matrix structure has both a vertical and a horizontal ling author We ‘The matrix structure combines the advantages ohitipalexpetise with product-project specialisation, thereby enhancing mone Nr abilities. The members of the Project A team report to b Me 5 a project inanager and their functional manager. ‘The matrix structure focusés Skills and resourées on the projects and products that are of major strategie significance. Eventthough the matrix stritire is easy to design, itis a complex one that can be difficult to imple Group CEO Wereine arog) (_Overatinstanager ] [Parsing Manser Sant Project Manager A Project Manager 8 Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiofchirango@[Link]Advantages of the matrix strueture 1. It supports a wide variety of project-oriented business activities. 2, It makes good use of functional expertise. 3. Middle managers are exposed to strategic issues and it thus provides training for strategic managers. 4, Itenhances creativity and diversity. Disadvantages to the matrix structure: 1. It is complex as it has dual lines of authority that require dual lines of regoutee allocation, reward systems and reporting channels. 2, Itincreases overhead costs as it creates more management positions: 3. There can be confusion about who is ultimately responsitile for strategysimplementation. 6. NETWORK STRUCTURES . . Network structures arose during the inforthation technology Boom of the late 1990s. Network structures are loosely grouped business teams that come together for a single project. The ‘members of these teams arejnot necessarily from the same organisation or business unit and the structure can be disbanded if necessary once a projecthas been completed. Network structures ination, a learning approach, frequent cross-fertlisation of are characterised by informal to6 ideas and a regular exchange of information. ‘The product team structure is an example of a network structure. A simplified alternative to the matrix structie, the product'team orggisation focuses resources on a narrow but strategically important product, project, market, customer or innovation. Teams that are dynamic and jon with a product-team structure, The product innovative perform the main work in an organi team assigns fufiotional mangers and specialists to teams tasked with the development of anew product-team structure are permanent in most cases. Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefehirango@gmailcomLecturer — Chief Chirango. 0735 697 941 Advantages of the product team structure 1. Product teams formed at the beginning of the product development cycle often generate cross functional understanding due to the functional diversity of the teams. 2. The reduced number of management levels allows for quick decision making at team level, which in tum speeds up the organisation’s ability to respond to customer needs through. innovation. Disadvantage used to autocratic decision making in their specialised areas, STRUCTURES OF THE FUTURE During the past decade, the overall trend regarding orgafiisational structures has been to move away from multilayered hierarchical organisational structures to decentralised, flatter structures with the emphasis on teams. In the 21* century this shifvaway from authoritarian, formal structures to flat, informal, virtual organisations will prdbably continue. Future organisational inked ionships, structures will be based on networks of temporary extérnal and internal rel primarily by information technology, in order to shite skills, costs and access to markets. Matching structures with strategies Organisational structifég oRehgeas the organisation's choice of strategy changes. There is no fixed recipé for matching attics and structures. Even though all structures have merit, there is also no “one-sizey faSigl!” structure ‘that all organisations, regardless of their chosen strategies, can use. Every organitation’s strategy is grounded in its own key success factors and value chain activities. Cbpsequeptly, the structure that best meets the implementation needs of the selected strategy should bé'€hosen. BM3 Notes 0774 376 975 chiefehirango@[Link]Research into the strategy-structure fit does, however, provide several guidelines for matching strategy with structure: 1. Single product or dominant-product organisations should employ functional structures to allow strong focus on tasks. 2. Organisations with several business lines that are somewhat related should use a divisional structure, 3. Large, diverse organisations with unrelated business divisions should uselan SBU structure, 4. Product development and innovation are enhanced by the matrix and, pouches structures. Earlier on, strategy was identified as a factor that influences structure. Otherigterpal factors that influence the choice of structure include specialisation, the distribution of power, departmentalisation, the size of the organisation and its @rganisational-culture. Mintzberg (1979) also found the following, interés ‘characteristics in terms of the size and age jon and its impact on oreasatiokal desi of an organi 1. The older and larger the organisation, ‘ihe more formalised its behaviour. 2. he larger the organisafi6n, the more elabdgate its Structure and the larger the size of its average unit. 3. Organisational structure reflects the age of the founding of the industry. In the new p gnomy, orgahis ations should also be aware of the external factors that drive xy sttucture, such as buyer power, globalisation, the internet and e- changes in fganisa commerce’ tipplietions, the. convergence of technology, variety and the speed of decision making), ad RESOURCE ALLOCATION AS A DRIVER OF STRATEGY IMPLEMENTATION ‘The role of resource allocation in strategy implementation The resource-based view of the organisation sees organisations as different collections of physical and intangible assets or resources and capabilities. Organisations differ from one another in terms of sets of experiences, assets, skills and organisational cultures. These sets of resources and capabilities determine how effectively and efficiently and organisation performs Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefehirango@[Link]its activities. It can thus, be concluded that an organisation will succeed if it has the best and ‘most appropriate resources for its strategy. To achieve successful strategy implementation, it is essential that resources be allocated in such ‘a way that they support the organisation’s long-term goals, chosen strategy, structure and short- term goals. Research has indicated that one of the barriers to successful strategy implementation is the resource barrier, Strategy implementation efforts will not succeed if the resource allocation plan or budget is not linked to the strategy. A change in strategy requires-a change in the resource allocation plan of an organisation to ensure a continued strategy-resource In organisations that do not follow a strategic approach, resources arftofiei allocated on a ‘ political or personal basis and not according to the priorities estplighed ‘by the short-term goals. Other ators that may hinder effective resoure allocation judg. a showt-erm financial focus, y an over-protection of resources, a reluctance to the take’ fisks a ve targets. ‘Types of resources and scarcity of resources VS What is a resource? A resource is something that on Spain owns or has access to, even if that access is temporary, R@tources can be categorised into tangible and intangible resources. . “Me 1, Tangible resources are often described as the resources “that you can touch or feel or see”. Exampleginchude property, land, buildings, manufacturing plants, equipment, patents, shares ems because most of and so forth. Tangible Fesources'gre often referred to as balance shee these typically ‘ebpear ‘on anvorganisation’s balance sheet in its financial statements. 2. Intangible resouftes cannot “be seen or touched "yet often form the core of an organisation’s competitive advantage. Examples of intangible resources include the skills, talent, experietiée and knowledge of employees and other stakeholders; relationships (i.e relationships with suppliers and distributors) culture; leadership; teamwork and so forth. Kaplan and Norton (2004:30) classify intangible resources into: human capital (employees’ skills, talent and knowledge); information capital (databases, information system, networks and technology infrastructure); and organisations capital (culture, leadership, employee «alignment, teamwork and knowledge management). Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiofehirango@ [Link]During the last three decades, the source of value of organisations has shifted from tangible to intangible resources. This ratio of tangible to intangible assets has an impact not only on strategy formulation, but also on strategy implementation. Kaplan and Norton (2004) emphasise that if'an organisation's intangible assets represent more than 75 percent of its total value, then its strategy implementation needs to focus on the mobilisation of its human capital, information capital and organisation capital. Itis a fundamental economic principle that all resources are scarce; in other ylords, an Unlimited supply of resources does not exist. Because resources are scarce, the use of themiicantnever be costless. In the strategic management process, organisations are ola with tiéchallenge of making decisions on the allocation of scarce, costly resources: beoveethcottipeting alternatives. Talent, an aspect of human resources, had, for example, reached a critical sHortage Wofldwide by the middle of July 2008. ad” The importance of human resources in the 21 century. As the world moves from the information technology efa to @ knowledge-based society and economy, the role of human resources in organisation’ and strategy implementation is becoming, increasingly important for strategy implementatiorthat people are allocated to the most important task in implementing the strategy. ° [Link] no {Enger generate’profits without the ideas, skills and talent of knowledge Organiss workers, sec es, factories, natural resources and capital are no longer difficult to obtain and are resign important in developing and sustaining a competitive advantage for the organisaityn. While éapital is becoming less scarce, the opposite may be said of talent and skills, especially in’developed countries. This may be one of the reasons for the rise in CEO and executive compensation in the last decade: demand for talented and highly skilled knowledge workers is outstripping supply. Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefchirango@gmailcomThe role of budgets in the resource allocation process Budgets form the plan according to which the different resources available to an organisation are allocated in order to achieve the organisation’s goals. Budgets quantify, specify and prioritise the resources needed to ensure strategy implementation. They also indicate what additional resources will be required and give a sense of reality to the organisation's goals and strategies. ‘The resource allocation plan or budget supports strategy implementation if senior management has a strong commitment to budgeting. Budgets are based on the organisation’s sffért-term goals and operating results are regularly compared with the budget. iS a\ \ Aligning resources with the chosen strategy al\ Nasi Se ‘The value of a resource allocation plan lies in its alignment with, org igo’ strategic goals. If too few resources are allocated, this slows down and hihde implet€ntation efforts. The allocation of too many resources wastes coStly reourdlig 1d reduces financial performance. A change in strategy requires:resourcesto be’ we in order to support the new goals and priorities. The new strategy must drive [Link]-allocation process. SHORT TERM GOALS AS AN INSTRUMI Long term goals translate the. mission into measurablé outcomes and guide the selection of a strategy. Long term goals are strategic goals that indicate what the organisation wants to achieve in the future gyer periods y as liye or seven years. However furetional ah ldional Hads need to know exactly what should be don term in ey 10h, incrdedto provide of specific guidélines and a clear indication of the action needed to the short Rin goal and the selected strategy. Thus short term goals are set translate the vision int action Short term goals glide action and direct the activities of organisational memembers. They add breadth and specificity in identifying what must be done to achieve long-term goals. short term ‘goals can serve as standards of performance and as incentives for managers and employees to perform, and are also used to justify activities to the stakeholders. The use of short term goals is a valuable strategy implementation instrument for the following reasons Lecturer — Chief Chirango. 0735 697 941 _BM3 Notes 0774 376 975 chiefehirango@[Link]1, Ithelps to establish departmental or divisional and organisational priorities, which in tum can be used as a basis for allocating resources 2. Short term goals assist in monitoring the progress made towards the achievement of the long term goals. 3. Short term goals can be linked to reward systems and serve as a primary mechanism for evaluating performance 4, They can be used as checkpoints for operational and strategic control i ‘Translating Long Terms Goals into Short-Term Goals » Be Long term goals are derived from the mission statement, which is in turn derived from the organisations’s vision or strategie intent. The short term goals afe set [Link] basis on the long term goals to ensure that the mission and strategie infent become'a rlity. “Aligning’short term goals with the organisation’s mission and strategy confifins that the strategic management process is interrelated and that a change in,one cémpohent Will. rigger changes in others. An organisation’s mission statement provides guidelines in terms of the areas that the long-term goals focus on, such as product, market, S hnology, profitability and corporate governance Short-term goals should inéBtporate these My areas into key operational areas, The link between long-term goals anlshort-term goals caseiidés through the organisation, from the broad vision and basic goals to speclffé short-term targets. This cascade can provide a clear reference for communigation. Criteria-for well-formulated goals terin}goals listed in Chapter 6 apply to short-term goals as wel Short-term The qualities of lon goals should also be aéceptable, flexible, suitable, motivating, understandable and achievable. Each short-term goaljshould indicate clearly who is responsible, what the focus is, what action is required, how it Wiil-be measured and what the time frame is. Short-term goals should be consistent across the various functional areas, divisions or strategic business units. Short-term goals should be supported by functional tactics and appropriate policies. Owing to timing considerations, it may be necessary to give some short-term goals priority to avoid conflicting assumptions of the different short-term goals. Lecturer ~ Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefehirango@gmailicomUsing the balanced scorecard to set short-term goals The balanced scorecard can be introduced as a framework according to which strategic or long- term goals could be set. The balanced scorecard also provides a guideline or setting short-term goals for each of these long-term goals. The balanced scorecard also provides for the translation of these long-term goals into short-term goals or targets. Therefore the balanced scorecard framework not only ensures thftthe long- [Link] directly term goals are tightly linked to the vision, but also ensures that the long tet related to the long term goals and thus indirectly linked to the organisation's vision. ay Furthermore, the balanced scorecard, in the form of initiatives, afséxtightly links the functional tactics to the short-term goals and the strategic goals4in ea ectiyes The balanced 1% 1 " scorecard closes the gap between long-terms plans and ghoft tem Reigns, thereby aiding the strategy implementation process. Lecturer — Chief Chirango. 0735 697 941 BMB3 Notes 0774 376 975 chiefehirango@gmailcom‘The Balanced Scorecard Vision and Strategy, [Learning and Growin To achieve ow ston, row ve sustain our abatyts cnacee ana mprov0 >" e Example of the Customer Pajpoctie, joa f Tage “To achiev, } our vision: To ahrease how shou! customer we appear Soman by | valle for Sa ete” | ai customers?” cans uetes over = weekends Lecturer — Chief Chirango, 0735 697 941 BM3 Notes 0774 376 975 hiefehirango@gmailcomFUNCTIONAL TACTICS AS AN INSTRUMENT FOR STRATEGY IMPLEMENTATION The role of functional tactics in strategy implementation Functional tactics support short term goals and can be defined as the key routine activities that must be undertaken in each functional area to achieve the organisation’s chosen strategi Functional tactics are different from grand or business strategies in terms of the following: 1. Time horizon 2. Specificity 3. Participation : Funetional tacties identify the tasks or activities that must be perfornfed now Onin the near future in the various functional areas (according to the functional stratgiigs).[Link] focus on the organisation’s position in the next few years. This focus of fiinctional tactics or’@shorter time horizon aids strategy implementation as it clarifies exactly whatuneeds to be done immediately. Whereas grand or business strategies provide genétal direction, functional area in order to achieve the short-term goals. Grand stfategies are usifilly developed by top management or business unit heads, whereas functional tactics are developed within the operational areas of the orgiisation. Involving operational managers in the formulation of functional tactics ensures tit the strategic intent and both the long-term and short term goals are well understood, which in turfighables more effective strategy implementation. Key focus area of functidilil tactics in each functional area aA - FUNCTIONAL | ; ALE ee FUNCTIONAL TACTICS TS. [lie Yole of i marketing finction is to ensure the profitable sale ofan organisation's products ) Sd srvirs in is argt markets so tat the organisation can achieve its overall long-term MARKETING _ | goals, ‘The four fundamental tasks ofthe marketing function revolve around products, price, “gy. | placeltnd promotion also referred to as she four Ps of marketing) and the marketing functional tactics should focus on these fundamental tasks. The financial funtion focuses on Four Key tasks, namely financing (which deals with tre ‘acquisition of funds), investment (which deals with the application of funds for the acquisition ‘of assets), the administration of financial matters and reporting on financial matters. Whereas the functional tactis in marketing, operations and human resourees management dal with implementation in the short-term ftir, some Financial tactics could focus onthe long term FINANCE future because ofthe importance of financial resources in achieving lon term goals andthe busines strategy. Financial tctes that focus on eaptal investment, debt financing and the | allocation of dividends vsually have longer-term perspectives inetional tactics with «short term perspective usually focus on financial issues such as managing working capital and short term assets Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefehirango@[Link]‘The operations Function of an organisation is responsible for converting inputs (raw materials, technology, supplies and labour) into outputs (the products and services of the organisation). Operations functional tactics will focus on issues such as the sourcing of facilites and ‘equipment, operations planning, operations control and outsourcing if relevant to the organisation concerned, OPERATIONS ‘Human resources management focuses on recruiting, developing and retaining the human resources of an organisation. It is also the responsibilty of human resources management to ‘manage compensation. Human resources management tactics will therefore focus on issues such as recruitment, selection, orientation, career development, training, compensation, performance evaluation and labour relations HUMAN RESOURCES MANAGEMENT POLICIES AS AN INSTRUMENT FOR STRATEGY IMPLEMENTATION » ‘end The role of policies in strategy implementation Even though functional tactics provide broad guidante on the key rotitine activities that should be performed in the various functional areas, more detailed guidance. is often required. Policies provide this detail. Policies can be defined as the spitific Guidelines, methods, procedures, rules, forms and administrative practices that direct the thinking, decisions and actions of managers and employees in strategy implementation, Policies inform employees about what is expected of them and clariff’Wwhat can and catinot be done in pursuit of the short term goals in the strategy implementation:process. Previously Héferted to as standard operating procedures (SOPS), policies standardise routine decisions, thus reducing the time it takes to make decisions. Lastly, policigs provide a basis fo ‘ontrol and promote coordination and consistency across organisational units. & } ’ o \ In order to be Valuable Strategy impleffientation instruments, policies need to support the chosen strategy. change in'strategy requires a change in policies. As strategic change does not concur automatically, policies are needed to guide day-to-day activities and procedures to ensure successful strategy'implementation. If existing policies are not changed when a new strategy is implemented, they can become a barrier to strategic change. During the last two decades of the 20" century, the nature of competition changed in that the focus or power shifted to the customer and the buyer. Organisations found that it was no longer sufficient to focus on producing good products. They also had to focus on satisfying all the Lecturer — Chief Chirango. 0735 697 941 on BM3 Notes 0774 376 975 chiefehirango@gmailcomneeds of their customers in terms of variety, speed, quality and high levels of service. Consequently, during the 1990s organisations shifted their strategic focus to customers and organised their operations in ways that would meet the superior quality expectations of the customer. Front-line employees became the contact point between the organisation and the customer. To ensure a high standard of customer service it was necessary to empower these front-line employees to make decisions or to act to fulfil customer needs. One way of creating empowerment is through policies. In order to support customer focused strategiesPOrganisations had to change their policies. Creating strategy supportive policies td Policies are usually developed under the guidance of functional manager, Oiganisational policies may be set out formally in wri policies may be required to conform to legislation such és. the Empltyhent Equity Act of 1998, the Basic Conditions of Employment Act of 199%; tax legistation’and other governmental or they tity beuiten nd formal. "Some regulations. Policies are often developed in the following areas: accounting and finance; administration; environmental and social responsibility; corporate goVemance and ethics; human resources and labour relations; marketing; operations and production; research and development; and corporate communication. Policies can also“focus on matters such as health, safety, efficiency, speed and quality. Policies [Link] in line with or derived from the short term goals and functional tactics invofder to ensure that the chosen strategy is implemented successfully. Asan Nowin staits to implement a new strategy, it becomes necessary to review current policies and ¢hange these where appropriate to support it. A review and a redevelopment of x can therefore use this process to alter the organisational culture to fit the new strategy and for bring about change in the organisation's internal work climate. Strategy implementers example to instil values for good corporate governance. Lecturer — Chief Chirango. 0735 697 941 BM3 Notes 0774 376 975 chiefchirango@[Link]