Strategy Implementation
MBA7061 Strategy
Session 7
Prof Richard Nyuur
November 2024
Learning Outcomes
1. Explain why strategy implementation is more difficult than strategy
formulation.
2. Discuss the importance of annual objectives and policies in achieving
organizational commitment for strategies to be implemented.
3. Explain why organizational structure is so important in strategy
implementation.
4. Compare and contrast restructuring and reengineering.
5. Explain how a firm can effectively link performance and pay to
strategies.
6. Describe how to modify an organizational culture to support new
strategies.
AFI Strategy Framework
Comprehensive Strategic-Management Model
The Nature of Strategy Implementation
• Strategy formulation is positioning forces before the action.
• Strategy implementation is managing forces during the action.
• Strategy formulation focuses on effectiveness.
• Strategy implementation focuses on efficiency.
• Strategy formulation is primarily an intellectual process.
• Strategy implementation is primarily an operational process.
• Strategy formulation requires good intuitive and analytical skills.
• Strategy implementation requires special motivation and
leadership skills.
Some Management Issues Central to Strategy
Implementation
Strategy Implementation
Annual objectives:
1. represent the basis for allocating resources
2. are a primary mechanism for evaluating managers
3. are the major instrument for monitoring progress toward
achieving long-term objectives
4. establish organizational, divisional, and departmental
priorities
The Stamus Company’s Hierarchy of Aims
Policies
Policy
• specific guidelines, methods, procedures, rules, forms, and administrative
practices established to support and encourage work toward stated goals
• instruments for strategy implementation
• set boundaries, constraints, and limits on the kinds of administrative actions
that can be taken to reward and sanction behavior
• clarify what can and cannot be done in pursuit of an organization’s objectives
A Hierarchy of Policies
Some Issues That May Require a Management Policy
Resource Allocation
• Types: Financial, physical, human and Technological
resources
• Resource allocation
• central management activity that allows for strategy execution
• often based on political or personal factors
• Strategic management enables resources to be allocated
according to priorities established by annual objectives
Managing Conflict
Conflict
• Disagreement between two or more parties on one or more issues
• Establishing annual objectives can lead to conflict because
individuals have different expectations and perceptions,
schedules create pressure, personalities are incompatible, and
misunderstandings occur between line managers and staff
managers
Managing Conflict
• Avoidance
• includes such actions as ignoring the problem in hopes that the conflict
will resolve itself or physically separating the conflicting individuals
• Defusion
• includes playing down differences between conflicting parties while
accentuating similarities and common interests.
• Confrontation
• exemplified by exchanging members of conflicting parties so that each
can gain an appreciation of the other’s point of view or holding a
meeting at which conflicting parties present their views and work
through their differences
Trade-Off Decisions Required in Strategy
Implementation
Matching Structure With Strategy
• Structure largely dictates how objectives and
policies will be established
• Structure dictates how resources will be allocated
Symptoms of an Ineffective Organizational
Structure
The Functional Structure
• Functional structure
• groups tasks and activities by business function, such as
production/operations, marketing, finance/accounting,
research and development, and management information
systems
Advantages and Disadvantages of a Functional
Organizational Structure
The Divisional Structure
• Divisional structure
• functional activities are performed both centrally and in each
separate division.
• Geographic area, product or service, customer, process
Advantages and Disadvantages of a Divisional
Organizational Structure
The Strategic Business Unit (SBU)
Structure
• SBU structure
• groups similar divisions into strategic business units and delegates
authority and responsibility for each unit to a senior executive who
reports directly to the chief executive officer
• can facilitate strategy implementation by improving coordination
between similar divisions and channeling accountability to distinct
business units
Sonoco Products’ SBU Organizational Chart
The Matrix Structure
• Matrix structure
• most complex of all designs because it depends upon both vertical and
horizontal flows of authority and communication
• For a matrix structure to be effective, organizations need
participative planning, training, clear mutual understanding of
roles and responsibilities, excellent internal communication, and
mutual trust and confidence
Advantages and Disadvantages of a
Matrix Structure
Restructuring and Reengineering
Restructuring Reengineering
• involves reconfiguring or
• involves reducing the size of redesigning work, jobs,
the firm in terms of number and processes for the
of employees, number of purpose of improving
divisions or units, and cost, quality, service,
number of hierarchical levels and speed.
in the firm’s organizational
structure. • also called process
management, process
innovation, or process
• also called downsizing, redesign.
rightsizing, or delayering.
Linking Performance and Pay to Strategies
1. Provide full transparency to all stakeholders
2. Reward long-term performance with long-term pay, rather than
annual incentives
3. Base executive compensation on actual company performance,
rather than on stock price.
4. Extend the time-horizon for bonuses. Replace short-term with
long-term incentives
5. Increase equity between workers and executives. Delete many
special perks and benefits for executives
Linking Performance and Pay to Strategies
1. Does the plan capture attention?
2. Do employees understand the plan?
3. Is the plan improving communication?
4. Does the plan pay out when it should?
5. Is the company or unit performing better?
Managing Resistance to Change
• Force change strategy
• involves giving orders and enforcing those orders
• Educative change strategy
• one that presents information to convince people of the need for change
• Self-interest change strategy
• one that attempts to convince individuals that the change is to their
personal advantage
Creating a Strategy-Supportive Culture
1. Formal statements of organizational philosophy, charters, creeds,
materials used for recruitment and selection, and socialization
2. Designing of physical spaces, facades, buildings
3. Deliberate role modeling, teaching, and coaching by leaders
4. Explicit reward and status system, promotion criteria
5. Stories, legends, myths, and parables about key people and
events
Creating a Strategy-Supportive Culture
6. What leaders pay attention to, measure, and control.
7. Leader reactions to critical incidents and organizational
crises.
8. How the organization is designed and structured
9. Organizational systems and procedures.
10. Criteria used for recruitment, selection, promotion, leveling
off, retirement, and “excommunication” of people.
Ways and Means for Altering an Organization’s
Culture
Labor Cost-Saving Tactics
Q&As