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STRATEGY
IMPLEMENTATION:
 Strategy Implementation
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 Strategy implementation
 the sum total of all activities and choices
required for the execution of a strategic plan
 It is the process by which objectives, strategies,
and policies are put into action through the
development of programs, budgets, and
procedures.
 To begin the implementation process, strategy
makers must consider these questions:
 Who are the people to carry out the strategic
plan?
 What must be done to align company operations
in the intended direction?
 How is everyone going to work together to do
what is needed?
 Common Strategy
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Implementation Problems
 A survey of 93 Fortune 500 firms revealed that
more than half of the corporations experienced
the following 10 problems when they attempted
to implement a strategic change:
1. Took more time than planned
2. Unanticipated major problems
3. Ineffective coordination
4. Competing activities and crises created distractions
5. Employees with insufficient capabilities
6. Lower-level employees were inadequately trained
7. Uncontrollable external environmental factors
8. Poor departmental leadership and direction
9. Inadequately defined implementation tasks and
activities
10. Inefficient information system to monitor activities
 Who implements Strategy?
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 In most large, multi-industry corporations,

the implementers are everyone in the
organization.
 Changes in mission, objectives, strategies,
and policies and their importance to the
company should be communicated clearly to
all operational managers.
 Involving people from all organizational
levels in the formulation and
implementation of strategy tends to result in
better organizational performance.
 What must be done?
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 The managers of divisions and functional

areas work with their fellow managers to
develop programs, budgets, and
procedures for the implementation of
strategy.
 They also work to achieve synergy among
the divisions and functional areas in order
to establish and maintain a company’s
distinctive competence.
 Developing Programs, Budgets

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and Procedures
 Strategy implementation involves establishing
programs to create a series of new
organizational activities, budgets to allocate
funds to the new activities, and procedures to
handle the day-to-day details.
 Program
 a collection of tactics where a tactic is the
individual action taken by the organization as an
element of the effort to accomplish a plan
 The purpose of a program or a tactic is to
make a strategy action-oriented.
 Developing Programs, Budgets

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and Procedures
 After programs have been developed, the
budget process begins.
 Planning a budget is the last real check a
corporation has on the feasibility of its
selected strategy.
 An ideal strategy might be found to be
completely impractical only after specific
implementation programs are costed in detail.
 Procedures
 detail the various activities that must be carried
out to complete a corporation’s programs
 Standard operating procedures
 Achieving Synergy
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 Synergy
 One of the goals to be achieved in strategy
implementation is synergy between and
among functions and business units.
 exists for a divisional corporation if the return
on investment is greater than what the
return would be if each division were an
independent business
 Forms of Synergy
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 How Is Strategy to Be
Implemented?
Organizing for Action
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 Before plans can lead to actual

performance, a corporation should be
appropriately organized, programs should
be adequately staffed, and activities should
be directed toward achieving desired
objectives.
 Any change in corporate strategy is very
likely to require some sort of change in the
way an organization is structured and in
the kind of skills needed in particular
positions.
 Structure Follows Strategy
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 Structure Follows Strategy

 changes in corporate strategy lead to
changes in organizational structure
 the following are the sequence of
what occurs:
1. New strategy is created
2. New administrative problems emerge
3. Economic performance declines
4. New appropriate structure is invented
5. Profit returns to its previous level
 Stages of Corporate
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Development
 Successful, large conglomerate organizations
have tended to follow a pattern of structural
development as they grow and expand.
I. Simple Structure
 Flexible and dynamic
II. Functional Structure
 Entrepreneur is replaced by a team of managers
III. Divisional Structure
 Management of diverse product lines in numerous
industries
 Decentralized decision making
IV. Beyond SBU’s
 Matrix
 Network
 Organizational Life Cycle
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 Organizational life cycle

 describes how organizations grow, develop
and decline
 Advanced Types of
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Organizational Structures
 A new strategy may require more flexible
characteristics than the traditional
functional or divisional structure can offer.
 Today’s business organizations are
becoming less centralized with a greater
use of cross-functional work teams.
 Matrix structures
 functional and product forms are combined
simultaneously at the same level of the
organization
 Employees have two superiors, a product or
project manager, and a functional manager.
 Matrix Structure
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 Advanced Types of
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Organizational Structures
Conditions for matrix structures include:
Ideas need to be cross-fertilized across

projects or products
Scarcity of resources

Abilities to process information and to

make decisions needs to be improved

 Advanced Types of
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Organizational Structures
 Network structure
 virtual elimination of in-house business functions
 A corporation organized in this manner is often called a
virtual organization
 Many activities are outsourced
 A network structure could be termed a “nonstructure”
because of its virtual elimination of in-house business
functions.
 Virtual organization
 composed of a series of project groups or collaborations
linked by constantly changing nonhierarchical, cobweb-like
electronic networks.
 The network structure becomes most useful when the
environment of a firm is unstable and is expected to
remain so.
 Network Structure
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 Staffing
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Staffing is one of the key issues in strategy

implementation. Considerations are:
Deep knowledge of the acquiring company

Flexible management style

Ability to work in cross-functional teams

Willingness to work independently

Sufficient emotional and cultural

intelligence to work in a diverse

environment
 Staffing Follows Strategy
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 One way to implement a company’s business

strategy, such as overall low cost, is through
training and development.
 Human resource planning depends on the
different types of strategies that are pursued at
different levels. And each will lead to different
staffing strategies.
 Strategic directions determine the HRP.
 Business level and functional level strategies
determine the focus of the different HR activities.
 Staffing ….
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Human resource functions such as

 Recruitment and selection: timing,

amount, skill mix etc,

 Placement: positions, assignments etc,

 Training: type, frequency, depth etc,

 Job design: team vs individual focus, cost

vs innovation focus etc,

 Promotion: intensity, considerations etc,

Depend all on the type of strategy pursued.

 Staffing…
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Issues to consider:

 Downsizing.
 Outsourcing.
 Non-permanent jobs.
 Project works.
 Guidelines for
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Successful Downsizing
 Eliminate unnecessary work instead of
making across the board cuts
 Contract out work that others can do
cheaper
 Plan for long-run efficiencies
 Communicate the reasons for actions
 Invest in the remaining employees
 Develop value added jobs to balance
out job elimination
 International Issues in
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Staffing
Companies that do a good job of
managing foreign assignments follow
three general practices:
When making international assignments,

they focus on transferring knowledge and

developing global leadership.
They make foreign assignments to people

whose technical skills are matched or

exceeded by their cross-cultural abilities.
 International Issues in
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Staffing
 They end foreign assignments with a
deliberate repatriation process, with
career guidance and jobs where the
employees can apply what they learned
in their assignments.
 Leading
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 Implementation
 involves leading and coaching people to
use their abilities and skills most effectively
and efficiently to achieve organizational
objectives
 Without direction, people tend to do
their work according to their personal
view of what tasks should be done, how
and in what order.
 Managing Corporate Culture
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 Strong cultures are resistant to change.

 Optimal culture supports mission and
strategies.
 Management must evaluate what a
particular change in strategy means to
the corporate culture, assess whether a
change in culture is needed and decide
whether an attempt to change the
culture is worth the likely costs.
 Assessing Strategy—Culture
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Compatibility
 Is the proposed strategy compatible with
the company’s current culture?
 Can the culture be easily modified to make
it more compatible with the new strategy?
 Is management willing and able to make
major organizational changes and accept
probable delays and a likely increase in
costs?
 Is management still committed to
implementing the strategy?
 Assessing Strategy—Culture
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Compatibility
 Managing Cultural Change
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Through Communication
Companies in which major cultural changes
have successfully taken place had the
following characteristics in common:
The CEO and other top managers had a

strategic vision of what the company could

become and communicated that vision to
employees at all levels.
The vision was translated into the key
elements necessary to accomplish that
vision.
 Action Planning
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 Action plan
 Activities can be directed toward

accomplishing strategic goals through

action planning.
 states what actions are going to be taken,
by whom, during what time frame and with
what expected results
 Action Planning
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1. Specific actions to be taken to make the

program operational
2. Dates to begin and end each action
3. Person responsible for carrying out each
action
4. Person responsible for monitoring the
timeliness and effectiveness of each
action
5. Expected financial and physical
consequences of each action
6. Contingency plans
 Importance of an Action
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Plan
 Serves as a link between strategy
formulation and evaluation and control
 Specifies what needs to be done differently
from current operations
 Helps in both the appraisal of performance
and in the identification of any remedial
actions
 Explicit assignment of responsibilities for
implementing and monitoring the programs
may contribute to better motivation
 7-S MODEL /
FRAMEWORK
 The international consulting firm of McKinsey &
Company has developed the McKinsey 7-S
Framework for evaluating strategy
 The underlying premise of this model is that the
value of any given strategy depends not only on
its content but equally on whether it can be
successfully executed
 McKinsey partners Tom Peters & Robert
Waterman – concluded that:
 “Structure alone could not solve the problem of how to
coordinate resource allocation, incentives, & actions
across large organizations.”
 Thus, the 7-S Framework is based on the concept that
any strategy, in order to be successfully implemented,
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must fit with the culture of the organization.
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7-S Model cont’d …

 According to the model:

 A strategy is usually successful when the
other S’s in the framework fit, or support,
the strategy
 If a chosen strategy has run into problems
during implementation, it is often because
there is a lack of fit b/n the strategy & one
or more of the other S’s

 The 7-S model posits that organizations are successful

when they achieve an integrated harmony among
 Three hard S's of strategy, structure, &
systems, and
 Four soft S's of skills, staff, style, & super- 35
ordinate goals (now referred 35
to as shared
values)
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Structure

Strategy Systems

Shared
Values

Skills Style

Staff
7-S Model cont’d …

 Strategy
 The positioning & actions taken by
an enterprise, in response to or
anticipation of changes in the
external environment, intended to
achieve competitive advantage

 Structure
 The way in which tasks & people are
specialized & divided, & authority is
distributed; how activities &
reporting relationships are grouped;
the mechanisms by which activities 37
in the organization are coordinated
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7-S Model cont’d …

 Systems
 The formal & informal procedures
used to manage the organization,
including management control
systems, performance measurement
& reward systems, planning,
budgeting & resource allocation
systems, & management information
systems

 Staff
 The people, their backgrounds &
competencies; how the organization
recruits, selects, trains, socializes, 38
manages the careers, & promotes
employees 38
7-S Model cont’d …

 Skills
 The distinctive competencies of the
organization; what it does best along
dimensions such as people, management
practices, processes, systems, technology, &
customer relationships

 Style/culture
 What they focus attention on, what questions
they ask of employees, how they make
decisions; also the organizational culture

 Shared values
 The leadership style of managers - how they
spend their time, the core or fundamental set
of values that are widely shared in the 39
organization & serve as guiding principles of
what is important. 39
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