Strategy implementation in strategic management

STRATEGY
IMPLEMENTATION
PRESENTED TO:
DR. PRERNA TUTEJA
ASSTT. PROFESSOR
HSB, GJUS&T
PRESENTED BY:
TAMANNA (230101010025)
ADITI (230101010039)

"in actual navigation, a ship
may veer off its course for
many miles. Without a
compass bearing, a ship would
neither find its port nor be able
to estimate the time required
to get there.“

Overview
• Strategic Implementation Process
• Designing Organizational Structure
• Activating Strategies
• Matching structure with Strategy
• Structural, Behavioral & Functional Implementation

Strategy is a framework to
guide critical choices to
achieve a desired future
Strategy
Current
State
Desired
Future

Strategy implementation is the translation
of chosen strategy into organizational
action so as to achieve strategic goals and
objectives.
STRATEGY
IMPLEMENTATION
STRATEGIC PLANNING
What to do
(overall)
STRATEGIC
IMPLEMENTATION
How to do it
(Day–to-day
operations )

Strategy Formulation – Implementation:
Interrelationship
STRATEGY FORMULATION
• It is positioning forces before
action.
• It focuses on effectiveness.
• It is an intellectual process
• It requires good intuitive and
analytical skills.
• It requires coordination among
few individuals.
STRATEGY IMPLEMENTATION
• It is managing forces during
action.
• It focuses on efficiency.
• It is primarily an operational
process.
• It requires special motivational
and leadership skills.
• It requires combination of many
individuals.

Google’s Strategy Implementation
1. Define Your Strategy Framework
• Google’s Focus: Diversified product expansion (e.g., Google Books, Chrome OS) while
maintaining leadership in online search and advertising.
• Strategic Objective: Attack competitors like Microsoft by expanding into operating
systems, cloud services (Google Docs), and browsers (Chrome).
2. Build Your Plan
• Action Steps: Google launched beta versions of new products, such as Chrome OS and
Google Docs, to gather user feedback before full-scale release.
• Competitive Strategy: Challenge Microsoft in its core businesses (OS, office software,
and browsers) with low-cost or free alternatives.

3. Define Key Performance Indicators (KPIs)
• Revenue Growth: Increase online advertising revenue (6.2% growth in Q1 2009).
• Market Share: Expand share in online searches (65% vs. Microsoft’s 8%),
smartphone OS (1.6% vs. Microsoft’s 10%), and browsers (1.8% vs. Microsoft’s 66%).
4. Establish Your Strategy Rhythm
• Continuous Innovation: Google maintained a regular cadence of product launches
and updates (e.g., beta launches for customer feedback).
• Employee and External Input: Encouraged internal innovation through “Don’t be
evil” and “Give up control” principles, ensuring continuous strategy refinement.

5. Implement Strategy Reporting
• Regular Monitoring: Regularly tracked growth in key business areas (e.g., online
advertising, market share in new sectors like cloud software and smartphones).
• Adapting to Market Conditions: Adjusted strategy in real time based on user
feedback and competitive market dynamics (e.g., competitive threat from Microsoft).
6. Link Performance to Strategy
• Long-Term Growth: Focus on sustaining competitive advantage through brand
value (ranked 4th “Most Admired Company in the World”) and diversifying its revenue
sources.

Designing the
Organizational
Structure

Relationship b/w Strategy-Structure
 Strategy gurus like Alfred Chandler and M. E. Porter argue
that structure follows strategy.

Points to ponder on…
• There is no best structure
available anywhere.
• There are no good or bad
structures.
• There are only structures
that match or do not match
with the requirements of a
strategy

DIMENSIONS OF ORGANIZATION DESIGN
1.Structural dimension:
a. Formalization b. Hierarchy
c. Centralization d. Specialization
e. Personnel ratio
2. Contextual dimensions:
a. Environment b. Goals and strategy
c. Culture d. Technology

BASIC ASPECTS OF DESIGNING STRUCTURE
1. Vertical Differentiation: Number of levels in the
organization’s hierarchy.
Relevance:
• For fast response and innovation (e.g., Google’s new product
launches), use minimal vertical differentiation (flat structure).
• For compliance and control, more hierarchy is necessary.
2. Horizontal Differentiation: Division of roles across
specialized functions or departments.
Relevance:
• Specialization ensures focused resource allocation (e.g.,
Google’s various divisions: Google Books, Chrome OS).
• Decentralized, function-specific departments support
diversified strategies.

• Institutionalization of strategy,
• Formulation of derivative plans and programmes,
• Translation of general objectives into specific objectives.
• Resource mobilization and allocation.
Key Activities for Strategy Activation

Institutionalization of strategy
Communication of
strategy
Getting
acceptance
• Context in which the particular strategy has
been formulated
• Contents of the strategy such as the
contribution of the strategy to the
achievement of organizational objectives,
changes required in existing organizational
processes, and what is expected from
personnel at different levels in the
organization.
• Willing Acceptance for Success
• Importance of Positive Attitude
• Addressing Resistance to Change

Formulation of Derivative Plans and Programmes
Action Plans Programmes
• Focus on effective resource utilization to
achieve objectives.
• Types vary based on strategy (e.g.,
takeover vs. expansion).
Key Questions:
• How does it contribute to the strategy?
• When will activities occur?
• Who will execute?
• What support is needed?
•Single-use plans specifying steps, timing,
sequence, and responsibility.
•Supported by capital and operational
budgets.
•Example: Takeover strategy involves both
acquisition and operating costs.
•Coordination: Ensures that multiple
programmes work together for successful
implementation.

•General objectives (e.g., growth) provide direction but are too broad for
direct action.
•Specific objectives translate these into measurable, time-bound targets
(e.g., "double turnover in 4 years").
Criteria for Effective Translation
•Tangible & Measurable: Objectives should be concrete, allowing for
performance evaluation.
•Contribution to General Objectives: Specific objectives must align
with long-term goals, ensuring phased achievement.
Translation of general objectives
into specific objectives

For implementing a strategy, an
organization should have commensurate
resources and these resources should be
committed and allocated to various units
and functions where these have optimum
use.
Resource Mobilization and Allocation
Financial Human
Organizational Resources

Matching Structure with Strategy

Changes in strategy often require changes in the way an
organization is structured for two major reasons:
 First, structure largely dictates how objectives and policies
will be established.
For example, objectives and policies established under a
geographic organizational structure are couched in geographic
terms.
 The second major reason is that structure dictates how
resources will be allocated.

An important concern is determining what types of
structural changes are needed to implement new
strategies and how these changes can best be
accomplished. We examine this issue by focusing on
seven basic types of organizational structure:
Simple/ Entrepreneurial Structure
Functional Structure
Divisional Structure
SBU Structure
Matrix Structure
Network Structure

More Flexibility and Adaptability
Enhanced Communication
More Employee Empowerment
Lower Costs
Role Ambiguity
Scalability Issues
Limited Specialization
Dependence on Individuals
Pros
Cons

Examples of Functional Structure
Two large firms that still successfully use a functional
structure are Nucor Steel, based in Charlotte, North
Carolina, and Sharp, the $17 billion consumer
electronics firm.

 More Specialization
 Clearer Roles
 More Career Development
 More Efficient Resource Use
 Silo Mentality
 Accountability forced to the top
 Poor delegation of authority
 Coordination Challenges
Pros
Cons

Divisional Structure
The divisional structure can be organized in one of four ways:
• by geographical area,
• by product or service,
• by customer, or
• by process.

Divisional Structure by geographic area
 A divisional structure by geographic area is appropriate
for organizations whose strategies need to be tailored
to fit the particular needs and characteristics of
customers in
different geographic areas.
 Hershey’s divisions are United States, Canada, Mexico,
Brazil, and Other.
 An alternative—and perhaps better—type of structure
for Hershey would be divisional by product because the
company produces and sells three types of products
worldwide:
(1)chocolate, (2) non-chocolate,
(3) grocery.

Divisional Structure by product
 A divisional structure by product (or services) is
most effective for implementing strategies when
specific products or services need special
emphasis.
 Also, this type of structure is widely used when an
organization offers only a few products or services
or when an organization’s products or services
differ substantially.

Divisional Structure by customer
 When a few major customers are of paramount
importance and many different services are provided
to these customers, then a divisional structure by
customer can be the most effective way to
implement strategies.
 This structure allows an organization to cater
effectively to the requirements of clearly defined
customer groups.

Divisional Structure by Process
 A divisional structure by process is similar to a
functional structure, because activities are organized
according to the way work is actually performed.
However, a key difference between these two
designs is that functional departments are not
accountable for profits or revenues, whereas
divisional process departments are evaluated on
these criteria.

Matrix Structure
 A matrix structure is the most complex of all designs
because it depends upon both vertical and horizontal
flows of authority and communication (hence the
term matrix).

SBU Structure
 A strategic business unit is a fully functional,
independently operational setup of a particular
business. These units are active and have their
vision, growth, and direction. The main objective of
such a unit is to maximize profits and mainly focus
on offering a particular product targeting a market
segment.

Network Structure
 A network structure goes far beyond your internal company
structure. It’s the act of joining the efforts of two or more
organizations to deliver one product or service. Typically, a
network organization outsources independent contractors
or vendors to complete the work.

 Promotes organizational agility and flexibility.
 Fosters collaboration across employees.
 Creates a web of work-related relationships.
 Creates highly specialized skills in employees.
 Creates a web of work-related relationships.
 Extremely complex and convoluted.
 Lower formalization.
 High turnover.
 There is a feeling of inequality between full-
time employees and contractors/freelancers.
 It’s difficult to know who has final approval.
Pros
Cons

Strategy Structure Type Control Mechanism
Concentration Strategy Functional Structure
Centralized control, focus
on efficiency
Integration Strategies Divisional Structure
Decentralized control,
focus on synergy
Diversification
Strategies
Multidivisional (M-Form)
Structure
Decentralized operations,
centralized strategy
Internationalization
Strategies
Global Matrix Structure
Balance of global and
local control
Cooperative Strategies Network Structure
Joint control, shared
decision-making

Structural Implementation
• Structural implementation is the process of aligning
an organization's structure with its strategy
• Arrangement of tasks and sub tasks required to
implement a strategy.

KINDS OF STRUCTURE
1.Vertical organizational structure
is a pyramid-like top-down
management structure. These
organizations have clearly defined
roles with the highest level of
leadership at the top, followed by
middle management then regular
employees.

2. Horizontal structure It's known as a flat
structure, is a type of business structure with a
few or no levels of middle management
between staff and executives.

Relationship between structure and
strategy
• Structure follows strategy for economic efficiency
• Strategy determines how the organization structure
has to be formed
• Structure influences present strategy implemented
and in future.

TYPES OF ORGANIZATION
STRUCTURE
1.Entrepreneurial structure
2.Functional structure
3.Divisional structure
4.SBU structure
5.Matrix structure

PROCESS OF STRUCTURE IMPLEMENTATION
1 Assess organizational structure
2 Define strategic goals and objectives
3 Design or Redesign the organizational structure
4 Allocate Resources
5 Develop policies and procedures
6 Change management and communication
7 Implementation and Monitoring
8 Feedback and Adjustments

Depending upon the strategic choice (along with some
other factors like size of the firm, technology used,
environmental complexities etc.), a firm may pursue
one of the following structures.
• Simple/ Entrepreneurial Structure
• Functional Structure
• SBU Structure
• Divisional Structure
• Matrix Structure
• Holding Company Structure
• Network Structure
• Other Structures

Restructuring
Restructuring refers to the process of changing the
various aspects organizational structure & design for
improving efficiency and effectiveness. It generally
involves reducing the size of the organization and the
associated costs by downsizing, rightsizing or
delayering.

Reengineering (or BPR)
• This concept is concerned with
the radical redesign of business
processes to achieve
improvements in the key areas
like cost, quality, speed delivery
of services etc. Reengineering is
broader in scope than
restructuring.
• It attempts to restructure the
jobs and processes from scratch
to boost up the efficiency and add
value to organization.

7 Essential Steps for Business Process Re-engineering
Step 1: Identify the Process to Re-engineer
Step 2: Analyze the Process
Step 3: Redesign the Process
Step 4: Test the New Process
Step 5: Implement the New Process
Step 6: Monitor and Evaluate
Step 7: Continuous Improvement

Behavioural Implementation
Behavioral implementation focuses on changing the
mindset, values, and behaviors of employees to align
with the new strategic goals and objectives. By
aligning employee behaviors and attitudes with the
new strategic goals and objectives, organizations can
create a culture of continuous improvement and
innovation that drives long-term success.

COMPONENTS OF BEHAVIOURAL
IMPLEMENTATION
• Leadership
• Corporate culture
• Communication
• Motivation
• Ethics
• Social responsibility

ISSUES IN BEHAVIOURAL
IMPLEMENTATION
• Influence tactics
• Power
• Political implication of power
• Managing resistance to change
• Managing conflict

FUNCTIONAL IMPLEMENTATION
• Functional implementation is the process of translating a
company's strategic goals into actionable plans and
initiatives within its functional areas, such as marketing,
finance, operations, human resources, and technology.
• It involves aligning functional activities, resources, and
capabilities with the overall strategic direction to achieve
desired outcomes.

Functional Strategies
Functional strategies deals with relatively
restricted plan designed to achieve objectives in
a specific functional area, allocation of resources
among different operations within that functional
area and coordination among different functional
areas for optimal contribution to the achievement
of the business and corporate level objectives

Functional Level Strategies
1.Marketing plan & policies.
2.Financial plan & policies
3.Operational plan & policies.
4.HRM plan & policies.
5.Information management plan & policies.

• Product: quality, features, choice of models, brand names,
packaging etc.
• Pricing: Discount, mode of payment, allowances, payment
period, credit terms etc.
• Place: Channels to be used, transportation, logistics and
inventory storage management and coverage of markets etc.
• Promotion: Advertising, personal selling, sales promotion and
publicity.

• Production system Capacity, location, layout, product or service
design, works system, degree of automation.
• Operations planning and control Aggregate production
planning, material supply, inventory, cost and quality
Management and maintenance of plant and equipment.
• Research and Development product development, personnel
and facilities, level of technology used technology transfer and
absorption, technological collaboration and support.

• Sources of Funds: Capital mix decisions capital structure,
procurement of capital and working capital borrowings, reserves
& surplus, relationship with lenders, banks & financial
institutions.
• Usage of Funds: Investment or asset-mix decisions: Capital
investment, loans and advances, fixed assets acquisition,
current assets, dividend decisions etc.
• Management of funds: The system of finance, accounting and
budgeting, cash, credit and risk management cost control and
reduction etc.

• Personnel System: Manpower planning. Selection.
development, compensation, communication and appraisal.
• Organizational and employee characteristics: Corporate
image, quality of managers, staff and workers, availability of
development opportunities for employees, working conditions.
• Industrial Relation: Union-management relationship, collective
bargaining, safety, welfare and security, employee satisfaction
and morale.

Information Management
• Acquisition and Retention of information: Sources,
quantity, quality and timeliness of information, retention
capacity and security of information.
• Processing and synthesis of information: database
management, computer systems, software capability and
the ability to synthesize information.
• Retrieval and usage of information: The retrieval and
usage of information deal with factors such as the
availability and appropriateness of information formats and
the capacity to assimilate &use information.

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