Unit 7 implementation phase of strategic management

Unit 7 : Implementation Phase
Implementation is the execution of the necessary strategies to meet the
objectives that have been set. To ensure success, all employees should
understand their roles and responsibilities. Appropriate activity measures
provide necessary feedback with facts that identify positive impacts and areas
for change. In this phase, companies pay attention to details and monitor
processes to implement quick changes as required. For example, if a common
customer complaint is that products take too long to arrive, an analysis of the
shipping process may reveal ways to expedite delivery.
1Compiled by-Roshan pant NCC MBM

Strategy implementation
• Implementing strategy entails converting the organization’s strategic plan into
action and then into results. No matter how brilliantly strategy is formulated, if not
implemented properly, it will simply be a futile exercise.`
• Implementation is the process that turns strategies and plans into actions in order
to accomplish strategic objectives and goals.
• Strategy implementation is also defined as the manner in which an organization
should develop, utilize, and amalgamate organizational structure, control systems,
and culture to follow strategies that lead to competitive advantage and a better
performance.
• Organizational structure allocates special value developing tasks and roles to the
employees and states how these tasks and roles can be correlated so as maximize
efficiency, quality, and customer satisfaction-the pillars of competitive advantage.
• It is concerned with Sub-strategies, programs, action plans, policies, procedures,
resource allocations, budgets, authority/responsibility delegation, teams and task
forces, reward and control systems, and individual assignments
Compiled by-Roshan pant NCC MBM 2

Issues Central to Strategy
Implementation
• Establish short-term (annual) objectives
• Devise and communicate policies
• Initiate specific functional tactics or action
plans
• Outsource functional activities, as deemed
appropriate

Strategy Formulation Strategy Implementation
Strategy Formulation includes planning and decision-making involved in
developing organization’s strategic goals and plans.
Strategy Implementation involves all those means related to executing the
strategic plans.
In short, Strategy Formulation is placing the Forces before the action. In short, Strategy Implementation is managing forces during the action.
Strategy Formulation is an Entrepreneurial Activity based on strategic
decision-making.
Strategic Implementation is mainly an Administrative Task based on
strategic and operational decisions.
Strategy Formulation emphasizes on effectiveness. Strategy Implementation emphasizes on efficiency.
Strategy Formulation is a rational process. Strategy Implementation is basically an operational process.
Strategy Formulation requires co-ordination among few individuals. Strategy Implementation requires co-ordination among many individuals.
Strategy Formulation requires a great deal of initiative and logical skills. Strategy Implementation requires specific motivational and leadership
traits.
Strategic Formulation precedes Strategy Implementation. STrategy Implementation follows Strategy Formulation.

Functional plan
• For effective implementation, strategists have to provide direction to
functional managers regarding the plans and policies to be adopted.
• Strategy of one functional area cannot be looked at in isolation. Different
functional tasks of the business are interwoven together and how a
strategy is synergised with other areas determines its effectiveness.
• Functional strategies play two important roles. Firstly, they provide
support to the overall business strategy.
• Secondly, they spell out as to how functional managers will work so as to
ensure better performance in their respective functional areas.
• For each functional area, first the major sub areas are identified and then
for each of these sub functional areas, content of functional strategies,
important factors, and their importance in the process of strategy
implementation are identified.
• Functional area strategy may include marketing, financial, production and
human resource management etc based on the functional capabilities of
an organisation.

Reasons why functional strategies are
needed ?
♦The development of functional strategies is aimed at making the
strategies-formulated at the top management level-practically
feasible at the functional level.
♦ Functional strategies facilitate flow of strategic decisions to the
different parts of an organization.
♦ They act as basis for controlling activities in the differen t functional
areas of business.
♦The time spent by functional managers in decision-making is reduced
as plans lay down clearly what is to be done and policies provide
the discretionary framework within which decisions need to be
taken.
♦Functional strategies help in bringing harmony and coordination as
they remain part of major strategies.
♦ Similar situations occurring in different functional areas are handled
in a consistent manner by the functional managers.

Functional plans and the basic issues
to be handeled under them for proper
implementation of strategy

1.Finance
financial plan includes the areas of ; source of financing. Inflows,
outflows, leverage, profitability and ratios, net worth and growth
• Sources of Funds: Capital Mix Decisions:
Capitalstructure, procurement of capital and working
capitalborrowings, reserves and surplus, relationship
withlenders, banks and financial institutions.
• Usage of Funds:Investment or asset-mix
decisions:Capital investment, fixed asset acquisition,
currentassets, loan and advances , dividend decisions
etc
• Management of Funds: The system of
finance,accounting and budgeting, cash, credit and
riskmanagement, cost control and reduction etc.

2. Marketing
Marketing: product and service mix, supply chain and value
chain. net worth and growth
• Marketing is a social and managerial process by which individuals and groups obtain what they need and want
through creating, offering and exchanging products of value with others.A business organization faces countless
marketing variables that affect the success or failure of strategy implementation. Some marketing decisions that
may require special attention are as follows:
1. The kind of distribution network to be used. Whether to use exclusive dealerships or multiple channels of
distribution.
2. The amount and the extent of advertising. Whether to use heavy or light advertising. What should be the
amount of advertising in print media, television or internet?
3. Whether to limit or enhance the share of business done with a single or a few customers?
4. Whether to be a price leader or a price follower?
5. Whether to offer a complete or limited warranty?
6. Whether to reward salespeople based on straight salary, straight commission, or on a combination of
salary/commission?
• 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 managementand coverage of markets
etc.
• Promotion :Advertising, personal selling, salespromotion and publicity.

3. Production operation
Production and operation: plant, location and layout; transportation and material
handling; product design and production; value addition and modification
• Production system- capacity, location, layout, product or service design,work systems, degree of automation,
extent of vertical integration.
• Operations Planning and control – aggregate production planning;materials supply; inventory, cost and quality
management; and maintenanceof plant and equipment.
• Research and development- product development, personnel and facilities,level of technology used, technology
transfer and absorption, technological collaboration and support.
Breaking the above points:
 Plant size (large or small)
 Plant Location (keeping in view infrastructure facilities, security, wages, transportation cost, political risk
factors etc.)
 Inventory / Inventory control (ABC Analysis; EOQ; JIT etc.)
 Quality control (inspection, checklist, control chart, sampling etc.)
 Cost control (standard costing, budgetary control etc)
 Technological innovation (amount, use of experts etc.)

4.Human Resource
• KSA-I (knowledge, skills, abilities and interest) interest means to pursue
career plan,
• - Acquisition,
• development,
• motivation,
• Maintenance
Breaking the above activities:
 Human Resource Planning
 Recruitment & Selection
 Training & Development
 Compensation Management
 Performance Appraisal
 Motivation and Rewards
 Work-Life Balance etc.

5. Research and development
• innovation and technology development,
• technology transfer and absorption,
• experimentation and testing,
• Improvement and optimization
• sustainability and support,
• engineering and re-engineering and reverse
engineering

6. Management information
system(MIS)
• Databases
• Integration of databases
• Analysis and interpretation
 Type of MIS (MIS/DSS/SIS/FAIS)
 Type of software
 System security
 Training for users
 Data update
 System improvement, etc.

7.General management work plan
• planning;
• organizing;
• leading;
• controlling
 (Re)designing the organization structure
 Developing strategy supportive culture
 Managing conflicts
 Overcoming resistance to change etc.

Outsourcing functional activities
 Outsourcing is concerned with sub-contracting out
some of the business functions/process to outside
parties/organizations.
 This is done through negotiating contract
agreements with a vendor who takes on the
responsibility for the production process, people
management, quality, customer service and key asset
management of the function.
 Sometimes, strategists may decide to outsource some functions to
take advantages of cost, quality, speed, flexibility and to allow the
firm focus on core/strategic issues.
 Nike is doing this very successfully.

Advantages of Outsourcing functional
activities
• Cost Savings:here can be significant cost savings when a business function
is outsourced. Employee compensation costs, office space expenses and
other costs associated with providing a work space or manufacturing
setup are eliminated and free up resources for other purposes.
• Focus on Core Business:Outsourcing allows organization to focus on their
expertise and core business. When organizations go outside their
expertise, they get into business functions and processes that they may
not be as knowledgeable about and could potentially take away from their
main focus.
• Improved Quality:Improved quality can be achieved by using vendors with
more expertise and more specialized processes
• Customer Satisfaction:The advantage of having a vendor contract is they
are bound to certain levels of service and quality
• Operational Efficiency:Outsourcing gives an organization exposure to
vendor specialized systems. Specialization provides more efficiency that
allows for a quicker turnaround time and higher levels of quality.

Disadvantages of Outsourcing
functional activities
• Quality Risk:Outsourcing can expose an organization to potential risks and legal exposure.As an
example, if a car is recalled for faulty parts and that part was outsourced, the car manufacturer
carries the burden of correcting the potentially damaged reputation of the car maker.
• too dependence upon the specialist provider
• Quality Service:Unless a contract specifically identifies a measurable process for quality service
reporting, there could be a poor service quality experience. Some contracts are written to
intentionally leave service levels out to save on costs.
• Language Barriers:If a customer call center is outsourced to a country that speaks a different
language, there may be levels of dissatisfaction for customers dealing with the language barriers of
someone with a strong accent.
• Employee/Public Opinion:There can be negative perceptions with outsourcing and the sympathy of
lost jobs. This needs to be managed with sensitivity and grace.
• Organizational Knowledge:There is the potential that an outsourced employee will come in contact
with customers and not be as knowledgeable of the organization, resulting in a negative customer
experience.
• Labor Issues:how the workforce responds to outsourcing and can affect their daily productivity.
• Legal Compliance and Security:Processes that are outsourced need to be managed to ensure there
is diligence with legal compliance and system security.
• Employee Layoffs:Outsourcing commonly results in the need to reduce staffing levels.

Empowerment of Operating Personnel
(Employee Empowerment)
• In simple sense it is the process of giving lower-level
employees decision making power.
 In broad sense empowerment=Adequate
authority,information, resources, and learning
opportunities
 Employee empowerment thus aims of making
employees more capable of doing their jobs.
 t is quite important for successful implementation of
strategies because: “it is the people who make
everything happen in organizations”.

Guidelines for Employee
Empowerment
1. Create and Share Vision, Mission, Values, Objectives and
Strategies
2. Trust People and Provide Information for Decision Making
3. Delegate Authority and Define Responsibility
4. Link Performance with Incentives; Not Just More Work
5. Provide Trainings and Provide Adequate Resources
6. Give the Opportunity for People to Work in Teams
7. Don’t Blame People, Fix the System
8. Provide Rewards (extrinsic) and/or Help Employees Feel
Rewarded (intrinsic)
9. Monitor the Progress and Provide Frequent Feedback

Empowerment essential: Trust (Schindler &
Thomas, 1993)
• Integrity; honesty and truthfulness
• Competence: technical and interpersonal
knowledge and skills
• Consistency: reliability, predictability, and
good judgement in handling situations
• Loyalty: willingness to protect a persons,
physically and emotionally
• Openness: willingness to share ideas and
information freely

Degree of employee empowerment
• Encouraging: employees to pay more active
and their work
• Involving: employees in taking responsibility
for improving the way things are done
• Enabling: employees to make more and bigger
decisions without having to refer to someone
more senior

Employees’ empowerment: Beliefs
• Enhance employees’ confidence
• Employees perceive the meaning of their work
• Employees feel competent
• Employees desire a sense of self-
determination
• Employees have an impact on important
decision

Functional policies
• policies that define the broad guideline for strategy implementation,
functional decision-making and actions to be takes.
• They are guides to thinking that establish the boundaries or limits within
which decisions are to be made.
• Within these boundaries, judgment must be exercised. The degree of
discretion permitted will vary from policy to policy. Some policies are quite
broad and allow much latitude, whereas others are narrowly constructed
and leave little room for judgment.
They may be:
• procedures/ techniques / formalities
• standards / ideas/ ethics
• guidelines/rules/ advices
• baselines/ starting point/ references point

Role of functional policies
• First and foremost, they simplify decision making
• policies will focus on legal and ethical behavior.
• They delimit the area of search for possible alternatives and preclude the need for repeated, in-
depth analysis of recurring, similar problems. Consequently, they promote efficiency in the
utilization of functional managerial time.
• sets clear boundaries with which employees operate
• restrict top management strategic options and intuitive decisions
• links the strategic goals, tactical goals, and operational goals with strategic plans,
tactical plans and operational plans correspondingly
• policies help secure consistency and equity in organizational decisions. Thus, if several
managers make decisions in a particular policy area, their decisions will be consistent within the
limits established by the governing policy.
• balance resource demands
• test the strategic soundness of a particular action

Thank you

Unit 7 implementation phase of strategic management

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