unit-5-strategy-implementation (1) (1).pptx

strategy

1. BBA 8 th Semester MGT 208 Business Strategy By Rajesh Karki

2. Unit – 5 strategy Implementation Concept of Strategy Implementation Strategy implementation may be defined as the sum total of the activities required for the successful execution of strategy. Strategy formulation and implementation are viewed as the two sides of the same coin. Strategy formulation is the planning of work whereas strategy implementation is working of plan.

3. Process of Strategy Implementation/Operationalizing the Strategy Determination of annual objectives and policies : Annual objectives are set with the involvement of all managers in an organization. Policies facilitate solving regular problems. Development of functional strategies and tactics : Functional strategies are developed to achieve functional objectives. After determinations of functional strategies, functional tactics should be formulated. Tactics link formulation and implementation of strategy. Development of programs, budget and procedures Programs: Program makes a strategy action oriented. The new strategy involves a sequence of new programs and activities. Budgets: Budget ensures the feasibility of strategy. Procedures: After the program and budgets are approved, procedures must be developed.

4. Process of Strategy Implementation/Operationalizing the Strategy Managing conflict: Establishing objectives can lead to conflict which should be managed and resolved. Matching strategy with structure : When a firm changes its strategy, the existing organizational structure may become ineffective. Changes in strategy often require changes in organizational structure. Restructuring and reengineering : Restructuring involves reducing the size of the firm in terms of number of employees, divisions or units, and hierarchies. Reengineering is concerned more with employee and customer well being. It involves redesigning work, jobs and processes to improve cost, quality, service and speed.

5. Process of Strategy Implementation/Operationalizing the Strategy Linking performance and pay to strategies : Successful implementation of strategy demands linking performance and pay to strategies. Managing resistance to change : People may fear change due to economic loss, inconvenience, uncertainty and a break in normal social patterns. Change must be viewed as an opportunity rather than as a threat by managers and employees and managed accordingly. Creating a strategy supportive culture : New strategies may demand different culture. Aspects of an existing culture that are incompatible to a proposed strategy should identifies and changed.

6. Relationship between Strategy and Structure New strategy is formulated New administrative problem emerges Organizational performance decreases Organizational performance improves A new organizational structure is established

7. Organizational Structure for Strategy Implementation Simple / Entrepreneurial Structure : In simple structure, the owner/ manager makes all major decisions. He / she monitors all activities. This structure is characterized by informal relationships, few rules, limited task specialization and informal information systems. Coordination is relatively high due to frequent and informal communications between the manager and employees.

8. Simple / Entrepreneurial Structure Advantages Has minimum hierarchy. Business decision are quick and effective since they are made by owner or managers. It is suitable if the size of the organization is small. Motivation of owner or manager is high due to control over the business activities. Through direct communication, congenial relationship may be maintained with the supplier, customer and employees. Disadvantages It is not suitable to address complex and dynamic business environment. Less chance of developing professionalism among the employees due to improper allocation of jobs.

9. Organizational Structure for Strategy Implementation Functional structure : The functional structure consists of a chief executive office with functional line managers in functional areas such as production, accounting, marketing, R&D and human resources. It allows for functional specialization.

10. Functional Structure Advantages Functional specialization can be achieved since the work, responsibility and accountability of the employees are clear. Efficiency of the employees increases due to the division of labour . The direst communication between the functional managers enhances their capability. This structure is simple and economical. It ensures proper allocation of resources among the functional units. Disadvantages Unnecessary conflict may arise due to coordination among the functional units. There may be lack of responsibility for the overall organizational performance. Since the managers and employees are regularly involved in a particular unit only, it may erode the innovativeness. It is difficult to identify the profitable products and activities. This structure can not address the environmental dynamism.

11. Organizational Structure for Strategy Implementation Multi Divisional Structure: The multidivisional structure consists of a corporate office and operating divisions which represents a separate business or profit center. The responsibility for day-to-day operations are delegated to divisional managers.

12. Multi Division Structure Advantages This structure is suitable for the business having multi products. The organizational effectives may be enhanced due to high coordination among the functional units. Each functional unit can address the environmental components. It encourages the management to concentrate on the business and functional strategy. It encourages management development. It enables the top management to monitor the performance of each business accurately and look for ways of improving performance. It facilitates comparisons between divisions, which improves the resources allocation process.

13. Multi Division Structure Disadvantages Unnecessary conflict and misunderstand may emerge as a result of poor communications among the divisions. Since the divisions work independently, there may be lack of coordination among them. There may be problems in allocation of resources among the departments. Organizational complexity may increase due to multiple divisions.

14. Organizational Structure for Strategy Implementation Matrix Structure: A matrix structure is the most complex of all structures. A matrix structure depends on both vertical and horizontal flows of authority and communication. It includes dual lines of budget authority with dual sources of reward and punishment, shared authority, dual reporting channels and a need for an extensive and effective communication systems.

15. Matrix Structure Advantages It enables organizational effectiveness by utilizing the resources in an optimum way. Decisions are effective as it attempts to address the interest of stakeholders. Decrease in bureaucracy due to direct coordination between different levels or units of the organization. It facilitates communication by enhancing motivation and commitment of the employees. The creativity of the employees can be enhanced by utilizing the human resources scientifically.

16. Matrix Structure Disadvantages There may be delay in decision making due to the involvement of different units and departments. There may not be clarity in the responsibility and accountability towards the work. The accountability of profit and cost center may not be clear. There may be conflict among the departments for the acquisition of resources. This structure is complex and costly.

17. Organizational Structure for Strategy Implementation Network Structure: A network structure is also called virtual structure or non-structure. It is a series of independent business units linked together by computers information system that designs, produces and markets a product or service. It is most useful when the environment of a firm is unstable.

18. Network Structure Advantages This structure is flexible to cope the environmental dynamism. It allows gathering efficiencies from other firms which enhances organizational effectiveness. It allows an organization to concentrate in the core competency. Disadvantages It involves many business units which may create unnecessary conflict among them. It is difficult for the organization to control its network.

19. Evaluation and Control in Strategic Management S trategy evaluation is important to ensure that stated objectives are being achieved. It alerts management to problems before a situation turns critical. Control is taking corrective actions if any deviation exists between the standard and actual. It ensures that the organization is using appropriate strategies to deal with the environmental conditions. Importance of evaluation and control Guides for the implementation of strategy. Provide early signals of the obstacles in the process of strategy implementation. Provide the future direction to the strategy.

20. Process of Evaluation and Control Determine what to measure Set control standards Measure performance Compare performance to standards Determine the reasons for the deviations Take corrective actions

21. Types of Strategic Control Premise control : Is the management process of systematically and continuously checking to determine whether premise upon which the strategy is based are still valid. Special alert control : Is the management actions undertaken to thoroughly and often vary rapidly, reconsider a firm’s strategy because of a sudden, unexpected events. Implementation control : Is the management efforts designed to assess whether the overall strategy should be changes in light of results associated with the incremental actions that implement the overall strategy. Strategic surveillance : Is the management efforts to monitor a broad range of events inside and more often outside the firm that are likely to affect the course of its strategy over time.

22. Criteria for Evaluating Strategies Consistency Consonance Feasibility Advantage

23. Characteristics of Strategic Evaluation Provides direction Continuous activity Top management activity Cost effective Focus on key performance Future oriented

24. Guidelines for Proper Evaluation and Control Economical Timeliness Provide true picture Action oriented Foster mutual understanding, trust and common sense Simple Convincing

25. Strategic Leadership Strategic leaders are people located in different parts of the firm using the strategic management process to help the firm reach its vision and mission. It is the ability to anticipate, envision, maintain flexibility and empower others to create strategic change as necessary.

26. The Role of Strategic Leadership Determining strategic direction Effectively managing the firm’s resource Providing information Sustaining an effective organizational culture and ethical practices Establishing balanced organizational controls Managing conflict Managing resistance to change

27. Leadership and Management Management is also involved in controlling and decision making. Control ensures that people’s behaviours are in line with the plan and variance if any can be identified and corrected quickly. In contrast, leadership is about changing people’s behaviour towards new direction. It ensures that organizational vision is in line with the values of the employees. In this way, management deals with complexity and leadership deals with change.

28. An organization skilled at creating, acquiring and transferring knowledge and at modifying its behaviour to reflect new knowledge and insights is called learning organization. Learning organizations are skilled at four main activities. Solving problems systematically Experimenting with new approaches Learning from their own experiences and past history as well as from the experiences of others. Transferring knowledge quickly and efficiently throughout the organization. The Learning Organization

29. Leadership Role and Skill in Building Learning Organization Roles The leader as designer The leader as teacher The leader as steward Skills Building a shared vision Surfacing and testing mental models System thinking

30. Emotional Intelligence and Leadership Performance Emotional intelligence is the ability to work with others. It is the ability to recognize one’s own emotion and the emotions of others. It manifests in; Self-awareness Self-regulation Motivation Empathy Social skills

31. Leadership Capabilities Sense making Relating Visioning Inventing

32. Impact of Leadership on Vision, Values and Culture Leadership, vision and values The top management checks whether the organization is going in the right direction. They shape the organizational values and lead by example. They are expert in promotion, protection and shaping of values. They guide, direct and signal to shape values. An effective leadership fosters stakeholders’ commitment to organizational vision and values. Leadership and culture An, effective strategic leaders recognizes when cultural change is needed. He/she shapes and reinforces a new culture by communication and problem solving along with selecting the right people, engaging in effective performance appraisals and using appropriate reward systems.

33. Cultural Dimensions Individualism collectivism Power distance Masculinity femininity Uncertainty avoidance Long and short term orientation

34. Corporate Culture and Leadership Corporate culture and leadership are the two sides of the same coin. Hence, they go together. One simply cannot flourish without other. When organization are started, there is always a leader with a certain way of doing things and those ways are going to be imposed on all the organizational members. The leader’s norms, values and preferences are the first ways that the organizational members follow in a shared way and become culture.

35. Leading Strategic Change Concept of strategic change Strategic change involves changes in the content of a firm’s strategy as defined by its scope, resource deployments, and competitive advantages. Strategic drift demands change in strategy. It occurs when the current strategy loses relevancy in terms of addressing the environmental issues.

36. Understanding the Forces of Change Business environment is dynamic. Dynamism results in rapid change in strategic assumptions. With the change in assumptions, the current strategies should be changed or adjusted. Both the external and internal forces of the environment demand strategic change. External forces : They reside outside the organization and are dynamic. Internal forces : They are within the organization. They are controllable in long run.

37. Types of Strategic Chain Adaptation : It is the change which is accommodated within the current paradigm. Reconstructio n : It is a rapid type of change. It involves a big change that causes a lot of confusion, worry and problems in an organization. E volution : It involves change in strategy which requires paradigm change in a long run. Revolution : It is a rapid and major strategic change. It involves paradigm change.

38. The Importance of Context Time : It demands how quickly the change is needed. Scope : It refers to width and depth of strategic change. Diversity : It may be related to diversity of experience, views and opinions within an organization. Capability : It involves the capability of the firm to cope up with the changed strategy. Capacity : It refers to the capacity of the firm in terms of resources to meet the changed strategy. Preservation : There may be certain aspects of the organization which must be preserved irrespective of the change. Readiness : It refers to readiness for change throughout the organization. Power : It refers to presence of power in an organization to affect change.

39. Organizational Culture Culture refers to shared values, beliefs and attitudes in an organization. It can also be used to understand the problems and requirements of strategic change. Force-field Analysis It provides an overview of the change problems likely to take place in future. It identifies aspects of the organization and its culture that might facilitate change.

40. Styles of Managing Change Education and communication : Education is related to persuading people towards the strategic change. Communication is informing the change to the stakeholders. Collaboration or participation : It is the involvement of those who will be affected by strategic change in the change agenda. Intervention : Intervention is the coordination of the change process and involves delegation of authority over the elements of the change process by a change agent. Direction : It is the use of personal managerial authority to establish a clear future strategy.

41. Roles in Managing Change Strategic leadership : The management of change is directly linked to the role of a strategic change. Leadership is the process of influencing an organization in its efforts towards achieving its goal. Middle managers : Its role is to translate the strategies set by top management by ensuring resource allocation and control. They also monitor the performance and behaviour of staff. They act as facilitators of the strategy. Outsiders : In the change process, outsiders are also equally important as the managers. They may take different forms: New chief executive New management Consultants

42. Levers for Managing Strategic Change L evers are the components that drive the process of strategic change. Some of the important levers of managing strategic change are: Structure and control : Strategic change may demand new structure and control system. Organizational routines : Organizational routines are a central feature of human organizations. They evolve over time. They should be accommodated with the changed strategy. Symbolic processes : Symbols are objects, events, acts or people which express more than their intrinsic content. They are meaningful in the context of a particular situation or organization.

43. Levers for Managing Strategic Change Power and political process : Political process is the use of power and social networking within an organization to achieve changes. Strategic change requires support from an individual or group combining both powe r and interest. Communicating change : Effective communication is an important factor in overcoming resistance to change. Open communication builds trust and enriches understanding. Change tactics : There are some change tactics that can be employed to facilitate the change process. The tactics may be the right time of change, delayering etc.

44. The End THANK YOU