Unit 14 Strategy Implementation Concept:: Business Environment and Strategy Management Complete Notes - WWW - Edunepal.info

Business Environment and Strategy Management Complete Notes | www.edunepal.
info
Unit 14 Strategy Implementation

Concept:
Strategy implementation is the sum total of the activities and the choices required
for the execution of a strategic plan. It is a process by which objectives, strategies
and policies are put into action through the development of programs, budgets and
procedures. (Wheelen and Hunger)
Process of Strategy Implementation:
i. Identifying short term objectives.
ii. Initiating specific functional tactics.
iii. Empowering people in the organizational by communicating policies.
iv. Matching the organization structure to strategy
v. Linking reward system with strategic goals.
vi. Measurement feedback and corrective mechanism.
Designing Structure for Strategy Implementation
Change in strategy often requires changes in the way an organization is structured
for two major reasons: First, Structure largely dictates how objectives and policies
will be established. Second, Structure dictates how resources will be allocated.
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Business Environment and Strategy Management Complete Notes | www.edunepal.info
Role of sound organizational structure for effective implementation of

Strategy:
Organizational structure largely dictates how objectives and policies will be
established. If an organization's structure is based on customer groups, then
resources will be allocated in that manner. Similarly, if an organization's structure
is setup along functional business lines, then resources are allocated by functional
areas. We need to be aware of situation that changes in strategy lead to changes in
organizational structure. Structure should be designed to facilitate the strategic
pursuit of a firm and, therefore, follows strategy. Structure does influence the
strategy. Structure can also shape the choice of strategies. However, a more
important concern is determining what types of structural changes are needed to
implement new strategies and how these changes can best be accomplished. There
are many types of organizational structure and each of them influences the
strategic decisions and implementation. Organization structure for implementation
of strategy is discussed below:
(a) Simple Structure: A simple structure is a form in which the owner manager
makes all major decisions directly and monitors all activities. This structure
involves little specialization of tasks, few rules and limited formalization. This
structure is designed in a small business where there is a single product line with
limited geographic market. The owner/ manager undertake almost all
responsibilities of management along with assistants.
(b) Functional Structure: It is build around business functions. It is based on
functions of an organization. This structure consists of CEO and a limited
corporate staffs with functional line managers such as production, accounting,
marketing, R and D, human resources etc. This structure facilitates career paths
and professional development in specialized functional areas. However, it is
generally adopted by smaller companies which have narrow product range.
(c) Multidivisional Structure/ SBU Structure: The multidivisional structure is
composed of operating divisions, each representing a separate business or profit
center. The top corporate officer delegates responsibilities for day-to-day
operations. It is highly decentralized structure. Each strategic business units are
divided on the base of products, services, geographical areas. When a firm
diversifies its operations, a functional strategy becomes inadequate. Therefore,
divisional structure is necessary to meet the coordination and decision making
requirements resulting from increased diversity and size.
(d) Holding Company Structure: It is an investment company having
shareholding in a variety of separate companies in which parent company exercises
control. The ownership holds by parent company to subsidiary company may be
fully or partially. The main advantage behind this holding company structure is
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that the parent company can offer the best ideas to the subsidiary company to
prepare and operate the strategy to the best potential.
(e) Matrix Structure: It is a combination of structures. It super imposes project
structure on functional structure. It integrates knowledge and skills. It temporarily
assigns people from functional departments to projects. It provides skills and
resources where and when they are must needed. It depends on both vertical and
horizontal flows of authority and communication. In it the quality decision are
possible. It fosters creativity. There is increased motivation, commitment and
communication.
(f) Team based Structure: A team is a group whose individual efforts results in
positive synergy through coordinated efforts. It combines both horizontal and
vertical coordination. In this the team members work collectively to achieve their
objectives. There is no rigid hierarchy. The performance evaluation is done by the
member themselves. The productivity and satisfaction is high. Employee’s talent
and skills are better utilized in this structure.
Resource Planning
Whenever organization selects new strategy to implement, it immediately requires
effective manpower to deploy, financial measures, new plant or equipments, R&D
etc. Therefore, there should be the sound resource planning for effective
implementation of strategy.
An effective resource plan helps answer the following questions:
 Do organizations have resources enabling their strategies to be executed
successfully?
 Are the strategies of the organization being shaped to capitalize on the
expertise in the resource area?
 What are the processes for allocating resources at corporate and business
level?
Process of Resource Planning
• Define the missions/goals
• Assess the current inventory of resources
• Assess and acquire the required resource
• Allocate the resources.
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Management System for Strategy Implementation

Strategy implementation requires establishment of management system.
Management gets the jobs done by working with & through people to implement
strategy. It performs the functions of planning, organizing, staffing, leading &
controlling. It manages change & conflicts. The essential of management system
for strategy implementation consists of:
i. Human Resource Management: People are the heart of strategy
implementation. The unique competencies of people are the key strategic
factors enabling the success of strategies. The components of human
resource management consists of (a) putting together a strong management
team (b) acquiring competent employees (c) development of employees (d)
utilization of employees & (e) Retention of employees.
ii. Information Management: Strategy implementation requires
establishment & use of information, communication, & ecommerce systems.
They enable people to carry out their roles successfully & effectively.
Information management enables success of strategy. Information
technology is advancing rapidly. The ability of organizations to access &
process information is crucial to strategy implementation. E-commerce is a
vital tool for strategy implementation.
iii. Leadership: Leadership is guiding & influencing people. It establishes
direction, manages change & builds a team. It makes decisions. It is essential
to drive strategy implementation forward. Effective leaders carry out the
following tasks to strategy into actions. (a) Benchmarking (b) performance
based records (c) supportive environment (d) open communication (e)
environmental adaptation (f) team building (g) conflict management & (h)
leading.
iv. Shaping Organization Culture: Management shapes supportive
organization culture for strategy implementation. Organization culture refers
to a set of beliefs, values, symbols & assumptions shared in common
throughout the organizations. Strategy supportive culture is developed.
v. Reward System: Effective reward system encourage the employees to do
better which helps sound implementation of strategy.

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Business Environment and Strategy Management Complete Notes | www.edunepal.

Unit 14 Strategy Implementation

Role of sound organizational structure for effective implementation of

Management System for Strategy Implementation

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