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 Strategy Implementation and Evaluation – May 24

C HAPTER 5

S TRATEGY I MPLEMENTATION AND E VALUATION

1. I N T R O D U C T I O N

▪ Strategic Management comprises of Strategy Formulation as well as Strategy Implementation & Evaluation.
▪ In this chapter, we will be learning about Strategic Management process, inter-relation between SM
Formulation & Implementation and other aspects of Strategy Implementation and Evaluation.

2. S T R A T E G I C M A N A G E M E N T P R O C E S S

▪ The process of developing an organisation’s strategy is quite methodical.

▪ Identifying Vision, Mission, Goals and objectives is the starting point of strategic Management process.
▪ Every organization, large or small, has Vision, Mission, Goals and objective; even if these elements are not
clearly written or communicated.
▪ Strategic management process is a dynamic and continuous process as any change in any component of
model can result in change in other components.
E.g.: Change in economy may present opportunity for Organisation leading to change in long term objective
& strategy. The strategic management process never really ends.
Therefore, strategy formulation, implementation, & evaluation activities should be performed on a continual
basis, not just at the end of the year or semi-annually. The SM process never really ends.
▪ Strategic management process can be best understood using a strategic management model (Fred R
David).

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▪ Although, this model is widely accepted and comprehensive, it does not guarantee sure shot success.
However, it represents practical approach for formulation, implementation and evaluation of strategy.
▪ It is not necessary that strategist follow these steps strictly / lockstep fashion.
▪ Relationships among major components of the strategic management process are shown in above model.

2.1. S T A G E S I N S T R A T E G I C M A N A G E M E N T P R O C ES S

▪ Strategic management involves the following stages:

Stage 1: Stage 2: Stage 5:
Stage 3: Stage 4:
Developing Strategic Environmental & Strategic
Organizational Formulation of Implementation of
Vision, Mission, Goals Evaluation and
Analysis Strategy Strategy
& Objectives Control
First, Co. should It is a diagnostic First stage in It is operation- Final stage of SM
develop a Vision phase of SM. strategy formulation oriented activity. process involves
i.e. future It involves: is developing Most demanding & ➢ evaluating Co.’s
blueprint. strategic time-consuming stage. strategy
a) Environmental alternatives in line
It answers the scanning - It Strategy execution implementation
question ‘where it with SWOT of
consists of process includes &
wants to land’. organization.
economic, following aspects: ➢ assessing impact
Top management’s social, technical Second stage
a) Developing budget of new external
views and & market involves choosing
to allocate ample developments
conclusions about analysis. appropriate
resource for and make
company’s alternative which
It is dynamic strategy corrective
direction and will serve as
and uncertain implementation adjustments to V,
product, customer, strategy of Firm.
& helps in M, Objectives &
market, technology Examples of b) Staffing Org. with strategy.
determining needed skills &
focus constitute opportunities strategic
expertise Successful strategy
strategic vision of and threats. alternatives:
execution requires
company. a) Should company c) Motivating people to
b) Organizational searching for:
Mission continue in same pursue target
Analysis - It energetically a) Ways to
statements define consists of business on
continuously
what we are and analysis of Co. same level of d) Creating a Co. improve and
what we do. resources, tech operation? culture & work
Hence, the focus is climate that b) Corrective
resources, b) If it should
on the role played support successful adjustments
Productive continue in same
by organizational strategy execution whenever
capacity, business, should
in society and external & and
distribution it grow by e) Ensuring policies,
overall direction internal
channel, R&D, expanding same procedures and
and not any SBU environment
HR, etc. unit; internal operations
specific direction. demands.
It reveals establishing new facilitate effective
Objectives & goals units; or execution It may be in
strength and
of an Org flows acquiring other form of –
weakness of f) Exerting Leadership
from V & M. Organisation. units in same ➢ Simple fine-
Industry? needed for strategic
They provide a execution & tuning
This stage helps
means of in SWOT analysis. c) If it should continuous strategy if
performance diversify, should improvement. strategy is
measurement at it diversify into working well;
each level of related or Good strategy or
management. unrelated areas? execution creates ➢ Modifying
strong fits between
d) Should it get out strategy when
a) Strategy & Org’s
of existing strategy is not

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business fully or capability yielding
partially? b) Strategy & reward
desired result
e) Combination of structure or there is
any of the above c) Strategy & Org changes in
strategies environment.
work culture
Above strategies are d) Strategy &
covered under internal system
Strategic Options &
Strategic Exits.

2.2. S T R A T E G Y F O R M U L A T I O N

▪ Planning is future oriented and it bridges gap between where we are and where we want to go.
▪ It means deciding what is needed to be done in future [today, next day, next week, next month, next year,
next couple of years] and generating blueprint of action.
▪ It involves determination of course of action to attain a pre-determined objective.

Strategic Planning Operational Planning

▪ Strategic Planning results in Corporate Strategy. ▪ It is done by middle level and lower-level
management.
▪ It is developed by Senior Management of Org as per SWOT
▪ Concerned with how to use the resources
▪ It is a process of determining
efficiently for achieving objectives.
➢ objectives of Organization;
➢ resource required to attain the objective; and
➢ formulation of policies for acquisition, usage and
disposal of resources.
Characteristics
a) Shapes the organisation and its resources. a) Deals with current deployment of resources.
b) Assesses the impact of environmental variables. b) Develops tactics rather than strategy.
c) Develops overall objectives and strategies. c) Projects current operations into the future.
d) It is concerned with long-term success of Organisation. d) Makes modifications to the business
e) It is a senior management responsibility. functions but not fundamental changes.
e) Is a responsibility of functional managers.

The game plan that really directs the company towards success is called “corporate strategy”.

STRATEGIC UNCERTAINTY

Dealing with Strategic uncertainty Impact of uncertainty

Strategic planning is future oriented & future is Each element of strategic uncertainty i.e., event
uncertain. or trend can have impact on present, proposed or
Strategic uncertainty refers to future events or trends potential business.
that is unpredictable & can impact Org. strategy & goals. E.g. Manufactures of aerated drinks now moving
To manage large number of uncertainties, these need to to manufacture juices.
be grouped in logical clusters & then importance of Impact of uncertainty depends on importance of
each cluster is assessed for Information gathering and the SBU.

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Dealing with Strategic uncertainty Impact of uncertainty

analysis. Some SBUs are more important than others.

Following points need to be considered for managing uncertainty:

a) Flexibility Strategies should be flexible to quickly adapt to changes in the environment.
b) Diversification Diversifying the organization's product portfolio, markets, and customer base can
reduce the impact of strategic uncertainty.
c) Monitoring & Organizations can regularly monitor key indicators of change and conduct scenario
Scenario Planning planning to understand how different future scenarios might impact their strategies.
d) Building Organizations can invest in building internal resilience, such as strengthening their
Resilience operational processes, increasing their financial flexibility, and improving their risk
management capabilities.
e) Collaboration and Collaborating with other organizations, suppliers, customers, and partners can help
Partnerships organizations pool resources, share risk, and gain access to new markets &
technologies.

2.3. S T R A T E G Y I M P L E M E N T A T I O N

▪ Strategic management process involves Strategy Formulation as well as strategy implementation.

▪ Strategic management process does not end with Firm selecting/ developing a strategy to pursue.
▪ It must be translated into strategic action. Even the most technically perfect plan will not be useful if not
implemented effectively.
▪ Change in an Organization comes through implementation and evaluation and not through plan.
▪ Strategy implementation refers to managerial exercise of putting a freshly chosen strategy into action.
▪ It translates strategic decisions into action, make it work.
▪ It involves making necessary changes in
➢ organizational structure
➢ corporate culture and policies
➢ allocation of resources and
➢ training of personnel.
▪ Strategy implementation requires actions such as –
i) Building new facilities
ii) Adding new departments
iii) Hiring and training new employees
iv) Building better information system
v) Allocating of Resources
vi) Closing Facilities
vii) Establishing cost control measures
viii) Changing pricing structure.

2.3.1. D I S T I N G U I S H B E T W E E N S T R A T E G Y F O R M U L A TI O N A N D S T R A T EG Y I M PL E M E N T A T I O N

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Strategy Formulation Strategy Implementation

An Entrepreneurial Activity based on strategic decision- An Administrative Task based on strategic and
making. operational decisions.
It is primarily an intellectual & rational process. It is primarily an operational process.
It requires conceptual and analytical skills. It requires motivation & leadership skills.
It requires co-ordination among few employees at top It requires co-ordination among many individuals
level. at middle and lower level.
It focuses on effectiveness. It focuses on efficiency.
It precedes Strategy Implementation. It follows Strategy Formulation.
Generally, strategy formulation concepts do not differ It varies substantially for different types of
greatly for smaller, large, profit or non-profit Organizations.
organizations.

2.3.2. R E L A T I O N S H I P B E T W E E N S T R A T E G Y F O R M U L A T I O N A N D S TR A T EG Y I M PL EM EN T A T I O N

Organization success is a function of good strategy & proper implementation.

As seen above, both processes are different and require very different skills.
The matrix below represents various combinations of strategy formulation and implementation:

Strategy Implementation
Weak Excellent
A B
S
t ▪ Square A represents a situation where ▪ Square B represents a situation where
r strategy formulation is sound and strategy formulation is sound and
a
t strategy implementation is weak. strategy implementation is excellent.
e
Sound
▪ It may be due to lack of resources, ▪ Ideal situation which every Firm wants to
g
y experience, leadership etc. achieve.

F ▪ Company should try to move from

o square A to B.
r
m C D
u
l ▪ Square C represents a situation where ▪ Square D represents a situation where
a strategy formulation is flawed and strategy formulation is flawed and
t Flawed strategy implementation is weak. strategy implementation is excellent.
i
o ▪ In this case, company needs to first ▪ In this case, company needs to first
n redesign their strategy & then readjust redesign their strategy & then readjust
their implementation skills. their implementation skills.

S. No. Effectiveness Efficiency

1. Concerned about “doing the right thing.” Concerned about “doing the thing right.”
2. Focuses on attainment of objectives & org. goals & Focuses on relationship between output and
achieving competitive position. input, usually for short period.
3. Externally focused and represents relationship It is internally focused.
between organization & environment.

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S. No. Effectiveness Efficiency

4. Responsibility of top management. Responsibility of operational management.
Which is more crucial? → Effectiveness. An emphasis on efficiency rather than effectiveness is clearly wrong.

Strategy Formulation
Effective Ineffective
Efficient 1 - Thrive/ Grow 2 - Die slowly
▪ Cell 1 represents a situation where ▪ Cell 2 represents a situation where
strategy formulation is effective and strategy formulation is ineffective
operational management is efficient. and operational management is
efficient.
▪ Such company is well placed and
thrives as it is achieving what it wants ▪ Such company is doomed to fail
to achieve with efficient input-output unless there is change in strategic
Operational ratio. direction.
Management
Inefficient 3 - Survive 4 - Die quickly
▪ Cell 3 represents a situation where ▪ Cell 4 represents a situation where
strategy formulation is effective and strategy formulation is ineffective
operational management is inefficient. and operational management is
inefficient.
▪ Such company will survive as strategic
direction to ensure effectiveness is ▪ Such company is doomed to fail
there even if too much input is used to unless there is change in strategic
generate output. direction.

2.3.3. L I N K A G E S B E T W E E N S T R A T E G Y F O R M U L A TI O N & S TR A T E G Y I M PL E M E N T A TI O N

Strategy being formulated at present is influenced by past strategic actions and it affects future.
Strategy formulation & Implementation are interlinked/ intertwined. Two types of linkages between them:
Forward Linkage Backward Linkage
Formulation of strategy determines future of Strategy formulation process is also affected by
organization. factors related to implementation.
With formulation of new strategy, we may need to make While deciding strategic choices, past strategic
changes in organization to ensure its implementation. actions also affect our decision of selecting the
Changes may be made in organizational structure, strategic choice.
corporate cultures, policies etc. Thus, strategy Organizations tend to adopt those strategies which
formulation has forward linkage with its can be implemented with existing resources with
implementation. some additional effort.

2.3.4. I S S U E S I N S T R A T E G Y I M P L E M E N T A T I O N

Strategies do not lead to action by itself. It is a statement of intent.

To realize the intent, implementation tasks are undertaken.
Strategies lead to various kinds of programmes. Programme refers to a broad term which includes goals,
policies, rules and steps to implement strategies.
Programmes are supported by funds.
Programmes lead to formation of projects which is highly specific. Time & costs are pre-determined.

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It requires allocation of resources, designing of organizational structures, formulation of policies & needs to be
completed within prescribed time.
Issues in strategy implementation to be considered are
a) Project implementation
b) Procedure implementation
c) Resource allocation
d) Structural implementation
e) Functional implementation
f) Behavioural implementation
The above activities need not be performed one after other. They can be done simultaneously as well.
Strategy implementation requires shift in responsibility from Strategist to divisional and functional
managers/ employees.
This shift in responsibility may create implementation problem if new strategy comes as surprise to them.
Hence, divisional & functional managers should be involved as much as possible in strategy formulation
process.
Similarly, strategists should also be involved in strategy implementation process.
Strategist’s genuine personal commitment to implementation is necessary and powerful motivation for
managers and employees and their lack of interest can be detrimental to organizational success.
Management issues w.r.t strategic implementation
a) Establishing Annual objectives
b) Devising policies
c) Change in organizational structure
d) Allocating resources
e) Hiring employees and training them
f) Building strategy supportive culture
g) Minimizing resistance to change.

3. S T R A T E G I C C H A N G E T H R O U G H D I G I T A L T R A N S F O R M A T I O N

In order to stay competitive in the dynamic environment, Organizations need to shift digitally.
Digital transformation is often a difficult and complicated process. To guarantee that projects for digital
transformation are effective, change management is crucial.

3.1. S T R A T E G I C C H A N G E

Changes in business environment requires business to make modification in their existing strategy and
develop new strategy.
Strategic change is a complex process that involves a corporate strategy which focuses on new product/
services, new market and new way of doing things.
Steps to initiate strategic change:
ii) Create a shared vision to manage
i) Recognize the need for change iii) Institutionalize the change
Change
First step is to diagnose which Objective of both organization & It is action stage that requires
aspects of current corporate individual should coincide and there implementation of change strategy.

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culture & capabilities are should not be any conflict. Change process should be monitored
strategy supportive & which are This needs creation of shared vision & in case of any deviation,
not. b/w organization & management corrective action should be taken.
This involves SWOT analysis. which needs to be communicated. It takes time for the changed
culture to prevail.

3.1.1. K U R T L E W I N ’ S M O D E L O F C H A N G E

To make the change lasting, Kurt Lewin proposed three phases of the change process for moving the
organization from the present to the future. These are explained below:
Unfreezing the situation Changing to new situation Refreezing
Lewin proposed that change Once unfreezing process is complete & members It occurs when new
should not come as surprise are prepared to change, their behavior pattern behavior pattern becomes
to organization members as needs to be redefined. way of life.
it lowers their morale. H.C. Kellman proposed 3 methods for redefining New behavior must replace
Process of unfreezing makes new behavior pattern: former behavior completely
individual aware of necessity a) Compliance – It is achieved by strictly & permanently.
for change & help prepare for enforcing reward & punishment for good or Change process is not one
such change. bad behavior. Fear of punishment, actual time process but a
It involves breaking down old punishment or reward helps in changing continuous one due to
attitude & behavior, custom behavior pattern. dynamism and ever-
& tradition so that they start b) Identification – In this, organization changing environment.
clean slate and are willing to members are influenced psychologically to
change. identify themselves with some role model
This can be achieved by whose behavior they like to adopt & become
making announcements and like them.
holding meetings throughout c) Internalization – It involves internal changing
the organization. in individual’s thought process in order to
adjust to new circumstances.

3.2. H O W D O E S D I G I T A L T R A N S F O R M A T I O N W O R K ?

Digital transformation refers to the

➢ use of digital technologies to develop improved or entirely new company procedures, goods or services.
It helps organization to use technology to create new value for customers, employees, & other stakeholders.
It is part of organisational change & Organizations can plan, prepare for, and carry out digital
transformations, with the help of change management.
Change management is a process of planning, implementing & monitoring of changes in an organization.
It helps in managing & making changes in a safe and regulated manner and can be used by any type of
organisation.
Change management in the digital transition consists of four essential elements:
a) Defining the goals & objectives of the transformation
b) Assessing the current state of the organization and identifying gaps
c) Creating a roadmap for change that outlines the required steps
d) Implementing and managing the change at every level of the organization

Role of change management in digital transformation

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Define Digital Transformation & change management.

A good change management strategy is necessary for a successful digital transformation.
A properly implemented change management strategy can help an organization to:
a) Specify the parameters and goals of the digital transformation
b) Determine which procedures and tools need to be modified.
c) Make a plan for implementing the improvements.
d) Involve staff members and parties involved in the transformation process.
e) Track progress and make required course corrections

3.3. C H A N G E M A N A G E M E N T S T R A T E G I E S F O R D I G I TA L T R A N S F O R M A T I O N

The five best practices for managing change in small and medium-sized businesses are:
a) Begin at the top Change should begin at the top of the organisation by a focused & united
leadership. This is the only way to motivate the rest of the organisation to accept
change.
b) Ensure that the Organisation needs to ensure that change is both necessary and desired.
change is both Decision-makers should be aware of how to properly handle digital transformation
necessary and and the effects it will have on their firm.
desired
Introducing too much too fast can frequently become a major issue.
c) Reduce disruption Digital Transformation causes disruption in an organisation. It's crucial to lessen
how changes affect staff.
It is possible to reduce workplace disruption by:
a. Getting the word out early and preparing for some interruption.
b. Giving staff members the knowledge and tools, they need to adjust to change.
c. Creating an environment that encourages transformation or change.
d. Empowering change agents to provide context and clarity for changes, such as
project managers or team leaders.
e. Ensuring that IT department is informed of changes in technology or
infrastructure and is prepared to support them.
d) Encourage Create channels so that workers may contact you with queries or complaints.
communication Communication promotes efficiency and has the power to influence culture. The
people who will be affected the most by these changes are reassured that they
are not in danger through effective communication, which keeps everyone on the
same page.
e) Recognize that Change is not a project but rather an ongoing process.
change is the norm, Change readiness may be defined as “the ability to continuously initiate and
not the exception respond to change in ways that create advantage and minimize risk.”
In order to keep up with the customers, businesses must also adapt their
operations. They must prepare for change in advance and expect them.

3.4. H O W T O M A N A G E C H A N G E D U R I N G D I G I T A L T R A N S F O R M A TI O N

To ensure that a digital transition is effective, change management is essential.

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a) Specify the digital What is the intended outcome? What are the precise objectives that must be
transformation’s accomplished?
aims and objectives It will be easier to make sure that everyone is on the same page and pursuing
the same aims if everyone has a clear grasp of the goals.
b) Always, always, It might be challenging for people to accept change and adjust to it. Ensure that
always you routinely and honestly discuss the objectives of the digital transformation
communicate and how they will affect stakeholders.
c) Be ready for Even when a change is for the better, it can be challenging for people to embrace
resistance it. Have a strategy in place for dealing with any resistance that may arise.
d) Implement changes Changes should ideally be implemented gradually rather than all at once.
gradually Organisations should avoid overwhelming individuals with too much change at
once & give people time to become used to the new way of doing things.
e) Offer assistance Workers will need guidance in the new procedures, software applications, etc.
and training

4. O R G A N I S A T I O N A L F R A M E W O R K

McKinsey 7S Model refers to a tool that analyzes a company’s “organizational design.”

The goal of the model is to depict how effectiveness can be achieved in an organization through interactions
of hard and soft elements.
The McKinsey 7s Model focuses on how the "Soft Ss" and "Hard Ss" elements are interrelated, suggesting that
modifying one aspect might have a ripple effect on the other elements.

Hard elements are:

Strategy: What steps does the company intend to take to
address current and futures challenges?
Structure: How is work divided, how do different
departments work and collaborate?
Systems: Which formal and informal processes is the
company’s structure based on?
Soft elements are:
Shared Values: What is the idea the organization subscribes
to? Is this idea communicated credibly to others?
Staff: This element refers to employee’s development and
relevant processes, performances & feedback programs etc.
Skill: What is the company’s base of skills and
competencies?
Style: This depicts the leadership style and how it
influences the strategic decisions of the organization.

The Hard elements are directly controlled by the management. Following elements are the hard elements in
an organization.
a) Strategy the direction of the organization, a blueprint to build on a core competency and achieve
competitive advantage to drive margins and lead the industry

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b) Structure depending on the availability of resources and the degree of centralisation or

decentralization that the management desires, it choses from the available alternatives
of organizational structures.
c) Systems the development of daily tasks, operations and teams to execute the goals and
objectives in the most efficient and effective manner.
Soft elements are difficult to define as they are more governed by the culture. But these soft elements are
equally important in determining an organization’s success. Following are the soft elements in this model:
a) Shared Values The core values which get reflected within the organizational culture or influence the
code of ethics of the management.
b) Style This depicts the leadership style and how it influences the strategic decisions of the
organisation. It also revolves around people motivation and organizational delivery of
goals.
c) Staff The talent pool of the organisation.
d) Skills The core competencies or the key skills of the employees play a vital role in defining
the organizational success.

Limitations McKinsey 7s Model:

a) It ignores the importance of the external environment and depicts only the most crucial elements
within the organization.
b) It does not clearly explain the concept of organizational effectiveness or performance.
c) It is considered to be more static and less flexible for decision making.
d) It misses out the real gaps in conceptualization and execution of strategy.

4.1. O R G A N I S A T I O N S T R U C T U R E

▪ Refers to company’s formal configuration /arrangement of employees that

➢ links authority, communication, rights and duties of an Organization.
▪ It determines decision making process and how roles, power and responsibilities are assigned, co-ordinated
and how information flows between different levels of an Organization.
▪ Most Imp: Organizational structure must fit with company’s strategy and facilitate its implementation.
Ineffective organization structure match may result in rigidity and lead to un-achievement of objectives.
▪ Thus, strategist leader seeks to develop an organization structure that matches strategy and is superior to
competition. This strategy-structure match gives competitive advantage to an organization.
▪ When a new strategy is implemented, an organization is structured for two major reasons:
a) Structure decides how operational objectives & policies are established to achieve strategic objectives.
b) Structure decides how resources will be allocated to achieve strategic objectives.
▪ There is no single optimal organization structure for a given strategy. What is appropriate for one
Organization may not be appropriate for another.
▪ However, successful Firms in a given Industry tend to organize themselves in a similar way.
➢ Consumer goods companies tend to emulate the divisional structure-by-product.
➢ Small Firms are generally functionally structured. [centralized]
➢ Medium sized Firms are generally divisionally structured. [decentralized]
➢ Large Firms use SBU or Matrix structure.

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▪ As organizations grow, their structures generally change from simple to complex as a result of linking
together of several basic strategies.

C H A N D L E R ’ S S T R A T E G Y – S T R U C T U R E R E L A TI O N S H I P

According to Chandler, change in corporate strategies leads to change in organization structure.

Structure should be designed or redesigned to facilitate strategy implementation.
Thus, organization structure follows strategy.
Chandler’s strategy-structure relationship is depicted below.

Should structure be changed in response to each change in environment?

Structure can also influence strategy. If a proposed strategy required massive structural changes, it would not
be an attractive choice. In this way, structure can shape the choice of strategy. But a more important concern
is determining what types of structural changes are needed to implement new strategies

Symptoms of Ineffective Organization Structure

Symptoms of an ineffective organizational structure include
➢ too many levels of management,
➢ too many meetings attended by too many people,
➢ too much attention being directed towards solving inter-departmental conflicts,
➢ too large a span of control and
➢ too many unachieved objectives.

TYPES OF ORGANIZATIONAL STRUCTURE

Simple Functional Divisional Multi- SBU Matrix Hourglass Network

Divisional

4.1.1. S I M P L E S T R U C T U R E

It is most appropriate for Organizations that follow

➢ single business strategy and
➢ offer line of product in single geographic market or
➢ focused cost leadership or
➢ focused differentiation strategy.

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In this structure, owner-manager make all major decisions directly and monitors all activities while other
staffs merely execute functions.
Characteristics of simple structure
a) Little Specialization of task
b) Few rules and little formal environment
c) Unsophisticated information system
d) Direct involvement of owner-manager in day-to-day operations.
Due to above characteristics, co-ordination problems that exist in larger organizations are few.

How can Simple Organization Structure help to get Competitive Advantage?

Since communication / information flow in simple organization structure is frequent and direct, new
products can be launched into market quickly which gives rise to competitive advantage.
Other potential competitive advantages
a) Openness to innovation
b) Greater structural flexibility
c) Ability to respond more rapidly to changes in environment.

4.1.2. F U N C T I O N A L O R G A N I Z A T I O N S T R U C T U R E

To coordinate more complex organizational functions, companies should abandon the simple structure in
favour of the functional structure.
The functional structure is used by larger companies and by companies with low levels of diversification.
Functional organization structure is a hierarchical type of organization structure.
In this
➢ people/ employees are grouped as per their area of specialization; and
➢ supervised by a functional manager with expertise in same field.
Functional organizational structure consists of
➢ CEO or MD, and
➢ supported by functional managers and functional workforce in the field of finance, marketing,
production, R&D, HRM, etc.

ADVANTAGES & DISADVANTAGES OF FUNCTIONAL ORGANIZATION STRUCTURE

Advantages a) It is simple and inexpensive.

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b) It promotes specialization of workforce.
c) Encourages efficiency.
d) Minimizes need for elaborate control system.
e) Allows rapid decision making.

Disadvantages a) Difference in functional specialization hampers communication and co-ordination.

b) Functional specialists may develop narrow/ myopic perspective and may lose focus of
strategic vision and mission.
c) Low employee morale due to repetitive work.
d) It creates line-staff conflict.
Thus, CEO must integrate functional decision making and co-ordinate actions of various
functions across organisation.

4.1.3. D I V I S I O N A L S T R U C T U R E

As a Firm grows, it faces difficulty in managing different products/services in different markets.

Hence, Divisional structure is preferred to motivate employees, control operations, & compete successfully.
It is suited to large enterprise which deals in
➢ multiple products
➢ to serve more than one distinctive market.
In this organization structure, people are organized in one of 4 ways:
Divisional structure by Divisional structure by Divisional structure by Divisional structure by
Geographic Area Product or Service Customer Process
It is appropriate for Appropriate when Appropriate when there are Similar to functional
organizations which specific product or few major customers of organization structure.
formulate strategies to service need special high importance. However, there is one
cater to specific needs in emphasis. It allows an organization to difference that while
different geographic It is used in cater effectively to functional department
areas. organization which requirements of clearly is not accountable for
It allows local offer few products or defined customer group. profit, divisional process
participation in decision services that differ Examples: department is
making & improved significantly. responsible for its profit.
coordination within a Airline companies have
E.g. General Motors, passengers and freight
region. Procter & Gamble, HUL customer divisions.
Banks have personal
banking and corporate

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banking divisions
Book-publishing companies
In this, independent divisions are created under overall control of Head office and functional activities are
performed both centrally and, in each division, separately.
Each divisional manager is given autonomy to run all functions of the division and is responsible for
functioning and profitability of the division.

A D V A N T A G E S & D I S A D V A N T A G E S O F D I V I S I O N A L O R G A N I Z A TI O N S T R U C TU R E

Advantages a) Promotes accountability since division managers can be held responsible for sales and
profitability of the division.
b) Higher career development for managers.
c) Employee morale is comparatively higher as there is extensive delegation of work.
d) Allows better control of local situation.
e) Allows new business and products to be added easily.

Disadvantages a) It is costly structure as it requires functional specialists for each division who are
highly paid.
b) There is duplication of functions across organization.
c) It requires elaborate HQ driven control system which may be costly.
d) Certain regions, products or customers may receive special treatment and it may be
difficult to maintain consistency in Company.

4.1.4. M U L T I - D I V I S I O N A L S T R U C T U R E (M- F O R M )

Multi divisional structure was developed in 1920s in response to co-ordination and control related problems in
larger firms.
This structure is composed of
➢ operating divisions where each division represents separate business.
Top corporate manager delegate responsibility and authority
➢ for day-to-day operations and business unit strategies to divisional managers.
It calls for
a) Creating separate divisions where each division represents a business. [semi- autonomous]
b) Each division, has its own functional hierarchy/ department.
c) Divisional managers are given responsibility for day-to-day operations of divisional level strategies.
d) Corporate office determines long term strategies and exercise overall financial control.

How are divisions managed?

When firms are less diversified When firm is highly diversified
Strategic control is used to manage divisions. It is not possible for corporate officers (strategic
Strategic control refers to operational Business Managers) to fully understand operations of all
understanding by corporate officers of strategies business units.
being implemented by division. Financial control is used to manage divisions which
enables corporate business managers to manage
cashflow of division through budgets and emphasize
profits from distinct businesses.

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4.1.5. S T R A T E G I C B U S I N E S S U N I T (SBU)

SBU concept is relevant for multiproduct, multi –business enterprise.

It is a scientific grouping of related businesses/ divisions which can be planned independently.
A strategic business unit (SBU) structure consists of at least three levels, with a
a) corporate headquarters at the top,
b) SBU groups at the second level, and
c) divisions grouped by relatedness within each SBU at the third level.

When number of products become huge, it is not practical to provide separate strategic treatment to each
product.
It is necessary to group product/ businesses into manageable number of strategically related businesses.
How to group products/ businesses?
Historically, large organizations make SBUs on territorial basis and strategic planning was made on the
basis of territory.
Two difficulties:
a) A given territorial SBU may have unrelated products due to which product with dissimilar
characteristics gets some strategic planning.
b) Since a number of territorial SBUs handle same product, same product gets different strategic planning
treatment.
Ideally, grouping of divisions may be done on the basis of -
➢ Similar product; or
➢ Similar customer; or
➢ Similar technology.
The principle underlying the grouping is that all related products-related from the standpoint of “function”-
should fall under one SBU.
It is extension of divisional structure where similar divisions are grouped into SBUs. Divisions within a SBU
are related but SBUs are not related to each other.
Thus, SBU is composed of operating units where each unit represents separate independent business.
Top management delegates authority and responsibility for day-to-day operations and business unit
strategies to SBU managers.
SBU manager reports to CEO of organization and is accountable for profit and sale of SBU. Thus, SBU is a
profit center.

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By such delegation, corporate officers are responsible for formulating and implementing overall corporate
strategy. They manage SBUs through financial and strategic control.
Identification of SBU is starting point for strategic planning.
Characteristics
a) It is a single business or a collection of related businesses which offer scope for independent planning
and which might feasibly standalone from the rest of the organization.
b) It has its own set of competitors.
c) It has a manager who has responsibility for strategic planning and profit performance, and who has
control of profit-influencing factors.

A T T R I B U T E S , A D V A N T A G E S & D I S A D V A N T A G E S O F SBU S TR U C TU R E

Attributes i) A scientific method of grouping the businesses of a multi – business corporation which
helps the firm in strategic planning.
ii) An improvement over the territorial grouping of businesses and strategic planning based
on territorial units.
iii) Strategic planning for SBU is distinct from rest of businesses. Products/ businesses
within an SBU receive same strategic planning treatment and priorities.
iv) Each SBU will have its own distinct set of competitors and its own distinct strategy.
v) The CEO of SBU will be responsible for strategic planning for SBU and its profit
performance.
vi) Products/businesses that are related from the stand point of function are assembled
together as a distinct SBU.
vii) Unrelated products/ businesses in any group are separated into separate SBUs.
viii) Grouping the businesses on SBU lines helps in strategic planning by removing the
vagueness and confusion.
ix) Each SBU is a separate business and will be distinct from one another on the basis of
mission, objectives etc.
Advantages a) Scientific grouping of businesses helps corporate headquarters to concentrate on
strategic planning rather than operational control.
b) In a SBU, similar divisions are grouped which may give rise to synergy benefit i.e.
advantage of doing work together.
c) Each SBU is treated as profit center. They react quickly to environmental changes.
d) It promotes accountability & enables Company to monitor performance of each SBU.
e) It helps in improved co-ordination within SBUs and organization.
f) It facilitates comparison between two or more SBUs leading to healthy competition.

Disadvantages a) It requires additional level of management, hence its costly.

b) Needs elaborate control mechanism.
c) It may result in unhealthy competition among SBUs for corporate resource.

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4.1.6. M A T R I X S T R U C T U R E

Manufacturing Sales & Marketing Finance Personnel

Project 1
Project 2
Project 3

Matrix structure is an O.S. where functional and projects/ products are combined simultaneously.
It aims at combining advantages of vertical and horizontal flow of authority and communication.
In matrix structure, there are functional departments with permanent employees who are assigned to work in
different projects.
So, employees have two superiors i.e., a product/ project manager and functional manager.
The “home” department - that is, engineering, manufacturing, or marketing - is usually functional & is
reasonably permanent. People from these functional units are assigned temporarily to one or more product
units or projects.
Matrix structure is the most complex structure since there is both vertical & horizontal flow of authority.
It is appropriate when management concludes that other forms of Organisation Structure is not right for
implementation of strategy.
It is often found in an organization or within an SBU when the following three conditions exist:
i) ideas need to be cross fertilized across projects or products,
ii) resources are scarce, and
iii) abilities to process information and to make decision needs to be improved.
It is widely used in many industries, including construction, healthcare, research and defence.

PHASES OF MATRIX STRUCTURE

Davis and Lawrence have proposed 3 distinct phases for construction of matrix structure:
1. Cross functional task ▪ It is temporary and is created when a new project is introduced.
forces
▪ A project manager is in charge of the project as key horizontal link.
2. Product/ Brand ▪ If cross functional task force becomes more permanent, project manager
management becomes product/ brand manager.
▪ Functional is still primary organizational structure but brand manager acts as
integrator.
3. Mature Matrix ▪ It is final phase of matrix development and involves dual authority.
▪ Both functional and product structure is permanent.
▪ All employees are connected to both vertical function superior and horizontal
product manager.
▪ Functional and product manager have equal authority and must work together
to resolve disagreements over resources.

C H A R A C T E R I S T I C S , A D V A N T A G E S & D I S A D V A N T A G ES O F M A T R I X S TR U C TU R E

Characteristics a) Dual line of authority (violation of principle of unity of command)

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b) Dual source of reward and punishment.
c) Shared authority by functional and product manager.
d) Need for efficient and effective communication.

Advantages a) Project objects are clear.

b) Many channels of communication and worker can see visible result of their work.
(Better feedback)
c) Shutting down a project is relatively easier. (Employee can be shifted, no loss of job)
d) It combines stability of functional structure and flexibility of divisional structure.

Disadvantages a) Complexity due to horizontal and vertical flow of authority and command.
b) Dual chain of authority and command violates principle of unity of command.
c) Dual reporting channel leads to chaos and confusion.
d) Higher employee cost due to more management positions.
e) There may be conflict in allocation of resource to various projects.

4.1.7. N E T W O R K S T R U C T U R E

▪ Network structure is an example of ‘non-structure’ due to elimination of in-house business functions .

▪ It is a series of independent businesses linked together by common information system/ Head Quarter.
▪ It is a radical structure where many activities are outsourced.
▪ It is also known as virtual organization.
▪ This structure is most useful when environment is uncertain & unstable and is expected to remain so.
▪ Basically, organization is only a shell with small head quarter, acting as broker and connected to
➢ completely owned businesses,
➢ partially owned businesses, and
➢ other independent companies.

A D V A N T A G E S & D I S A D V A N T A G E S O F N E T W O R K S TR U C TU R E

Advantages a) Allows a company to concentrate on its own competencies & outsourcing of other
functions to experts in their field.
b) It provides more flexibility and adaptability to meet/face rapid change in technology,
taste and preferences.
c) Most useful when environment of a Firm is unstable.

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Disadvantages a) Availability of numerous partners can be a source of trouble.

b) Outsourcing of functions may keep the Firm away from discovering any synergies.
c) If a Firm overspecializes in only few functions, there is a risk of choosing the wrong
function and thus becoming non- competitive.
d) Low employee morale.

4.1.8. H O U R G L A S S S T R U C T U R E

▪ Hourglass structure consists of 3 layers with narrow/ constricted middle layer.

▪ It has short or narrow middle management layer.
▪ In recent years, IT has significantly altered the functioning of organizations.
▪ It links top and bottom level management, thus taking away many tasks that were earlier performed by
middle managers.
▪ A shrunken middle layer co-ordinates diverse lower-level activities.
▪ Earlier, traditional middle level managers were often specialists. However, in hourglass structure, they are
generalists who handle variety of tasks.

A D V A N T A G E S & D I S A D V A N T A G E S O F H O U R G L A S S S T R U C TU R E

Advantages a) Reduced cost due to reduction of middle level management posts.

b) Enhanced responsiveness by simplifying decision making.
c) Decision making authority is close to source of information, so it’s faster.

Disadvantages a) Since size of middle management is reduced, promotion opportunity for lower-level
managers is also reduced.
b) Lower employee morale at lower level due to monotony.

4.2. O R G A N I S A T I O N C U L T U R E

It is known as personality of Organization and distinguishes one organization from other.

It refers to company’s
➢ philosophy, history, values,
➢ Way of approaching problem and making decisions,
➢ Own work culture,
➢ Own way of doing work,
➢ Own belief, thoughts and practices/ behavioural norms.

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Where Does Corporate Culture Come From?

It is reflected/ manifested / comes from
a) Official policies and practices
b) Ethical standards
c) Management practices
d) Dealing with stakeholders i.e. relationship with employees, shareholders, vendors, trade union, Govt. etc.
e) Employee’s attitude and behavior
f) Legends people repeat about in organization
g) Peer pressure that exists in organization.
All the above sociological factors combine to form corporate culture.

4.2.1. C U L T U R E : A L L Y O R O B S T A C L E T O S T R A T E G Y E X EC U T I O N ?

An organization’s culture is either an important contributor or an obstacle to successful strategy execution.

When the vision, mission, strategy or business approach and the culture are compatible, the culture becomes
a valuable ally in strategy implementation and execution.
However, When the culture is in conflict with some aspect of the company’s vision, mission, strategy or
business approach, the culture becomes an obstacle/stumbling block that impedes successful strategy
implementation and execution.

4.2.2. R O L E O F C U L T U R E I N S T R A T E G Y E X EC U T I O N / I M PA C T O F C U L T U R E O N A N O R G A N I Z A T I O N

Every company has a culture that has powerful influence on behavior of managers. Culture dictates not only
the way managers behave within the organization but also decisions they take.
Strong culture promotes good strategy execution when there is fit and obstructs / hinders/ impedes execution
if there is misfit.
For example, a culture where frugality and thrift are values strongly shared by organizational members is
very conducive to successful execution of a low-cost leadership strategy. A culture where creativity,
embracing change, and challenging the status quo are pervasive themes is very conducive to successful
execution of a product innovation and technological leadership strategy.
A culture built around business principles like
➢ listening to employees and
➢ encouraging them to take pride in their work
➢ is conducive for successful execution of strategy.
A strong strategy supporting culture makes employee feel genuinely about their job and need of what
company is trying to achieve.
Employees are motivated to take challenging work to realize company’s vision & do their work competently.

4.2.3. C U L T U R E I S S T R E N G T H O R W E A K N E S S ?

Culture as a strength Culture as a weakness

As a strength, culture can facilitate As a weakness, culture may obstruct smooth implementation of
strategy by creating resistance to change.
➢ Communication among functions and
employees, An organization culture could be characterized as weak when
➢ Commitment towards Org. goals, ➢ many sub cultures exist;

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➢ Control over operations and ➢ few value and behavior norms are shared;
➢ Decision making. ➢ traditions are rare.
In such Organization, employees do not have sense of
commitment and loyalty with the organization.

4.2.4. P E R I L S / D A N G E R S O F S T R A T E G Y -C U L TU R E C O N F L I C T

In such cases, culture must be changed as rapidly as possible.

Correcting strategy-culture conflict can occasionally mean changing strategy to produce culture fit.
However, usually culture is changed to produce strategy fit.
Creating a strong fit between strategy and culture
a) In case of unchangeable/ sacred aspects of prevailing corporate culture,
➢ it is strategy maker’s responsibility to select a strategy compatible with unchangeable aspects.
b) It is strategy implementor’s task that once strategy is chosen,
➢ they change any part of culture that obstructs strategy execution.

4.2.5. C H A N G I N G A P R O B L E M A T I C C U L T U R E

Changing a problematic culture is very difficult due to deeply held values and habits.
It takes combined management efforts over a point of time to replace unhealthy culture with healthy
culture or remove unwanted aspects of problem culture and instill those which are more supportive.
First step Diagnose which aspects of present culture are strategy supportive and which are not.
Second step Managers have to talk openly and truthfully to all concerned employees about the
aspects of culture that needs to be changed.
Third step The talk has to be followed swiftly by visible aggressive action to identify and modify
the culture to create right strategy-culture fit.
The culture changing actions include
a) Revising policies and procedures.
b) Altering incentive compensation. (to reward employee who follow new culture)
c) Visibly praise and recognize such employees who display new culture habits.
d) Recruiting new managers and employees.
e) Replacing employees who are strongly associated with old culture.
f) Communicate the need and benefits to employees.

5. S T R A T E G I C L E A D E R S H I P

Leadership is ability of
➢ influencing others to voluntarily make decisions that
➢ enhance long term success while maintaining short term financial stability.
Strategic leadership helps in
➢ developing and communicating vision of future,
➢ formulate strategies in the light of internal and external environment,

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➢ brings about changes required to implement strategies and

➢ inspire the staff to contribute to strategy execution.
Role played by a strategic manager (General)
Visionary Chief strategist Chief administrator
Resource acquirer and allocator Culture builder Crisis manager
Motivator Policy maker and enforcer.

5.1. F I V E L E A D E R S H I P R O L E S P L A Y E D B Y S T R A T E G I C M A N A G E R F O R G O O D S T R A TE G Y E X E C U TI O N

Strategic leader is a change agent who ensure that the changes are successfully implemented.
Managers have five leadership roles to play in pushing for good strategy execution:
a) Staying on top of what is happening, monitoring progress, solving issues and removing obstacles from the
path of strategy execution.
b) Keeping the Organization responsive to changing situation.
c) Promoting culture of espirit de corps in organization.
d) Exercising ethical leadership and ensuring that company acts as a model corporate citizen.
e) Pushing corrective actions to improve strategy execution and performance.

Examples:
▪ N. R. Narayan Murthy, is known as a celebrated business leader because of the values he had
institutionalised over his tenure as CEO of Infosys. One of the great legacies he left with Infosys is
a strong management development program that builds management talent and strategic leader
with ethical values.
▪ Dhirubhai Ambani, pioneer of Reliance Group, was an icon in himself because of his ability to
conceptualize and create sweeping strategies, to reach corporate goals, and proficiency in implementing
his strategic vision.

5.2. R E S P O N S I B I L I T I E S O F S T R A T E G I C L E A D ER M A N A G ER

Strategic manager develops & communicates vision of future & inspires Org. members to achieve objectives.
Responsibilities of strategic leader manager are:
a) Making strategic decisions
b) Formulating policies and action plan for implementing strategic decisions.
c) Ensuring effective communication within organization.
d) Managing human capital.
e) Managing changes in organization.
f) Creating and sustaining strong corporate culture.

Note: Unlike strategic leadership, managerial leadership is generally concerned with the short-term, day-to-
day activities.

5.3. T W O A P P R O A C H E S T O S T R A T E G I C L E A D ER S H I P

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Transformational Leadership style Transactional Leadership style

It uses charisma and enthusiasm to It uses the authority of its office to exchange rewards
such as pay, status symbols etc.
➢ inspire people to work for good of Organization.
It is appropriate It is more appropriate in
➢ in turbulent/ unsafe environment or ➢ static environment, or
➢ in industries at start or end of PLC or ➢ in mature industry; or
➢ In poorly performing organization. ➢ in organizations that are performing well.
These leaders inspire employees by offering They prefer a more formalized approach to motivation,
excitement, vision, intellectual stimulation and setting clear goals with explicit rewards or penalties
personal satisfaction. for achievement and non-achievement.
They involve followers in mission and give them These leaders try to build on existing culture and
vision of higher purpose so as to get more dramatic enhance current practices.
changes in organization.

6. S T R A T E G I C C O N T R O L

Controlling is one of important functions of Management & often regarded as core of management process.
It involves
➢ monitoring the activity,
➢ measuring results against predefined standards,
➢ analysing & correcting deviation as necessary &
➢ adapting the system.
It is a function intended to regulate & check and ensure that performance of planned activities achieve pre-
determined goals.
Elements of process of control: The process of control has the following elements:
a) Objective of organization which can be expressed in measurable & comparable standard.
b) A mechanism for monitoring & measuring performance.
c) A mechanism for
➢ comparing Actual Result w.r.t standard,
➢ detecting deviation from standard &
➢ learning new insights.
d) A mechanism for feeding back information for taking corrective actions in order to ensure the strategy
is relevant & goals are achieved.

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6.1. T H R E E T Y P E S O F O R G A N I Z A T I O N A L C O N T R O L

Operational Control Management Control Strategic Control

It is concerned with individual task or It is concerned with integrated It is a process of evaluating
transaction as against total activities of a complete strategy as it is formulated &
management functions. department, division or even implemented and making
One of the ways to identify operational organization. necessary adjustments.
control area is there should be clear cut It is more aggregative & inclusive It focuses on dual question of
& measurable relationship b/w input & than operational control. whether
output. It is a process by which a) Strategy is implemented as
It ensures that processes are regulated management ensure that planned or not
within certain ‘tolerances’ limit. resources obtained are used b) Result produced by strategy
Examples: effectively and efficiently to is effective & intended or not.
achieve objectives.
a) Stock control (maintaining stocks It is directed towards identifying
between set limits), Example: Inventory management problems and changes in

b) Production control (manufacturing premises and making necessary

to set programmes), adjustments.

c) Quality control (keeping product

quality between agreed limits),
d) Cost control (maintaining
expenditure as per standards),
e) budgetary control (keeping
performance to budget)

6.2. T Y P E S O F S T R A T E G I C C O N T R O L

Premise Control Strategic surveillance Special Alert Control Implementation Control

Strategies are based on It is unfocussed and Unexpected events like It assesses need for change
certain assumptions & involves general natural calamity, in overall strategy as per
premises w.r.t environment monitoring of terrorist attack, change
➢ unfolding events &
in which they operate. environment & various in government & other
Such premises may not sources of information such events may force ➢ results of strategy
remain valid over a period like an organization to
It is not replacement of
review & reconsider their
of time. ➢ financial operational controls.
strategy.
Premise control is a tool for newspaper Two basic forms of
systematically & To cope up with such
➢ business magazines implementational controls
continuously monitoring crisis, organizations
etc. are:
form a crisis team to
a) environmental factors to uncover handle the situation. a) Monitoring strategic
such as economic unanticipated thrusts - It helps
(interest rate, ex rate), information which managers to determine
technology, social and may affect the whether overall strategy
legal; and strategy. is progressing/
b) industry factors such as Known as loose form implemented in desired
competitors, suppliers direction or not &
of strategic control. whether there is need for
etc.
adjustment,
to verify the validity &
accuracy of the premise b) Milestone review - It
based on which strategy involves segregating
was formed. activities required for
strategy implementation

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Premise Control Strategic surveillance Special Alert Control Implementation Control

It is neither feasible nor in terms of time &
desirable to control all resources in order to
types of premises in same review whether mile stone
manner. is achieved or not.
Question: Is Strategic implementation control is not a replacement to operational control?
No; Unlike operational control, Implementation control continuously monitors the basic direction of strategy.

7. S T R A T E G I C P E R F O R M A N C E M E A S U R E S

SPM is a method that

➢ increases line executives' understanding of an organization's strategic goals and
➢ offers a continuous system for tracking progress towards these goals using clear-cut performance
measurements.
It refers to key indicators that organizations use to track the effectiveness of their strategies, organizational
performance and make informed decisions about resource allocation.
Things to be considered while selecting Key Performance Indicators are:
a) there needs to be a clear cause & effect relationship between the indicators and strategic outcomes.
b) KPIs need to be carefully chosen as they will influence the behaviour of people within the organisation.
However, managers should be aware of paralysis by over analysis.

7.1. T Y P E S O F S T R A T E G I C P E R F O R M A N C E M E A S U R E S

i) Financial Measures Financial measures such as revenue growth, return on investment (ROI), & profit
margins, provide an understanding of the
➢ organization's financial performance and its ability to generate profit.
ii) Customer Customer measures, such as customer satisfaction, customer retention, and
Satisfaction customer loyalty, provide insight into the
Measures
➢ organization's ability to meet customer needs.
iii) Market Measures Market measures, such as market share, customer acquisition, and customer
referrals, provide information about the
➢ organization's competitiveness in the marketplace and its ability to attract
and retain customers.
iv) Employee Measures Employee measures, such as employee satisfaction, turnover rate, and employee

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engagement, provide insight into the
➢ organization's ability to attract and retain talented employees and create a
positive work environment.
v) Innovation Measures Innovation measures, such as research and development (R&D) spending, patent
applications, and new product launches, provide insight into the
➢ organization's ability to innovate and create new products and services that
meet customer needs.
vi) Environmental Environmental measures, such as energy consumption, waste reduction, and
Measures carbon emissions, provide insight into the
➢ organization's impact on the environment and its efforts to operate in a
sustainable manner.

Toward More Holistic Measures of Strategic Performance

Development of management thought and practice has persistently pushed the boundaries of strategic
performance beyond financial metrics.
Thus, the Triple Bottom Line framework (TBL) emphasises People and Planetary Concerns besides
profitability or Economic Prosperity alone.
The Quadruple Bottomline adds the 4th P to add a spiritual dimension named ‘Purpose.’

7.2. I M P O R T A N C E O F S T R A T E G I C P E R F O R M A N C E M E A S U R E S

a) Goal Alignment SPM help organizations align their strategies with their goals and objectives, ensuring
that they are on track to achieve their desired outcomes.
b) Resource SPM provide organizations with the information they need to make informed decisions
Allocation about resource allocation, resulting in most effective and efficient performance.
c) Continuous SPM helps in continuous improvement as it enables Organisations to track their progress
Improvement and make adjustments to improve their performance over time.
d) External SPM help organizations demonstrate accountability to stakeholders including
Accountability shareholders, customers & regulatory bodies, by providing a clear & transparent picture
of their performance.

7.3. C H O O S I N G T H E R I G H T S T R A T E G I C P E R F O R M A N C E M E A S U R E S

Organizations should choose SPM that are aligned with their goals and objectives and that provide relevant
actionable information.
In selecting the right SPM, organizations should consider the following factors:
a) Relevance The measure should be relevant to the organization's goals and objectives and provide
information that is actionable and meaningful.
b) Data Availability The measure should be based on data that is readily available and can be collected
and analyzed in a timely manner.
c) Data Quality The measure should be based on high-quality data that is accurate and reliable.
d) Data Timeliness The measure should be based on data that is current and up-to-date, enabling
organizations to make informed decisions in a timely manner.

Simplifying Complexity P a g e | 5.27

Harder you work, luckier you get