Q50838 Write about the Strategy Implementation Process.

Question based IMT CDL MBA SM Solved Assignment and other course

Answer:

Steps in the Strategy Implementation Process:

The process of the strategy implementation process comprises of six steps:

1. Analyzing Strategic Change
2. Building a Capable Organization
3. Allocating Resources to Match the Strategic Objectives
4. Establishing Organization-wide Commitment to the Strategic Plan.
5. Institutionalizing the Strategy Implementation
6. Operationalizing the Strategy Implementation

The detail understanding of the aforementioned steps is presented as follows:

1. Analyzing Strategic Change: The first step in the implementation process is Analysis of Strategic Change, which can be divided into two areas:
   1. Determine Necessary Level of Change for Successful Implementation: For the successful implementation of the strategy, the conducive change in the same becomes essential. Therefore, determining the extent to which the change has to be made is an integral and the foremost step in the process of strategy implementation. However, it is obvious that some strategies require only minimal changes in the organization.

For instance, in case of selecting the market penetration, the marketing efforts such as raise the

advertising and distribution or decrease in prices. This type of strategy will not change the routine operational pattern of the organization, as only few people within the organization are offered new assignments. While in case the organization plans to enter into new businesses, it would require new direction for sales growth and stability, which will demand for the organization to reshape its structure.

2. Classifying Levels for Strategic Change: For strategy implementation purposes, strategic change is divided into the five stages, namely, Continuation Strategy; Routine Strategy Change; Limited Change; Radical Change and Organizational Redirection, which are explained in brief below:
   • A Continuation Strategy: The same strategy, as applied in the previous planning period, is chosen to be repeated, which is generally based on the stability of the existing environmental factors and the fact that no new skills or unfamiliar tasks are involved. Manager, at this stage, generally monitor the ongoing activities in order to ensure timely accomplishment of the short- run goals. Thus, the cumulative effect of the learning curve on the basis of the past experience will reduce and increase productivity.
   • A Routine Strategy:This strategy involves normal changes in the appeals of customers’ interest. For instance: Redesigning the packaging of the product;Alteration in advertising theme; changes in sales promotion; adopting new pricing tactics, and changing distributors or distribution methods. Positioning and repositioning of the product in the minds of the customers is also the type of the routine strategy, in which the managers’ performance in strategy implementation is measured by the indicator of the consumer reactions and responses.
   • This type of strategy is not only powerful, but also easy to execute, and do not require large changes in the organization. Implementation of this type of strategies is the routine task of the managers’ job. Managers’ contact certain outside agencies and intermediaries, determines the schedules for each activity, and monitors the proceeding of each activity. In order to ensure proper handling of the messages as well as the collected information, managers shall possess the coordinating skills.
   • A Limited Strategy: It offers new products to new markets within the same general product area. It has been evident from the historical facts that the more successfully diversified companies generally emphasize and introduce the business expansion in the current are of with businesses related to their current area of expertise. This strategy is based on the rationale that the experience and competence gained by the firm in one part of the portfolio will be valuable and beneficial to the other portfolios of the business. Both, synergy and balance are involved in the limited type of strategy. The degree of difference between new products and existing products, determines the degree to which the organization will have to change.
   • A Radical Strategy: This type of strategy involves reorganization, such as, mergers or acquisitions between two firms in the same industry, which are generally complex as it requires complete integration of two firms.For instance, In food industry, acquisition of Carnation by Nestlé and acquisition of Richardson Vicks by Procter & Gamble in the consumer products industry.

The quantum of the efforts to be applied by the firms applying this strategy, involves not only obtainment of the new products and markets, but also confronting with the legal problems, the complexities of developing a new organizational structure, and has to reconcile the conflicting organizational values and beliefs. Over and above, it also involves numerous changes in the organizational structure, multiple acquisitions, and sales of subsidiaries.

For instance: When John F. Welch Jr. became chairman of General Electric, GE was regarded as a “GNP company” whose growth and prosperity could never outpace those of the overall economy, who aimed to set the creation of the organization that has the capacity to outperform the economy and could prosper even during the difficult economic times followed the strategy of radical change. For eventually developing the total organization redirection and for accomplishing this objective, the action plan, strategy, comprised of, stripping of the management levels across the corporate hierarchy and shifting of the resources from manufacturing businesses to fast-growing services and high technology; automation of the production facilities and elimination of about 100,000 employees, i.e., of about more than one-fourth of the workforce. Further, in his first 5 years as Chairman, he sold 190 subsidiaries worth nearly US$ 6 Billion and spent US$10 Billion on 70 acquisitions. Clearly, this is a strategy of radical change, which could eventually develop into a total organizational redirection.

Thus, in the radical change strategy the degree of strategic change depends on how different the industries are and on how centralized the management of the new firm is to be. For example, when Philip Morris, a manufacturer of cigarettes and beverages, acquired, General Foods, a food products manufacturer, the redirection consisted primarily of becoming a more diversified organization operating in two similar industries.

• Organizational Redirection:Another form of organizational redirection occurs when a firm leaves one industry and enters a new one, which involves the most cornpled strategy implementation, which also demands change in the firm’s mission and new set of skills and technologies. For Example: American Can Company redirected its business from packaging to financial services and retailing during the mid-1980s. Such organizational redirection involves the most cornpled strategy implementation. It involves changes in the firm’s mission and may require an entirely new set of skills and technologies.

2. Building a Capable Organization:The second step in the implementation process is building an organization capable of carrying out the strategic plan. This can be further classified into three sub steps:
   1. Matching Structure to Strategy: The choice of structure should be determined on the basis of the firm’s strategy, which could be capable of segmenting the key activities and/or strategic operating units to enhance efficiency through specialization, response to competitive environment, and freedom to act. However, at the same times, the structure must also be able to effectively integrate and coordinate these activities and units to accommodate interdependence between the activities and overall control. Thus, the structure selected must be able to reflect the needs of the strategy in terms of the following:
   2. Firms’ Size;
   3. Firms’ Product/service diversity;
   4. Firms’ Competitive Environment and Volatility;
   5. Firms’ Internal political considerations;
   6. Firms’ Information and coordination needs of each component of the firm;
   7. Firms’ Potentials to Grow

Here, the primary determinant of the strategy and the prime source of strategic initiative is philosophy of top management. Thus, an appropriate match of the organizational structure with the organization strategy by the suitable managers makes the aspiration realistic, which also provides a unique ability to the management to overcome one or more special situations.

2. Building Distinctive Competencies: An organization’s distinctive competencies, i.e, technical skills, habits, attitudes, and managerial capabilities, have to be thoroughly developed, which may take years.In this context, the superior performance of the firm in few selected sub units can also contribute significantly to the strategic success. For this, the managers of the firm has to take immediate actions to see that the organization is staffed with right number of the right type of people, and are well delegated by the required administrative support for generating the distinctive competence. Consequently, for a distinctive competency to emerge from organization-building actions, strategy implementers have to push aggressively to establish top-notch technical skills and capabilities for sub units. Superior performance of strategically critical tasks can make a real contribution to strategic success. Once distinctive competencies are developed, the strengths and capabilities that are attached to them become logical cornerstones for successful strategy implementation as well as for the actual strategy itself.
3. Assembling a Management Team: Another important task of the strategy implementation is assembling of the capable management team, to bother the recurring administrative issues in addition to finding the right people to fill each slot. The management team sometimes may comprise of the existing management team, i.e., by strengthening the existing management team or by promoting the qualified people from within, or by bringing in skilled managerial talent from the outside. Above al, it is important to assemble a core executive group with the proper composition of backgrounds, experience, knowledge, values, beliefs, styles of man-agile and personalities. Thus, often at this first part of strategy implementation, the company assembles a solid management team. However, until all the key positions are filled with the right people, it is difficult for the strategy implementation to proceed correctly at its highest speed.

3. Allocating Resources to Match Strategic Objectives: In most cases, changes in strategic objectives will require a change in the allocation of the firm’s resources. Therefore, the third phase of the strategy implementation process is the allocation of resources to support the organization’s strategic objectives. The central role here is played by the general manager, in determining the distribution and reallocation of resources. For this, it is inevitable that the general manager must have knowledge of the types of resources, understand the importance of resource allocation, and effectively distribute these resources is explained below:

Types of Resources, Importance of Resource Allocation and Effective Distribution of the Resources: The resources of the organization can be classified into four types, namely, financial, physical, human, and technological. Financial resources are made up of liquid assets, such as, cash, receivables, and marketable securities; liabilities, such as, bonds and bank notes, and equity, such as, retained earnings and stocks. While, Physical resources include the firm’s tangible assets, such as, plants,equipment, land, and inventory. The organization’s employees are its human resources, comprising of, engineers, lawyers, and skilled as well as unskilled hourly workers. Technical resources, includes, knowledge, skill methods, and tools of the organization used to carry out its business activities, such as, firm’s accounting methods, communication systems, R&D skills, and management information systems.The organizational sub units must have basic resources to carry out the strategic plans, and the general manager is responsible for the allocation of these basis resources.

For example, if a 10 percent increase in sales for a sub unit is the strategic objective, the general manager would need to determine advertising and public relations budget changes, manufacturing equipment expansions or improvements, distribution changes, and so forth, to allow the sub unit to meet its new goal. In this case, if the general manager allocates too little resources to a strategic area, then it may not be able to achieve its strategic objective. While, if too much is given, waste and

inefficiency occurs, and company performance could suffer. However, if the current strategy is only a fine-tuning of the previous strategy, then less reallocation will be needed.

Thus, the step of allocation of the resources comprises four major activities, namely, maintaining flexible organization; overcoming barriers to distribution; utilizing a combination approach and applying the systematic allocation method. For performing this step, the general manager must be strong and determined enough to take risks, to overcome company politics and for allowing the shift of over protection of resources between the units to allow these shifts to take place; for establishing or maintaining a flexible atmosphere for improving the chance for successful strategy implementation. Undoubtedly, a fluid, flexible approach to reorganization and reallocation of people and budgets is the characteristic of successfully implementing the strategic change.

Thus, since the demand for resources exceeds the supply in most organization, resource allocation should be performed in a systematic manner to achieve optimum results. Thus, the first step, the summary of the available resources, consists of determining what the firm currently has, or what can be made available to it. The second step indicates the areas in which the resources are currently located. The third step then lists the desired resources of these individual areas. The final step is the actual resource allocation process. It starts by comparing the resource requests with the available resources. Resources can then be distributed in the most efficient manner, with any shortages being felt by those areas that have less strategic significance.

4. Establishing Organization-Wide Commitment to the Strategic Plan: The fourth phase in the implementation process is the establishment of an organization-wide commitment to the strategic plan which should be supported by the corporate culture, by developing employees’ mind set to work energetically and enthusiastically pursue strategic goals. The key role to be played by the general manger at this stage is, to motivate the firm, to develop the strategy supportive culture, to create a results orientation, and to link reward and performance.

Here the first step is to motivate the organization to accomplish its strategy. It is critical that the entire organization, from top management down to the line workers, is committed to successfully implementing the strategic plan. To inculcate commitment at this level, the general manager may need to use motivational tools, such as, rewards and incentives, in the form of, praise or company recognition, or can come as salary increases and/or houses, or in the form of inspirational meetings and open communication through memos and letters.

5. Institutionalizing Strategy: It is inevitable, to institutionalize the strategy effectively. An institution refers to the collection of values, norms, roles, and groups that develops to accomplish a certain goal. The institution of education, for example, developed to prepare children to be productive members of society. Similarly, to institutionalize a business strategy, business leaders should also develop a system of values, norms, roles, and groups that enables the accomplishment of strategic goals, i.e, by connecting the strategy to the culture of the organization, quality system, and the other driving forces in the organization. Another drive which has been used by the organization to institutionalize strategy implementation is drive towards TQM, i.e, Total Quality Management; apart from Ethics Development, growing as the another aspect of organizational life. Both of these approaches shift organizational attention from detection and control to coordination and strategic impact, to get the ultimate focused outcome of enhanced quality of work environment for employees and increased quality of products and services for customers.

6. Operationalizing Strategy: If strategies set the general goal and course of action for organizations, operational plans provide the details needed to incorporate strategic plans into the organization’s day-to- day operations. The operational are of two types, namely, the Single-use plans and the Standing Plans. The Single-use Plans are designed to be dissolved, on the accomplishment of the specific, nonrecurring goals, while, the standing plans, in contrast, are standardized approaches to handling recurring and predictable situations.

Single-Use Plans: The single-use plans are detailed courses of action which probably will not be repeated in the same form in future. The different types of single-use plan are the Program, Budgets, and Projects. A program is a single-use plan that covers a relatively large set of activities, such as, the major steps required to reach an objective; the organization unit or member responsible for each step; and the order and timing of each step. Projects are smaller, separate portions of programs; with the limited scope and different directives pertaining to the assignments and time. While, the budgets are statements of financial resources set aside for specific activities in a given period of time; used primarily devices to control an organization’s activities, and thus are important components of programs and projects.

Standing Plans: In case, the organizational activities comprises of the repeated tasks, standing plans are generally referred to. The standing plans are re-established single decision or set of decisions, which can effectively guide such routine activities. Such types of plans assist managers in saving their valuable time, as similar situations are handled in a predetermined, consistent manner. Standing plans consist of policies, rules, and more detailed procedures.

A policy is a general guideline for decision making, which sets up boundaries around decisions, upon those decisions which can be made and those that cannot be made. Thus, it directs the thinking of the organization members in consistent with the organizational objectives. While, some policies have rules inbuilt, in the form of statements of specific actions to be taken in the given situation. Generally, the policies are accompanied by the detailed procedures, which are called as the standard operating procedures or standard methods, in the form of detailed set of instructions for performing a sequence of actions that occurs often or are routine.Most organizations have some form of policies, rules, and procedures in order assist the implementation of strategy of routine. For example, At WalMart, a discount merchandiser, store procedure requires that one person greet all customers and smile at them.

Thus, the next step ahead in the management of the organization after and for the effective strategy implementation is the appropriate structural selection and implementation.