UNITV Strategy Implementation Control Strategy Implementation Strategy implementation

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UNIT-V Strategy Implementation& Control

UNIT-V Strategy Implementation& Control

Strategy Implementation �Strategy implementation is the translation of chosen strategy into organizational action so

Strategy Implementation �Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives. �Its defined as the manner in which an organization should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance.

Steps in Implementing a Strategy �Developing an organization having potential of carrying out strategy

Steps in Implementing a Strategy �Developing an organization having potential of carrying out strategy successfully. �Disbursement of copious resources to strategy-essential activities. �Creating strategy-encouraging policies. �Employing best policies and programs for constant improvement. �Linking reward structure to success of results. �Making use of strategic leadership.

Principle Components of Strategy Implementation Exercising strong leadership Establishing a strategy supporting compensation plan

Principle Components of Strategy Implementation Exercising strong leadership Establishing a strategy supporting compensation plan Installing information and operating systems that support the strategy Building an organization with the competencies, capabilities, and resources needed to execute the strategy The Action Agenda for Implementing Strategy Adopting best practices and striving for continuous improvement Shaping the work environment and corporate culture to fit the strategy Marshalling resources behind the drive for strategy execution Instituting policies and procedures that facilitate strategy execution

1. Building an organization with the competencies, capabilities, and resources needed to execute the

1. Building an organization with the competencies, capabilities, and resources needed to execute the strategy �Selecting a business strategy that exploits valuable resources and core competences �Ensuring that all resources and capabilities are fully employed and exploited �Building and regenerating valuable resources and core competences

2. Shaping the work environment and corporate culture to fit the strategy �An organizational

2. Shaping the work environment and corporate culture to fit the strategy �An organizational culture consists of a complex set of ideologies, symbols, and core values that is shared during the firm and influences the way it conducts business. �An appropriate organizational culture will enable effective implementation of strategy

3. Marshaling resources behind the drive for strategy execution Budget Implications ◦ A change

3. Marshaling resources behind the drive for strategy execution Budget Implications ◦ A change in strategy nearly always calls for budget reallocations. ◦ Units that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and increases in their operating budgets.

4. Instituting policies and procedures that facilitate strategy execution

4. Instituting policies and procedures that facilitate strategy execution

How Policies and Procedures Facilitate Strategy Implementation Provides top-down guidance about how certain things

How Policies and Procedures Facilitate Strategy Implementation Provides top-down guidance about how certain things need to be done Prescribing policies and procedures Channels individual and group efforts along a strategy-supportive path Helps enforce consistency in how strategy-critical activities are performed in geographically spread organizational units Promotes the creation of a work climate that facilitates good strategy execution

5. Adopting best practices and striving for continuous improvement

5. Adopting best practices and striving for continuous improvement

Best Practices �Best Practices ◦ Managerial efforts to identify and adopt best practices are

Best Practices �Best Practices ◦ Managerial efforts to identify and adopt best practices are a powerful tool for promoting operating excellence and better strategy execution. �Best Practice ◦ A best practice is any practice that at least one company has proved works particularly well.

Example: Benchmarking Participate in benchmarking to identify the best practice for performing an activity

Example: Benchmarking Participate in benchmarking to identify the best practice for performing an activity Adapt the best practice to fit the company’s situation; then implement it Continue to benchmark company performance of the activity against best-inindustry performers Move closer to operating excellence in performing the activity

6. Installing information and operating systems

6. Installing information and operating systems

Information Systems and Strategy ◦ Company strategies can’t be executed well without a number

Information Systems and Strategy ◦ Company strategies can’t be executed well without a number of internal systems for business operations. ◦ Well-conceived state-of-the-art operating systems not only enable better strategy execution but also strengthen organizational capabilities—perhaps enough to provide a competitive edge over rivals. �Wal-Mart Example �Textbook Example

Areas Information Systems Needs to Cover Customer data Operations data Employee data Supplier, partner,

Areas Information Systems Needs to Cover Customer data Operations data Employee data Supplier, partner, collaborative ally data Financial performance data

7. Establishing strategy supportive compensation systems

7. Establishing strategy supportive compensation systems

Importance of Motivating Employees �Motivation ◦ It is important for both organizational units and

Importance of Motivating Employees �Motivation ◦ It is important for both organizational units and individuals to be enthusiastically committed to executing strategy and achieving performance targets. ◦ Company managers typically use an assortment of motivational techniques and rewards to enlist organizational-wide commitment to executing the strategic plan.

Strategy Facilitating Motivational Practices �Providing attractive perks and fringe benefits �Relying on promotion from

Strategy Facilitating Motivational Practices �Providing attractive perks and fringe benefits �Relying on promotion from within whenever possible �Making sure that the ideas and suggestions of employees are valued and respected �Creating a work atmosphere in which there is genuine sincerity, caring, and mutual respect among workers and between management and employees 618

Strategy Facilitating Motivational Practices �Stating a strategic vision in inspirational terms that make employees

Strategy Facilitating Motivational Practices �Stating a strategic vision in inspirational terms that make employees feel they are a part of doing something very worthwhile in a larger social sense �Sharing information with employees about financial performance, strategy, operational measures, market conditions, and competitors’ actions �Being flexible in how the company approaches people management in multinational, multicultural environments 619

8. Exercising strong leadership 620

8. Exercising strong leadership 620

Strategic Leadership Basics of Strategic Leadership ◦ To achieve results, a manager must take

Strategic Leadership Basics of Strategic Leadership ◦ To achieve results, a manager must take on a variety of leadership roles in managing the strategy execution process: �Resource acquirer and allocator, capabilities builder, motivator, policy maker, policy enforcer, head cheerleader, crisis solver, decision maker, taskmaster, and so on. 621

Mc. Kinsey 7 -S Model

Mc. Kinsey 7 -S Model

The Seven-Ss is a framework for analyzing organizations and their effectiveness Consultants at Mc.

The Seven-Ss is a framework for analyzing organizations and their effectiveness Consultants at Mc. Kinsey & Company developed the 7 S model in the late 1970 s to help managers address the difficulties of organizational change.

The Mc. Kinsey 7 -S Model is a widely discussed framework for viewing the

The Mc. Kinsey 7 -S Model is a widely discussed framework for viewing the interrelationship of strategy formulation and implementation

7 S Model STRATEGY SKILLS STRUCTURE SHARED VALUES STAFF SYSTEMS STYLE

7 S Model STRATEGY SKILLS STRUCTURE SHARED VALUES STAFF SYSTEMS STYLE

7 -S Model – The Hard S’s �Strategy �Structure �Systems The hard elements are

7 -S Model – The Hard S’s �Strategy �Structure �Systems The hard elements are factual and easy to identify. They can be found in strategy statements, corporate plans, organization charts, and other documentation

7 -S Model – The Hard S’s �Strategy ◦ Actions a company plans in

7 -S Model – The Hard S’s �Strategy ◦ Actions a company plans in response to or in anticipation of changes in its external environment �Structure ◦ Basis for specialization and coordination, influenced primarily by strategy and by organization size and diversity �Systems ◦ Formal and informal procedures that support the strategy and structure

7 -S Model – The Soft S’s �Style / Culture �Staff �Skills �Shared Values

7 -S Model – The Soft S’s �Style / Culture �Staff �Skills �Shared Values The soft elements are difficult to describe since they are continuously developing and changing. They are highly determined by the people at work in the organization.

7 -S Model – The Soft S’s �Style / Culture The culture of the

7 -S Model – The Soft S’s �Style / Culture The culture of the organization, consisting of ◦ Organizational culture: the dominant values, beliefs and norms which develop over time and become relatively enduring features of organization life ◦ Management style: what managers do rather than what they say (where they spend their time and attention, what they allow, what they reward, etc)

7 -S Model – The Soft S’s � Staff ◦ The people/human resource management

7 -S Model – The Soft S’s � Staff ◦ The people/human resource management – ways of shaping basic management values, processes used to develop managers, ways of introducing new employees and managing careers, socialization processes � Skills ◦ Distinctive competencies – what the company does best, ways of developing or shifting competencies �Shared values ◦ Guiding concepts, fundamental ideas around which a business is built – simple, usually stated at abstract level, have great meaning inside the organization, although outsiders may not see or understand them

Mc. Kinsey 7 -S Model �Strategy �Structure �Systems �Style �Staff �Skills �Shared values Effective

Mc. Kinsey 7 -S Model �Strategy �Structure �Systems �Style �Staff �Skills �Shared values Effective organizations achieve a harmony between these seven elements; if one element changes, then this will affect all the others

Mc. Kinsey 7 -S Model �Strategy �Structure �Systems �Style �Staff �Skills �Shared values The

Mc. Kinsey 7 -S Model �Strategy �Structure �Systems �Style �Staff �Skills �Shared values The 7 -S Model can be a valuable tool to initiate change processes and to give them direction; i. e. determine current state and ideal state of each element, and develop action plans to close the gaps

Mc. Kinsey 7 -S Model �Strategy �Structure �Systems �Style �Staff �Skills �Shared values In

Mc. Kinsey 7 -S Model �Strategy �Structure �Systems �Style �Staff �Skills �Shared values In change processes, many organizations focus their efforts on the hard S’s; however, the soft factors can make or break a successful change process.

Strategic Control

Strategic Control

Definition �Strategic control is tracking a strategy as it is being implemented, detecting problems

Definition �Strategic control is tracking a strategy as it is being implemented, detecting problems or changes, and making necessary adjustments �Provides feedback that is critical for determining if all steps of the strategic management process are appropriate and compatible

Types of strategic control �Premise control �Implementation control �Strategic surveillance �Strategic alert control

Types of strategic control �Premise control �Implementation control �Strategic surveillance �Strategic alert control

1. Premise Control �Premise control is designed to check systematically and continuously whether the

1. Premise Control �Premise control is designed to check systematically and continuously whether the premises on which the strategy is based are still valid �Helps strategists to reject invalid premise, and shift their focus on alternate feasible and advantageous

2. Implementation control �Aimed at assessing if the plans, programme and policies are actually

2. Implementation control �Aimed at assessing if the plans, programme and policies are actually guiding the organization towards its predetermined objectives or not �Reviews all activities for implementation in terms of events, major resource allocation or time

3. Strategic Surveillance �A more generalized control designed to monitor a broad range of

3. Strategic Surveillance �A more generalized control designed to monitor a broad range of events inside and outside the company that are likely to threaten the course of the strategy

4. Special alert control �It is the thorough and often rapid reconsideration of the

4. Special alert control �It is the thorough and often rapid reconsideration of the firm’s strategy because of sudden unexpected event

Characteristics of effective control system �Suitable �Simple �Economical �Objective �Indicate responsibility for failure �Acceptable

Characteristics of effective control system �Suitable �Simple �Economical �Objective �Indicate responsibility for failure �Acceptable

Strategic Audit

Strategic Audit

(1) Resource Audit �Financial Resources �Human Resources �Physical resources �Intangible resources

(1) Resource Audit �Financial Resources �Human Resources �Physical resources �Intangible resources

(2) Value Chain Analysis � Primary Activities � Support Activities (3) Core Competence Analysis

(2) Value Chain Analysis � Primary Activities � Support Activities (3) Core Competence Analysis (4) SWOT Analysis

(5) Portfolio Analysis �Its analysis the overall balance of the strategic business units of

(5) Portfolio Analysis �Its analysis the overall balance of the strategic business units of a business. �Most large businesses have operations in more than one market segment, and often in different geographical markets.

e r u t u F g ce n i g an a n

e r u t u F g ce n i g an a n rm a M rfo Pe Bu Va ildin lue g Fu Balanced Scorecard tur e

What Is a Balanced Scorecard? At the highest level, the Balanced Scorecard is A

What Is a Balanced Scorecard? At the highest level, the Balanced Scorecard is A framework that helps organizations translate strategy into operational objectives that drive both behavior and performance.

Definition A new strategic measurement and strategic management system which attempts to reconcile traditional

Definition A new strategic measurement and strategic management system which attempts to reconcile traditional financial measures with more forward-looking, non-financial measures. (Corporate Strategy Board, June 1997: 3&9)

Examples of Measurements by Perspective Stakeholder / • Current customer satisfaction level Customer •

Examples of Measurements by Perspective Stakeholder / • Current customer satisfaction level Customer • Improvement in customer satisfaction • Customer retention rate • Frequency of customer contact by customer service • Average time to resolve a customer inquiry • Number of customer complaints Learning and • Percentage employee absenteeism Growth • • • Hours of absenteeism Job posting response rate Personnel turnover rate Ratio of acceptances to offers Time to fill vacancy Internal Processes • Number of unscheduled maintenance calls • Production time lost because of maintenance problems • Percentage of equipment maintained on schedule • Average number of monthly unscheduled outages • Mean time between failures Investments • % of facility assets fully funded for upgrading • % of IT infrastructure investments approved • % of new hire positions authorized for filling • % of required contracts awarded and in place

Benefit of Scorecard � Improves management effectiveness by having a shared and actionable view

Benefit of Scorecard � Improves management effectiveness by having a shared and actionable view of the strategy � Optimizes and ensures strategic outcomes for a given set of resources � Enables employees to work in a coordinated, collaborative fashion towards organizational goals � Speeds time to value through faster more informed decision-making on time and resource allocation � Accelerates the approach, and its accuracy to the strategic goal

Balanced Scorecard Planning Process Vision / Mission Objectives What are the steps we will

Balanced Scorecard Planning Process Vision / Mission Objectives What are the steps we will be taking to achieve our vision of the future? Measures What will progress towards out vision of the future look like? Targets Initiatives

The Balanced Scorecard �The scorecard measures an organization’s performance from four key perspectives: 1

The Balanced Scorecard �The scorecard measures an organization’s performance from four key perspectives: 1 Financial 2 Customer 3 Internal business processes 4 Learning and growth

Financial? To succeed financially, how should we appear to our shareholders? Growth • Revenue

Financial? To succeed financially, how should we appear to our shareholders? Growth • Revenue growth rates • Cost reduction • Asset utilisation • Project profitability Maturity What should our balance sheet look like? Harvesting Financial objectives tend to be influenced by the organisation’s position on the life-cycle curve.

Customer? To achieve our vision, how should we appear to our customers? Market Share

Customer? To achieve our vision, how should we appear to our customers? Market Share Customer Acquisition Customer Retention Customer Satisfaction • Product / Service W ou hat Attributes va r c do • Customer Relationship lue ust m om • Image and Reputation os er t? Customer Profitability s Organisational sub-units may have internal clients.

Internal Business Processes? To satisfy our shareholders and customers, what business processes must we

Internal Business Processes? To satisfy our shareholders and customers, what business processes must we excel at? core • Improve quality competencies • Reduce cycle times • Maximise production • Maximise throughput • Reduce cost per process • Reduce cost per transaction

Learning & Innovation? • Employee capabilities To achieve our vision, how will we •

Learning & Innovation? • Employee capabilities To achieve our vision, how will we • Information system sustain our ability capabilities to change and improve? • Motivation & &D l a • Empowerment tern nal R In ter • Alignment Ex Highlight gaps in employee skills and information systems.

We Use the Scorecard to Articulate Strategic Hypotheses in Cause-effect Terms Realize the Vision

We Use the Scorecard to Articulate Strategic Hypotheses in Cause-effect Terms Realize the Vision Financial Results Customer Benefits Internal Capabilities Knowledge, Skills, Systems, and Tools To Drive Financial Success. . . Needed to Deliver Unique Sets of Benefits to Customers. . . To Build the Strategic Capabilities. . Equip our People. . .

Porter’s Approach for Globalization

Porter’s Approach for Globalization

National Diamond Porter’s way of looking at the competitive advantage of nations

National Diamond Porter’s way of looking at the competitive advantage of nations

There are four parts of looking at why some countries are more competitive than

There are four parts of looking at why some countries are more competitive than others and they are explained by the four components of national diamond

1. Factor Conditions: The extent to which the four classical factors of production are

1. Factor Conditions: The extent to which the four classical factors of production are available land, labour, capital and entrepreneurship 2. Demand Conditions: Demand for final products and factors for the production Local & International Demand 3. Role of supporting industries: The role and presence of ancillaries and other infrastructure support 4. Firms Structure, Rivalry and Strategy: The extent of competition with in the industry: Link back to Porters 5 F model