Strategy Implementation

Five-Stage Model of Strategy Implementation ProcessDetermining how much the organization will have in order to implement the strategy under considerationAnalyzing the formal and informal structures of the organizationAnalyzing the culture of the organization.Selecting an appropriate approachImplementing the strategy and evaluating the results.

Issues in Strategy Formulation and ImplementationSuccessRouletteFailureTroubleStrategy FormulationStrategy ImplementationGoodPoorGoodPoor

Four VariablesSuccess- organization has a good strategy and implements well.Roulette- a poorly formulated strategy is implemented well.Trouble- a well-formulated strategy is poorly implemented.Failure- poorly formulated strategy is poorly implemented.

Step 1-Analyzing Strategic ChangeLevels of Strategic Change

IndustryOrganizationProductsMarket AppealContinuation strategyRoutine strategy changeLimited Strategy changeRadical strategy changeOrganizational redirectionsamesamesamesamesamesamesamenewsamesamenewnewsamenewnewnewnewnewnewnew

The Five Levels of Strategic ChangeContinuation strategy- same strategy used in the previous planning period is repeated.Routine strategy- involves normal changes in the appeals to attract customers.Limited Strategy change- involves offering new products to new markets within the same general product class.Radical Strategy Change- major reorganization within the firm.Organizational Redirection- mergers and acquisitions of firms in different industries/when a firm leaves one industry and enters a new one.

An Operational Approach to Product PositioningIdentify the competitors.Determine how competitors are perceived and evaluated.Determine the competitors position.Analyze the customers.Select the position.Monitoring the position.

Step 2- Analyzing Organizational StructureFormal- this is conveyed in the organizational chart.Informal- represents the social relationships based on friendships or interests shared among members of the organization.

Five Types of Organizational StructureSimpleFunctionalDivisionalStrategic Business Unit StructureMatrix

Simple Organizational StructureIt has only two levels, the owner-manager and the employees.

Owner-ManagerEmployees

Functional Organizational StructureReflect greater specialization in functional business areas as firms grow and develop a number of related products and markets. CEOOperationsFinanceMarketing

Divisional Organizational StructureAs firms acquire or develop new products in different industries and markets

CEODivision 1 ManagerDivision 2 Manager

Strategic Business Unit StructureWhen a divisional structure becomes unwieldy because a CEO has too many divisions to manageCEOVP- SBU 1VP- SBU 2Division ManagersDivision Managers123654

Matrix Organizational StructureUsed to facilitate the development and execution of various programs.CEOVP ProductionVP MarketingVP R&DVP FinanceProjectManager 1ProjectManager 2

Simple Organizational StructureAdvantages:Facilitates control of all the businesss activities.Makes possible rapid decision making and ability to change with market signals.Offers simple and informal motivation/reward/control system.

Simple Organizational StructureDisadvantages:Is very demanding on the owner-manager.Grows increasingly inadequate as volume expands.Does not facilitate development of future managers.Tends to focus owner-manager on day-to-day matters.

Functional Organizational StructureAdvantages:Boosts efficiency through specialization.Fosters improved development of functional expertise.Differentiates and delegates day-to-day operating decisions.Retains centralized control of strategic decisions.

Functional Organizational StructureDisadvantages:Promotes narrow specialization and potential rivalry of conflict.Fosters difficulty in functional coordination and interfunctional decision-making.Can occasion staff-line conflict.Limits internal development of general managers.

Divisional Organizational StructureAdvantages:Forces coordination and necessary authority down to the appropriate level for rapid response.Places strategy development and implementation in closer proximity to the divisions unique environment.Frees chief executive officer for broader strategic decision making.

Sharply focuses accountability for performance.Retains functional specialization within each division.Serves as good training ground for strategic managers.

Divisional Organizational StructureDisadvantages:Fosters potentially dysfunctional competition for corporate-level resources.Creates a problem with the extent of authority given to division managers.Fosters the potential for policy inconsistencies between divisions.

Strategic Business UnitsAdvantages:Improves coordination between divisions with similar strategic concerns and product/market environments.Tightens the strategic management and control of large, diverse business enterprises.Channels accountability to distinct business units.

Strategic Business UnitsDisadvantages:Places another layer of management between the divisions and corporate management.May increase dysfunctional competition for corporate resources.May make defining the role of the group vice-president difficult.

Matrix Organizational StructureAdvantages:Accommodates a wide variety of project-oriented business activity.Serves as good training ground for strategic managers.Maximizes efficient use of functional managers.Fosters creativity and multiple sources of diversity.Provides broader middle-management exposure to strategic issues for the business.

Matrix Organizational StructureDisadvantages:Can create confusion and contradictory policies by allowing dual accountability.Necessitates tremendous horizontal and vertical coordination.

Step 3- Analyzing Organizational CultureOrganizational Culture- a set of shared values and beliefs that influences the effectiveness of strategy formulation and implementation.

Five Primary MechanismsWhat leaders pay attention to, measure and control.Leaders reactions to critical incidents and organizational crises.Deliberate role modeling, teaching and coaching.Criteria for allocation of rewards and status.Criteria for recruitment, selection, promotion and retirement of employees.

Secondary MechanismsThe organizations design and structure.Organizational systems and procedures.Design of physical space, facades, and buildings.Stories, legends, myths and parables about important events and people.Formal statements of organizational philosophy, creeds and charters.

Illustrative Example: Stories that Influence Organizational CultureRemember, when Ray Kroc (founder of McDonalds Restaurants) visited a McDonalds franchise in Winnipeg? He found a single fly. Even one fly didnt fit with QSC&V (Quality, Service, Cleanliness and Value- the McDonald's creed). Two weeks later the Winnipeg franchisee lost his franchise. Youd better believe that after this story made the rounds, a whole lot of McDonalds people found nearly mystical ways to eliminate flies-every fly-from their shop. Mr. Kroc did do things like that.

A Procter & Gamble executive recounted a late-night phone call he received several years ago. The executive had just been promoted to management at that time and the call was from his district sales manager: George, youve got a problem with a bar soap down here. Down here, George explained, was three hundred miles away. George, think you could get down here by six-thirty in the morning?. Our informant added, It sounded like more than an invitation. And finally, he concluded, After youve finished your first three-hundred mile ride through the back hills of Tennessee at seventy mile an hour to look at one damned thirty-four-cent bar of soap, you understand that P&G is very, very serious about product quality. You dont subsequently need a two-hundred page manual to prove it to you.

Step 4- Selecting an Implementation ApproachCommander ApproachOrganizational Change ApproachCollaborative ApproachCultural ApproachCrescive Approach

Commander ApproachThe manager concentrates on formulating strategy by applying rigorous logic and analysis. The manager may either develop strategies alone or supervised by a team of strategists charged with determining the optimal course of action for the organization.

Organizational Change ApproachFocuses on how to get an organization to implement a strategy. Managers assume that a good strategy has been formulated and view their task as getting the company moving toward new goals.

Collaborative ApproachThe manager in charge of the strategy calls in the rest of the management team to brainstorm strategy formulation and strategy implementation.Managers with different perspectives are encouraged to contribute their points of view in order to extract whatever group wisdom emerges from these multiple perspectives.

Cultural ApproachIt enlarges the collaborative approach to include lower levels in the organization.The manager guides the organization by communicating and instilling his or her vision of the overall mission for the organization and allowing employees to design their own work activities in accordance with this mission.

Crescive ApproachThe manager who adopts this approach addresses strategy formulation and strategy implementation simultaneously. Crescive means increasing or growing.The manager does not focus on doing these tasks but on encouraging subordinates to develop, champion and implement sound strategies on their own.

Step 5- Implementing the Strategy and Evaluating the ResultsFour Key Implementation Skills

BackgroundLeadershipALLOCATINGORGANIZINGINTERACTINGMONITORINGQualityPractice

Four Key Implementation SkillsInteracting skills- are expressed in managing ones own and others behavior to achieve objectives.Allocating skills- are brought to bear in managers abilities to schedule tasks and budget time, money and other resources efficiently.Monitoring skills- involve the efficient use of information to correct any problem that arise on the process of implementation.Organizing skills- are exhibited in the ability to create a new informal organization or network to match each problem that occurs.