STRATEGY IMPLEMENTATION.pdf

TEAM INFINITY BPMN 3023 / STRATEGIC MANAGEMENT

YAP PING WAY 212576 AIN NABILAH BT MAT RASID 213738 NOR ALEYAMIRA BT AHMAD FAIZOL 213753 AMARUL AYASY BIN AB. BASIR 213769 SITI NURNABIHA BT HAMZAH 214009 SHAKINAH BT ZOOLKIFFLI 214125 NOOR FADILA BT ISMAIL 214350 NUR ZURIATI BT ABD RAZAK 214501

Strategy implementation the process through

which a chosen strategy is put into action .

It involves the design and management of

systems to achieve the best integration of

people, structure, processes and resources in

achieving organizational objectives.

It affects whole organization from top to bottom.

Has a substantial impact on organization

performance.

There are a few component to ensure the effective strategy implementation .

1) Peter & Waterman, 1982 - Organization structure System Shared values (culture) Skills Style Staff

2) Husseys Framework

Task People Structure Decision Process Culture Information system Control system Reward system

Varies among different types and sizes of organizations.

a. Altering sales territories b. Adding new departments c. Closing facilities d. Hiring new employees e. Cost - control procedures f. Modifying advertising

strategies g. Building new facilities

Strategy formulation is positioning forces before the action Strategy implementation is managing forces during the action Strategy formulation focuses in effectiveness Strategy implementation focus efficiency Strategy formulation requires good intuitive and analytical skills Strategy implementation requires special motivation and leadership skills Strategy formulation requires coordination among a few individuals Strategy implementation requires coordination among many individuals

Essential because

I. represent the basis for allocating resources

II. are a primary mechanism for evaluating managers

III. are the major instrument for monitoring progress toward achieving long term objectives

IV. establish organizational, divisional and department priorities

specific guidelines, methods, procedures,

rules, forms, and administrative practices

established to support and encourage work

toward stated goals

instruments for strategy implementation

Central management activity that allows for strategy excution.

Four types of resources : a. Financial resources

b. Physical resources

c. Human resources

d. Technological resources

CONFLICT

APRROACHES

Disagreement between two or

more parties on one or more

issues

Avoidance Confrontation

Defusion

The reasons for matching structure with strategy :

Structure largely dictates how objectives and policies

will be established

Structure dictates how resources will be allocated

7 types of organization structure :

1. Functional structure 2. Divisional by geographic area structure 3. Divisional by product 4. Divisional by customer 5. Divisional process 6. Strategic Business Unit (SBU) 7. Matrix

Simplest and least expensive

Groups tasks and activities by business

function, such as production/operations,

marketing, finance/accounting, research and

development, and management information

systems

For example : University

Also known as decentralized structure

Functional activities are performed both centrally

and in each separate division

Geographic area, product or service, customer,

process

Groups similar divisions into strategic business

units and delegates authority and responsibility

for each unit to a senior executive who reports

directly to the chief executive officer

Can facilitate strategy implementation by

improving coordination between similar divisions

and channeling accountability to distinct

business units

Most complex of all designs

Can result in higher overhead

Other disadvantages:

Dual lines of budget authority

Dual sources of reward and punishment

Shared authority

Dual reporting channel

A need for an extensive and effective communication system

Widely used in many industries

For a matrix structure to be effective,

organizations need participative planning, training,

clear mutual understanding of roles and

responsibilities, excellent internal communication,

and mutual trust and confidence

Dos Reserve the title CEO

for the top executive

Use the title chief or VP or manager for functional business executives

Directly below the CEO it is best to have a COO and other chief officers

Donts Use the title president

for the top executive

Use the title president for functional business executives

Restructuring Involves reducing the size of the firm

Is intended to improve the efficiency and effectiveness

Concerned primarily with shareholder well -being than employee well - being

Also called downsizing, rightsizing, or delayering

Reengineering

Involves reconfiguring or

redesigning work, jobs, and

processes for the purpose of

improving cost, quality,

service, and speed

Concerned more with

employee and customer

well-being than shareholder

well-being

Also called process

management, process

innovation, or process

redesign

Policies to improve compensation practices: Provide full transparency to all stakeholders

Reward long - term performance with long - term pay, rather than annual incentives

Base executive compensation on actual company performance, rather than on stock price

Extend the time - horizon for bonuses. Replace short - term with long - term incentives

Increase equity between workers and executives. Delete many special perks and benefits for executives

Criteria to link performance and pay to strategies

Bonus system - can be an effective tool for motivating individuals

- to encourage managers and employees to push hard for successful strategic management

Profit sharing - widely uses form of incentive compensation

Gain sharing - requires employees or departments to establish performance targets

Does the plan capture attention?

Do employees understand the plan?

Is the plan improving communication?

Does the plan pay out when it should?

Is the company or unit performing better?

It can be considered the single greater treat to successful strategy implementation.

Resistance occur the form of sabotaging production machines, absenteeism, filling unfounded grievances, and unwillingness to cooperate.

Approaches for implementation strategy:

i. Force change strategy involves giving orders and enforcing those orders

ii. Educative change strategy one that presents information to convince people of the need for change

iii. Self- interest change strategy one that attempts to convince individuals that the change is to their personal advantage

1. Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection, and socialization

2. Designing of physical spaces, facades, buildings

3. Deliberate role modeling, teaching, and coaching by leaders

4. Explicit reward and status system, promotion criteria

5. Stories, legends, myths, and parables about key people and events

6. What leaders pay attention to, measure, and

control

7. Leader reactions to critical incidents and

organizational crises

8. How the organization is designed and structured

9. Organizational systems and procedures

10. Criteria used for recruitment, selection,

promotion, leveling off, retirement, and

Production related decision on plant size, plant location, product design, kind of tooling, size of inventory, inventory control etl .

Just in time (JIT) production approaches have withstood the test of time.

Significantly reduces the cost of implementing strategy

The job HRM is changing rapidly as companies to down size and reorganize.

The responsibilities of HRM is assessing the staffing need and the cost for alternative strategies proposed during the strategy formulation and developing a staffing plan for effectively implementing strategies.

Activity of Human resource

Employee stock ownership plans(ESOPs) A tax qualified, defined contribution, employee benefit plan whereby employees purchase stock company through borrowed money contribution.

Balancing Work life and Home life Allow employees to define how they work (Bank of America)

Benefit of a diverse workforce

Corporate wellness program

INTRODUCTION

Countless marketing variables affect the

success or failure of strategy implementation.

Some examples of marketing decisions that

may require policies are as follows:

oTo use exclusive dealerships or multiple

channels of distribution

oTo limit (or not) the share of business done

with a single customer

oTo be a price leader or a price follower

CURRENT

MARKETING ISSUE

STRATEGY IMPLEMENTATION

THE NEW PRINCIPLES OF MARKETING


ADVERTISING MEDIA

Companies are rapidly coming to realization that social networking sites are better means of reaching their customer than spending so many money on traditional method yellow pages, television, magazine, radio, and newspaper ads.

Internet advertising is growing so rapidly that marketer are more and more allowed to create bigger, more intrusive ads that take up more space on the web page


PURPOSED-BASED MARKETING

The best way to sell in a weak economy

Show customer how they can improves their lives with your product

Need to build trust and emotional connection to the customer in order to differentiate your product

When consumers are more interested in buying cheaper brand, Stengel says, ads must promote price and show the intrinsic value of the product to be cost effective

Purposed - based appeal: promote low price & build emotional equity

PRODUCT

POSITIONING


MARKET

SEGMENTATION

MARKETING ISSUE

Market Segmentation

Subdividing of a market into distinct subsets of customers according to needs and buying habits


Requires strategies to determine the

characteristic and need customer, analyze

consumer similarities and differences and to develop

consumer group profile.

Key to matching supply and demand, which is one of the

thorniest problem in customer services.

MARKET SEGMENTATION

MARKET SEGMENTATION

Example text

This is an example text.


Market Segment Basis Psychographic

Behavioral

Geographic

Demographic

Market - development, product -development, market -penetration, and diversification strategies require market segmentation Market segmentation allows operating with limited resources; enables small firms to compete successfully Market segmentation decisions affect marketing mix variables

MARKET SEGMENTATION

1

PLACE 2

3

4

PRODUCT

PROMOTION

PRICE


Marketing Mix Variables

PRODUCT POSITIONING


Product Positioning

Schematic representations that reflect how products/services compare to competitors on

dimensions most important to success in the industry


Select key criteria

Diagram map

Plot competitors products

Look for niches

Develop marketing plan

PRODUCT POSITIONING


Look for a vacant niche

Dont serve two segments with the same

strategy

Dont position yourself in the middle of the map

RULES FOR USING PRODUCT POSITIONING AS A STRATEGY IMPLEMENTATION TOOL

PRODUCT POSITIONING


An effective product positioning strategy meets 2 criteria: 1. It uniquely distinguishes a company

from the competition 2. It leads customers to expect slightly

less service than a company can deliver

PRODUCT POSITIONING

Acquiring needed capital

Developing projected financial statements

Preparing financial budgets

Evaluating the worth of a business

The value of a firm is defined to be the sum of the value of the firms debt and the firms equity.

V = B + S

Value of the Firm

S B S B

EBIT- EPS Analysis - used to help determine whether it would be better to finance a project with debt or equity.

The EPS- EBIT approach to capital structure involves selecting the capital structure that maximizes EPS over the expected range of EBIT . Using this approach, the emphasis is on maximizing the owners returns (EPS).

EPS = (EBIT - I)(1 - t) - P

S

I= interest expense P = preferred dividends S = number of shares of common stock outstanding

56

For combination stock/debt options

eg. 30/70 , 70/30

In preparing EPS/EBIT graphs, the line will intersect, thus revealing break - even points at which one financing alternative becomes more or less attractive than another.

> best financing alternatives - highest EPS

Financial statements use to summarize the different events projected for the future.

To forecast the impact of various actions and approaches

Projected income statement and balance sheet allow organization to compute projected financial ratio.

1. Prepare the projected income statement before the balance sheet.

2. Use the percentage - of - sales method to project cost of goods sold and the expense items in the income statement.

3. Calculate the projected net income. 4. Subtract from net income any dividends to be paid

for that year, remaining retained earning(RE). 5. Bring this retained earnings amount over the balance sheet by adding it to the prior years RE.

6. Project the balance sheet items, beginning with RE and then forecasting stockholders equity, long-term liabilities, current liabilities, total liabilities, total assets, fixed assets and current assets.

A document that detailed how funds will be obtained and spent for a specified period of time

It is the planned allocation of a firms resources based on forecasts of the future.

Cash budget

Stockholders equity (common stock, additional paid - in capital, retained

earnings)

Price- earnings ratio method

Outstanding share method

number of shares outstanding x market price per share

Transferring complex technology Adjusting process to local raw material Adapting process to local market Altering product to particular taste and specification

Emphasis Product

Stress basic

Leader

Develop robotic

High Spending

R&D within the firm

University Research

Process Improvement Applied Research Follower Manual Type Processes Low Spending Contract The Research Private Sector Research

Technology

Progress

Rate Of

Market

Growth

Barrier To New

Entrant

Time R&D Decision

Fast Moderate High - Used In -

House R&D

Fast Low - -

out R&D

Slow High - Low Outsourced

R&D

Fast High - - Outsourced

R&D

Be the first firm to market

new technology product

Imitator the successful

product with less cost

Mass Producing with

lesser cost

Staffing Compensation Safety And Health Training And Development Industrial Relationship

Depend heavily on Cooperation among all

personal in organization

Strategy without implementation will be just a

strategy.

-way-

strategic management.

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