STRTEGY IMPLEMENTATION

What is strategy
implementation?

• It is putting the formulated strategy into effect.

• It is the doing part of the job.

 Strategy implementation as a
process
• It is a process of selecting
(1)the most appropriate structure for the chosen strategy:
ensure that structure and strategy are compatible
(2)Mechanisms (polices, approaches, systems) for resource
allocation, and
(3)Applying suitable motivation: incentives, inspirations by
the leader
 Importance of governance in strategy implementation

• Corporate Governance (CG) is one of the most important mechanisms in strategy

implementation
• CG: directing, governing, overseeing the entire organization, including the
implementation of the selected strategy
• CG; managing workers, managing various stakeholders, appointing leaders (CEOS
and board of directors etc…), ensuring harmonious labor relationships etc….
• Corporate governance is the set of mechanisms used to manage the relationship
among stakeholders that is used to determine and control the strategic direction
and performance of organizations.
• The relationship between owners and managers, and the various mechanisms that
owners use to govern managers to ensure that they comply with their responsibility
to maximize shareholder value are central to the issue of corporate governance.
• Electing board of directors, appointing a CEO are some of internal governance
mechanisms.
 organizational structure and how it helps implement
strategies

• What is an organizational structure?

It is a framework of an organization that is used to depict authority, responsibility, and reporting directions within an
organization.

Types of organizational Structure

- Simple Structure – small/micro business
- Functional structure- HRM, Marketing, Finance, Procurement, etc
- Geographic/Divisional Structure- geographic locations of business
- Product Structure: types of products (product line based): Software vs hardware dept
- SBU Structure: Strategic Business Units of an organization
- Matrix Structure: it is mostly the combination of Functional and any other option such as geographic or product
depart mentation
 Basic Forms of Structure

 Functional Structure
 Divisional Structure - this is based on
geographic area, or product/ service or
customers or process ( eg. Residential
program vs distance program)
 Strategic Business Unit Structure (SBU)
 Matrix Structure
 Functional Structure

• Group tasks and activities based on business functions:

marketing, Finance, Production, HRM etc
Functional Structure pros and
cons
 Divisional Structure

• Can be organized in one of four ways:

• - geographic area
• - product or service
• - customer
• - process ( eg. Residential program vs
distance program)
Divisional Structure
 Strategic Business Unit
Structure (SBU)
• Group similar divisions into strategic
business units and delegate authority and
responsibility for each unit to a senior
executive who reports directly to the chief
executive officer of the overall company
 Matrix Structure

• The most complex of all designs

because it depends upon both
vertical and horizontal flows of
authority and communication
Matrix structure
 the relationship between structure and strategy-
reciprocal relationship

• Strategy and structure have a reciprocal relationship. This

relationship highlights the interconnectedness between
strategy formulation and strategy implementation.
• In general, the reciprocal relationship finds structure
flowing from or following the selection of the firm’s
strategy. Once in place, structure can influence current
strategic actions as well as choices about future
strategies.
Corporate culture and strategy implementation

• The corporate culture is a pattern of norms, attitudes, values,

beliefs, and customs that governs the behavior of people within the
organization.

• It is pervasive and refers to how people within the corporation think

and act as members of the organization.
• Shared beliefs among the members of an organization
• A system of shared meaning/beliefs held by members of an
organization
 corporate culture and strategy implementation

The following factors explain the essence of culture

1) Innovation and risk taking. The degree to which employees
are encouraged to be innovative and take risks.
2) Attention to detail. The degree to which employees are
expected to exhibit precision, analysis, and attention to detail.
3) Outcome orientation. The degree to which management
focuses on results or outcomes rather than on the techniques
and processes used to achieve them.
corporate culture and strategy implementation

4) People orientation. The degree to which management

decisions take into consideration the effect of outcomes on
people within the organization.
5) Team orientation. The degree to which work activities are
organized around teams rather than individuals.
6) Aggressiveness. The degree to which people are aggressive
and competitive rather than easygoing.
7) Stability.The degree to which organizational activities
emphasize maintaining the status quo in contrast to growth.
 Major strategic leadership actions in strategy
implementation

What is leadership, to begin with?

Leadership is influencing the behavior of followers(employees)
to get compliance/adherence with the goal to get the job done.
What is strategic leadership?
STL= Visionary, flexible, and able to empower followers
Strategic leadership is the ability to anticipate, envision,
maintain flexibility, and empower others to create strategic
change as necessary.
1) Key Strategic leadership Actions
Determining Strategic Direction : head towards the vision of the organization.
2) Effectively Managing the Firm’s Resource Portfolio
3) Exploiting and Maintaining Core Competencies
4) Developing Human Capital and Social Capital
5) Sustaining Entrepreneurial Mind-Set - encourage and promote innovation
6) Changing the Organizational Culture and Restructuring (if necessary)
7) Emphasizing Ethical Practices - act ethically (moral obligation). Ethical business
practice
8) Establishing Balanced Organization- use both financial and non financial measures
using tools like Balanced Scorecard (BSC)!

Reading Assignment: Balanced Scorecard

Read and understand what it is. (Discuss )
 Major strategic leadership actions in strategy implementation – Class Activity

• List and explain key leadership actions?! (let the students discuss on this
points)
• Key Strategic leadership Actions

A. Determining Strategic Direction – determining image/reputation

that the firm wishes to build in the future
B. Effectively Managing the Firm’s Resource Portfolio – effectively
managing the firms resource bases: financial capital, human capital,
social capital, and organizational capital (including organizational culture).
C. Exploiting and Maintaining Core Competencies - Core competencies
are capabilities that serve as a source of competitive advantage for a firm
over its rivals.
 Major strategic leadership actions in strategy
implementation

D. Developing Human Capital and Social Capital –

Human capital refers to the knowledge and skills of a firm’s entire
workforce.
Social capital involves relationships inside(eg with employees)
and outside the firm (eg with stakeholders such as other partner
firms, communities, government….) that help the firm accomplish
tasks and create value for customers and shareholders.
E. Sustaining Entrepreneurial Mind-Set - encourage and
promote innovation
 Major strategic leadership actions
in strategy implementation
F. Changing the Organizational Culture and Restructuring
(if necessary)

G. Emphasizing Ethical Practices - act ethically

H. Establishing Balanced Organization- use both financial and

non financial measures using tools like Balanced Scorecard BSC!
(See the discussion on BSC on the next slides)
 Meaning of Balanced Scorecard
The balanced scorecard (BSC) is a
strategic planning and management system that organizations
use to:
• Communicate what they are trying to accomplish
• Align the day-to-day work that everyone is doing with
strategy
• Prioritize projects, products, and services
• Measure and monitor progress towards strategic targets
Balanced Scorecard Objectives
Financial Objectives Strategic
Objectives

Outcomes focused Customer

• Value creation
on improving Financial
Internal
Performance
Processes
• Value creating
processes
Learning and
Growth
• Aligning
 More on BSC dimensions
The BSC suggests that we view the organization from four
perspectives, and to develop objectives, measures (KPIs), targets,
and initiatives (actions) relative to each of these points of view:
• Financial: this perspective views organizational financial
performance and the use of financial resources
• Customer/Stakeholder: this perspective views organizational
performance from the point of view the customer or other key
stakeholders that the organization is designed to serve
 More on BSC dimensions
• Internal Process: views organizational performance
through the lenses of the quality and efficiency related to
our product or services or other key business processes
• Organizational Capacity (originally called Learning
and Growth): views organizational performance through
the lenses of human capital, infrastructure,
technology, culture and other capacities that are key
to breakthrough performance