STRATEGY IMPLEMENTATION

Introduction:
Successful strategy formulation does not guarantee successful strategy Implementation.
It is always more difficult to do something (strategy implementation) than to say you are going
to do it (strategy formation). Although inextricably linked,
Difference between Strategy Formulation & Strategy Implementation:
Strategy Formulation
a.
b.
c.
d.

Strategy Implementation

Its positioning forces before Action

Its an intellectual process
It is focuses on Effectiveness
It requires good Conceptual, Integrative

a.
b.
c.
d.

Its managing forces during Action

Its more an Operational in character
It is focuses on Efficiency
It requires special skills in Motivation and

and Analytical skills

e. It requires coordination among a few

Leadership
e. It requires coordination among a many

individuals
Concepts and tools do not differ greatly for

individuals
Concepts and tools differ substantially

f.

small,

large,

profit

or

non-profit

organization.

f.

among small, large, profit or non-profit

organization.

Implementing strategies requires such actions as altering sales territories, adding new
departments, closing facilities, hiring new employees, changing an organizations pricing
strategy, developing financial budgets, developing new employee benefits, establishing costcontrol procedures, changing advertising strategies, building new facilities, training new
employees, transferring managers among divisions, and building a better management
information system. These types of activities obviously differ greatly between manufacturing,
service, and governmental organizations.

Definition:
According to Charles W.L.Hill and Gareth R.Jones The way in which a company creates
the organizational arrangements that allow it to put its strategic plan into operation most
efficiently and to achieve its objectives
According to Steiner and Miner The implementation of policies and strategies is concerned
with the design and management of system to achieve the best integration of people, structure,
processes and resources in reaching organizational purposes
Thus, Implementation of Strategy is 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.

Implementation of strategy affects an organisation from top to bottom; it affects all the
functional and divisional areas of business.

STRATEGY TO OPERATIONAL PLATFORM

STRATEGY
Definition

MOTIVATION
and

IMPLEMENTATION

Acceptance

PROJECT REPORT
IMPLEMENTATION

Data:

Resource

implementation of

Compilation

strategic goals

(completion

management
Project

instruction, directives,
handbook,

management

help

database etc.,
Process Analysis

Basic Conditions

Implementation

(legal and corporate)

and

Training

(machinery

and

peripherals)
Motivation

for

Testing

Usage

Success inspection
Personnel
and
framework
rehabilitation

and

Adaptation
integration in all
relevant
communication
system

Steps of Strategy Implementation

1.
2.
3.
4.
5.
6.
7.
8.

Institutionalization of strategy
Formulation of Action Plans.
Project Implementation.
Procedural Implementation
Resource Allocation.
Structural Implementation.
Functional Implementation.
Behavioural Implementation.

Institutionalization of strategy:
Institutionalization of strategy is the first activity involved in activating the strategy.
Institutionalization of strategy involves two aspects:
a. Communication of strategy: Once the strategy is formulated it must be communicated
to those persons who would implement it. Strategy communication is a process of
transferring the strategy information from the formulators to the implementers.
b. Securing Acceptance of Strategy: It is not enough to communicate the strategy to the
members of the organizations, but it is equally important to secure their acceptance of
the strategy, so that they implement effectively.

Formulation of Action Plans:

Once the strategy is institutionalized through its communication and acceptance, the
management proceeds to formulate action plans. The management has to frame action plans in
respect of several activities required to implement a strategy.
The action plans may be in respect of purchasing new machinery, appointing additional
personnel, developing a new process, etcThe type of action plan depends upon nature of
strategy. While framing a manager should check out the objectives, activities to perform
&resources required to perform the action plans.
Project Implementation:
Project Implementation passes through following phases that are as follows:
a. Conception Phase This phase is an extension of strategy formulation phase. In this
phase, project ideas are generated during the process of strategic alternatives &
strategic choice that maybe implemented in future by organization.
b. Project Analysis Phase The project ideas have to be arranged according to priority
for the purpose of development. Before selecting a project for development, a preliminary
project analysis have to be made in respect of marketing, technical, finance, etcand
check out such analysis is required to analyse whether project would appeal to investors,
banks & FIs.
c. Planning Phase In this phase, management under takes detailed planning of project.
The detailed planning should cover different areas of project such as production
schedules, plant design & layout, technical arrangements, marketing, finance, etc
Organizing Phase The management must organize for necessary resources such as
manpower, finance, systems and procedures to implement the project.
d. Implementation Phase During this phase, the management must undertake
engineering, order placement for equipment & material etc leading to the testing, trial
& working of plant.
e. Operation Phase The final phase involves handing over the plant to the operating
personnel for operation purpose. At this stage the production starts.
Procedural Implementation:
In order to implement the strategies, the management must have good knowledge of the
procedural framework within which the plans, projects and programmes have to be approved
by the government authorities. The policy guidelines issued by the government authorities
may change from time to time. Some of the important procedural requirements can be
elaborated as follows:

a. Formation of a company The formation of a company is governed by the

provision of Indian companies act, 1956 as amended from time to time. All activities
for formation should be carried out such as Registration, obtaining certificates;
documentation must be forwarded to registrar of companies, etc

b. Licensing Procedures Certain industries require licensing procedures. As per

the industrial policy,1991, six industries require licensing manufacturing products
such as alcohol, cigarettes, chemical fertilizers, industrial explosives, defence and
Drugs& Pharmaceuticals. Therefore company requiring the license must apply for
the same.
c. FEMA Requirements if required, organization must fulfil the necessary
requirements of the Foreign Exchange Management Act, 2000. Those organizations
willing to deal in foreign exchange transactions must ensure that they collect
required information in context to provisions of FEMA.

d. Import and Export Requirements Similarly, organization willing to deal in

Import & Export need to follow certain procedural requirements, such as they have
to register with Directorate General of Foreign Trade (DGFT) and obtain Importers
Exporters Code (IEC)5. Competition Act, 2002 The government has introduced this
act that aims at promoting competition by restricting anticompetitive practices.
Large businesses must have a good understanding of the competitive act.
e. Foreign Collaboration Procedures For proposals to set up projects with foreign
collaborations require prior government approval. The government authorities such
as Reserve Bank of India (RBI),Foreign Investment Promotion Board (FIPB) and
Project Approval Board are major regulatory bodies for foreign collaborations
including joint ventures abroad.
f.

SEBI Requirement Securities and Exchange Board of INDIA (SEBI) became

active since 1992 with the passing of SEBI Act, 1992. the act empowered SEBI with
necessary powers to regulate the activities connected with marketing of securities &
investments of stock exchanges, merchant banking, portfolio management, stock

brokers and others connected with securities

g. Consumer Protection Act, 1986 Business firms must have good knowledge of
consumer protection act, 1986. This act was passed to provide better protection of the
interests of consumers. The act seeks to promote & protect rights of consumers such
as:

(i). The right to be protected against the marketing of goods that are
hazardous to life & property.
(ii). The right to be informed about the quality, quantity, potency, purity
standards and price of goods to protect the consumer against unfair trade
practices.

(iii). The right to be heard & be assured that consumers interests will receive
due consideration. etc.,
h. Pollution Control Requirements the govt. of India has passed several laws relating
to the protection of environment. The business organizations should have a good
knowledge of such laws. To name few of them are as follows:
(i). The Water (Prevention & Control of Pollution),Act, 1974.
(ii). The Air (Prevention & Control of Pollution), Act,1981.
(iii). The Environment Protection Act, 1986, etc
i.

Labour Legislation Requirements The govt. of India has passed several laws to
protect the interest of the workers. Business Organizations should have a good
knowledge of such laws, which include:
(i). The factories Act, 1948.
(ii). The Workmen Compensation Act, 1923.
(iii). The Bonus Act, 1965.
(iv). The Minimum Wages Act, 1948.
(v). The Industrial Disputes Act, 1947, etc

Resource Allocation:
The resources may be existing with a company or many be acquired through capital allocation.
Resources include physical, financial and human resources essential for implementing plans.
Resources are broadly of four categories.

i) Money
ii) Facilities and equipments
iii) Materials, supplies and services
iv) Personnel
Decisions involved in allocation of resources have vital significance in strategy implementation.
In single product firms it may involve assessment of the resource needs of different functional
departments. In the multi divisional organization it implies assessing the resource needs of
different SBUs or product divisions Redeployment or reallocation of resources becomes
necessary when changes take place. The redeployment of resources is quite critical when there
are major changes and shifts in strategic posture of company. Redeployment of resources may
arise due to strategies of a company to grow in certain areas and withdraw from the other.
Methods of Resource allocation
(i). Based on percentages: Usually, companies have been following system of allocation of
resources by percentages. It may not serve much purpose these days. They may be of
help only in making some comparisons. The allocation of resources should not be based

on their availability or scarcity as it may prove to be counterproductive. The resource

allocation should be made with regard to strategies of a company for its future
competitive position and growth. The decisions of resource allocation are also closely
connected with the objectives of a company.
(ii). Based on modern methods: Other methods include -Portfolio models, product life-cycle
charts, balance sheets, profit and loss statements income statements. When
retrenchment or turnaround strategies are implemented zero-based budgeting is used.
During mergers, acquisitions and expansion, capital budgeting techniques are suggested.
Resource allocation is not purely a rational technique but is based on several behavioural
and political considerations. The other analytical conceptual models used for strategic
choice are growth share matrix, stop light, and Directional Policy Matrix used in multi
divisional firms. A more comprehensive approach to management decisions on resource
allocation is provided by the budgeting system carefully geared to the chosen strategy.
Structural Implementation:
An organizational structure is the pattern or arrangement of jobs and groups of jobs within
an organization. Organizational Design is the process of creating or reshaping an
organizational structure optimized to support strategic decisions.
The elements of organization structure and design are:
1. Division of labour

It is the process of dividing work into relatively specialized

jobs to achieve advantages of specialization. Division of
Labour Occurs in Three Different Ways:
a. Personal specialties
b. Natural sequence of work
c. Vertical plane

2. Departmentalization

Departmentalization is the process of grouping of work

activities into departments, divisions, and other homogenous
units.

It

takes

place

in

various

patterns

like

departmentalization by
a.
b.
c.
d.
e.
f.
3. Delegation of Authority

Functions
Products
Customers
Geographic location
Process and
Combinations of above (Matrix departmentalization)

Delegation of authority can be defined as subdivision and suballocation of powers to the subordinates in order to achieve
effective results. Types:
a. Centralization and

b. Decentralization
4. Span of Control

Span of Control means the number of subordinates that can be

managed efficiently and effectively by a superior in an
organization. It suggests how the relations are designed
between a superior and a subordinate in an organization.
Types
a. Narrow span of control
b. wide span of control

DESIGNING STRATEGIC CONTROL

Strategic control systems provide managers with required information to find out whether
strategy and structure move in the same direction. It includes target setting, monitoring,
evaluation and feedback system.
The importance of strategic control

Achieving operational efficiency

Maintaining focus on quality

Fostering innovation

Insuring responsiveness to customers

Strategic Control Process

Levels of strategic control

Types of control systems:

a. Financial Controls

Since one of the primary purposes of every business firm is to earn a

profit, managers need financial controls. Two specific financial
controls include budgets and financial ratio analysis

b. Operations Controls

Operations control techniques are designed to assess how efficiently

and effectively an organization's transformation processes are
working

c. Behavioural Controls

Managers accomplish organizational goals by working with other

people. It's important for managers to ensure that employees are
performing as they're supposed to do. We'll be looking at three
explicit ways that managers control employee behaviour: Direct
supervision, Performance appraisals, and Discipline