In solving strategic business cases, problems are identified, alternative strategies for solving the problems are assessed, and recommendations are made. Once the strategic recommendations are made, an implementation plan must be developed.
In developing an implementation plan, the operational and implementation issues, as well as the problems that must be addressed to help support the successful achievement of the new strategy, must be analyzed and resolved. Once recommendations are made to resolve these issues, an action plan for implementing the strategy must be developed.
The general steps to completing an implementation plan are as follows:
1. Identify and analyze the implementation issues, such as those concerning change management, acquiring the required resources, and resolving any specific risks associated with the recommended strategy.
2. Address the operational and other minor issues (e.g. ethical, internal control, operations management). Discuss how solving these problems can affect the implementation of the strategic recommendations, and/or how they affect other minor issues and weaknesses. This demonstrates integrative thinking.
3. Make clear and actionable recommendations pertaining to the implementation issues and minor issues.
4. Provide an action plan to implement the strategic and operational recommendations.
Implementation and Operational Issues
Any issues or risks that could impede the implementation process are addressed in this section of the report. These internal or external risks can relate to such things as the market, the product, the stakeholders, internal processes, or key success factors. When a risk to the successful implementation of the strategy is identified, details on how to resolve or mitigate this risk should be provided and the associated costs and benefits should be analyzed. Where feasible, the recommended strategy is strengthened when significant “cons” are addressed and overcome.
Details on how to resolve the issues dealing with change management should be provided in the written portion of the implementation plan. Managing change and allaying the concerns of those stakeholders who are affected by the change are critical
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when implementing a strategy. For a large corporation, communicating a new strategic direction can be a significant undertaking. Strategic change can involve divestiture, acquisition, expansion, changes to the product line, shifts in target markets, or the installation of a new corporate-wide program.
Some change management considerations include the following:
1. Communicate the reasons for the change and outline any relevant consequences to the workers, particularly those who are affected by the change (e.g. hold a general staff meeting).
2. Provide an opportunity to those most affected by the change to be part of the change management team. This involvement will allow them to work out their concerns before, during, and after the implementation of the change. This involvement will greatly contribute to their acceptance of the change.
3. Provide periodic updates or status reports (e.g. send out quarterly updates to staff).
4. Monitor the change (e.g. require individuals responsible for a particular aspect of the implementation plan to prepare and present a report to management).
5. Evaluate the change (e.g. compare results against performance targets).
Explain how the change issues will be addressed during implementation. This communication fortifies the merits of any plan and ensures consideration has been given to all the players involved. For example, if training is required as a result of the recommended changes, provide the details of training requirements in the body of the report and reflect these needs in the action plan timeline.
Minor issues and weaknesses that are identified in the situational analysis should also be addressed in the implementation plan. Non-strategic matters pertaining to information technology (e.g. ERP system upgrades) or human resources (e.g. employee feedback) can have an indirect impact on the success of the new strategy. Other minor case issues that do not fit anywhere else in the report can be addressed as part of the analysis of the implementation issues.
In analyzing the implementation and operational issues, the following objectives of the implementation plan should be kept in mind:
1. It aligns the organization’s resources and success factors to accomplish the recommended strategy (e.g. benefits exceed costs, sufficient resources are available or can be obtained, and competitive advantages are exploited or developed).
2. It resolves problems without causing others.
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3. It considers organizational implications (e.g. organizational structure, morale, and the role of functions such as distribution, IT, accounting, sales, purchasing, marketing, human resources, financing, etc.).
The impact of the alternative actions on the pro forma financial statements and cash flow forecast should also be kept in mind. For each issue analyzed, a clear, actionable recommendation must be made. Indicating that the issue “needs to be resolved” or
“needs to be further investigated” cannot be credited for analyzing and resolving the issue.
Once recommendations are made for the implementation and operational issues, the last step is to prepare the action plan.
Exhibit 1 provides an example of a small portion of the implementation plan section of a business report. This example is based on the Toys-Plus Inc. (TP) Board Report case.
Action Plan
Preparing an action plan is the final step in the development of the implementation plan. It should address the following questions:
1. What needs to be done?
2. Who is responsible for each task?
3. When must each action be completed?
4. What resources (money and people) are required to complete the task?
An action plan is best represented visually as a table, graph, or chart. It can be created on a spreadsheet where each column represents one of the above elements and each row represents a unique step. Exhibit 2 is an example of how an action plan can be structured.
Another popular method of illustrating a project schedule (i.e. action plan) is a Gantt chart. The Gantt chart uses bars to reflect the start and finish dates of each activity in a project. The calendar dates can be marked on the horizontal axis and the activities on the vertical axis, with a bar for each activity representing the duration of the activity. This method of charting has a couple of advantages. Updating each bar with the percentage of completion for each activity, one can quickly see which activities are behind schedule. Exhibit 3 provides an example of one type of Gantt chart.
Gantt charts can also be structured to reflect dependencies between activities. The critical path for the entire project can be identified when these linkages are in place.
Slippage in the critical path can be quickly assessed once this path is established.
Knowing the delay in a project and possible cost overruns is a valuable tool in the financial management of any project.
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The visual portrayal of an action plan is usually presented in the business report as an appendix. Its detailed timeline provides stakeholders with a level of confidence that the recommended strategy has been well thought through.
Sample Implementation Considerations
Using the example of a strategy to acquire another company, below are some considerations that may be relevant when developing an implementation plan that involves an acquisition. They include typical questions and suggested action items to do with financing and operational issues that may be relevant for implementing the acquisition strategy. Where appropriate, the answers to the questions should be addressed in the body of the report. In some cases, there will be an action and associated cost that should be added to the action plan presented in the appendices.
Where relevant, an ‘(action item required?)’ prompt is provided for items that might be appropriate for the action plan.
Note that these questions are by no means exhaustive, nor are all the questions relevant for every situation. As well, some of the responses to the questions may be more appropriately covered in the analysis portion of the paper.
A. Financing Considerations:
•
Will additional financing be required? If so, where will the financing come from and what steps must be taken to acquire this financing? (Action item required?)
•
Will a loan covenant be a factor? Is there any risk of loan default? If so, what is the contingency plan?
•
Will severance packages be paid out? If so, what is the total cost? How will this be financed (e.g. retained earnings, line of credit, bank loan, share issue, etc.)?
Will the severances be paid monthly or as a lump sum?
•
How will other expenses be affected? (e.g. interest payments, taxes, etc.)
•
How will the financing issues and operational issues affect the pro forma financial statements and cash flow?
B. Operational Considerations:
•
Will layoffs be necessary? If so, will the reduction in manpower lead to possible internal or quality control issues? Is there a possibility of a lawsuit as a result of the layoff? What is the timeline for the layoff? Who will be responsible? (Action item required?)
•
Will the acquisition result in operating at full capacity or will it provide excess capacity in terms of production?
•
What percentage of customers from the acquired company will be lost as a result of the acquisition?
•
Will training be required? If so, when, how, and at what cost? (Action item required?)
•
Will benefit packages need to be modified to be consistent between the companies?
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•
Who will lead the acquired company? When and how will they take the lead?
(Action item required?)
•
Will a press release need to be sent out to announce the acquisition? (Action item required?)
•
Will a succession plan need to be implemented? (Action item required?)
•
How will change management help to assimilate the cultures of the two organizations? How will the change be communicated? (Action item required?)
•
What risks need to be mitigated if the two cultures are merged (e.g. preferential treatment, biased decision making, employee in-fighting, etc.)? How will issues between the cultures be resolved?
•
How will the other functional departments be affected? Marketing? Logistics?
(Action item required?)
•
How will the acquisition affect the supply chain? (Action item required?)
•
What changes need to be made to information systems, and at what cost?
(Action item required?)
•
How can information technology be used to help implement a successful acquisition and at what cost? (Action item required?)
•
What performance targets will be affected? (Action item required?)
•
What are the potential consequences of an unsuccessful implementation of the acquisition?
•
How will the acquisition affect the pro forma statements and cash flow projection?
Summary
The value of an implementation plan increases once the strategic recommendations are approved. Knowing the critical actions and the deadline dates will reveal the most critical activities that need to be completed to ensure that the project is accomplished smoothly and on time. Once the critical activities are identified, responsibility for these activities can be assigned in a manner that will ensure the deadlines are met (e.g. potential bottlenecks can be identified and dealt with by distributing the workload in an equitable manner). Detailing cost estimates is useful for budgeting and forecasting the financial requirements for successfully implementing the recommended strategies.
The implementation plan also helps in defining the performance measures and establishing the performance targets. Throughout the implementation process, the progress of the project implementation can be reviewed against the plan and adjustments can be made where required.
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Exhibit 1
1
The following is based on the strategic recommendation that TP divest the Toys
Division and grow strategically in Games by acquiring Luke Software Inc. (LS) and expanding into Europe.
There are certain key risks that may impede the implementation of TP’s strategic direction to expand into Europe, to divest from the toy industry and to focus more on software games. These risks are categorized as product risks, market risks, and stakeholder risks.
Product Risks
Graphics and sounds are important for next-generation console games and European consumers. As shown in the Customer Focus section, graphics are not a competitive focal point for TP. Although graphic quality will be maintained at a basic competitive level, TP will lag behind certain competitors on this dimension of product quality. The following are recommended strategies for mitigating this risk:
1. Strengthening and internalizing its core competency in sound and music, thereby protecting its unique customer reputation;
2. Creating new styles of games where graphics are not a customer focal point;
3. Focusing on games/competencies where TP can best compete.
Another way to mitigate product risk is by creating a portfolio of games with varying complexity and associated risk. Console digital distribution offers new opportunities to create a diversified game portfolio. All next-generation consoles (e.g. Xbox Live Arcade,
Playstation Network) have adopted digital distribution. Casual style games (e.g. poker) can be developed at low cost and break-even point.
2
Due to the relative simplicity of such games, success is contingent on developing uniqueness and innovation, not on graphics and game size, which bodes well for TP.
B. Change Management
An Integration Manager is critical in managing change and ensuring successful integration of LS. It is recommended that a one-year contract position be created with
1
Modified from “Toys-Plus, Example of a Good Report 2007,” pp. 55-77.
2
Hyman, P. (2007). State of the industry: digital distribution. Game Developer. March 2007. Vol.14,
Iss. 3, p.11.
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an expected salary of $100,000
3
and an additional miscellaneous budget of $100,000.
This manager will develop and facilitate the integration plan, by acting as a liaison between staff and management, and by dealing with attrition and morale issues.
J. Wener or M. Paulo needs to hire an Integration Manager by Q3 in 2008.
The division divestment will impact TP employee morale. The Toy division employees require ongoing communication and support during the divestment, otherwise TP may lose the trust and respect of the remaining TP employees.
4
Furthermore, TP’s situation is unique in that both TP and the Toys purchaser will be temporarily located together.
Any unresolved issues may result in resistance to change.
Change management must be initiated and supported by the leadership team. Success requires ongoing and candid communication between management and employees at all levels. J. Wener should hold a meeting with staff in Q1, 2008, to communicate the strategy and the expected financial outcomes.
C. Operational Issues
Intellectual Property Insurance
A weakness of TP is not possessing intellectual property (IP) insurance. This contributed extensively to the current litigation, forcing TP to divest the Toys division. To protect itself against future litigation, TP must obtain insurance.
The two policy types of IP insurance available are infringement and enforcement.
Infringement policies protect against inadvertent exploitation of another organization’s
IP. Enforcement policies protect an organization’s current IP and assist in covering litigation expenses up front.
5
It is recommended that TP obtain maximum protection by purchasing both infringement and enforcement policies. These policies cost approximately $100,000 per year.
6
Subcontracting Sound Development
One of TP’s strengths is its reputation with customers for good quality sound and music associated with its games. To keep development costs low, production of both sound and music is outsourced to sub-contractors. Because these functions are critical to the quality of TP’s games and are a major element of the total production cost, it is imperative that TP controls this competency.
3
Salaries based on Robert Half International 2007 Salary Guide.
4
Budros, A. The Mean and Lean Firm and Downsizing: Causes of Involuntary and Voluntary Downsizing
Strategies. Sociological Forum. Vol. 17, No. 2. June 2002. pp. 307-352.
5
Diversified Risk Insurance Brokers Website (2007). Intellectual Property Insurance. Retrieved March 7,
2007, from www.drib.com/products/IntellectualProperty.htm
6
(2.5%*$4M) assuming coverage of $4M based on LS lawsuit and an average cost of 2.5% of total coverage per annum. Insurance Choice Website (2007). IP Sure: Intellectual Property Rights
Insurance. Retrieved March 12, 2007, from www.insurancechoice.com.au/downloads/ipsure_brochure.pdf
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Manufacturing companies, such as Dell and Toyota, have developed and managed extensive supplier relationships which have become competitive strengths.
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For instance, Dell Inc.’s knowledge sharing with suppliers has evolved to the point where business partners are treated as insiders.
It is recommended that TP share explicit knowledge of development processes with suppliers through training workshops. This will protect and build TP’s strength, and link the supplier to a long-term productive business relationship. Additional wages and salaries will be incurred during the knowledge sharing process with key suppliers, costing approximately $100,000 per year.
8
Other Issues
Space Wun Proposal
TP should not undertake the rebate coupon proposal to increase sales of Space Wun, as it will result in a loss even in the most beneficial scenario (Figure 1).
Figure 1: Financial Summary of the Space Wun Proposal (in ’000s)
% Coupon usage 20% 8%
% Rebates applied for 90% 85% 90% 85%
Incremental gross margin
Variable costs
Fixed costs
Before-tax net income (loss)
$ 216 $ 216 $ 216 $ 216
356 337 143 135
205 205 205 205
$(345) $(325) $(131) $(123)
7
Using Supplier Networks To Learn Faster. Jeffrey H. Dyer and Nile W. Hatch. MIT Sloan Management
Review . Spring 2004.
8
Salaries based on Robert Half International 2007 Salary Guide.
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Exhibit 2
Action Plan
European Expansion – Games including copyrights – initiate proposal and assign new VP Sales as champion
Initiation Completion
Action Responsibility Date
New VP Sales
& M. Snuffle
$1.7M Q1 2008 Q1 2008
J. Wener Hold strategy communication sessions with financial outcomes – two per month for first quarter
Draft and mail working condition statement to Shan
Wen Manufacturing Pte.
Divest the Toys Division and sell off assets listed at eight times true earnings
Settle lawsuit with and acquire Luke Software Inc.
– settle at recommended price of $4M plus purchase price of $1.5M
Integrate LS key personnel and disciplined development processes – contract an Integration
Manager
Implement new organizational structure – recruit VP
Finance, HR manager, and VP Sales
Vertically integrate distribution operations – cancel
Agram distributor contract
Purchase and install auto-replenishment inventory system software
Develop and implement succession planning
Law firm
H,H&M
J. Wener &
M. Paulo
J. Wener &
Law firm
H,H&M
J. Wener &
M. Paulo
J. Wener &
M. Paulo
New VP Sales
& M. Snuffle
Cost of business
Q1 2008 Q1 2008
Cost of business
Inflow of
$8.1M
Q1 2008
Q1 2008
Q1 2008
Q2 2008
$5.5M Q2 2008 Q3 2008
$200K
$230K
Inflow of
$783K
Q3 2008
Q4 2008
Q4 2008
Q4 2008
Q4 2008
Q4 2008
IT Leadership $30K Q1 2009 Q1 2009
Develop policy and procedures/ethical standards documentation – obtain leadership support and input
Purchase intellectual property insurance – both infringement and enforcement policies
Obtain new office space upon expiry of lease or renegotiate sublease
Build supplier networks for core competencies (sound in particular) – training workshops and establish knowledge sharing/learning teams
Initiate, communicate and utilize the Balanced
Scorecard – tie compensation to objectives and hold a general meeting
J. Wener Cost of business
Q1 2009 Q1 2009
$65.8K Q1 2009 Q1 2009 R. Abboud &
HR Director
J. Wener &
Law firm
H,H&M
J. Wener
$100K per year
Cost of business
R. Abboud $100K per year
Q2 2009
Q2 2009
Q2 2009
Q2 2009
Q2 2009
Ongoing
J. Wener &
M. Paulo
Initiate target costing and tie performance to the
Balanced Scorecard
Convert the existing call centre into the Post-Product-
Purchase Team – engaging customers and distributing satisfaction surveys
Reassess supplier networks and possible integration/ acquisition options
Assess East Asia and India market feasibility
M Paulo
M. Snuffle
R. Abboud
New VP Sales
$100K Q2 2010 Ongoing
$60K
Cost of business
Cost of business
Q4 2010
Q2 2011
Q2 2012
Q1 2011
Ongoing
Ongoing
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Exhibit 3
9
PRIMARY TASKS 3 mo
Hire a new Financial
& Admin Mgr.
Hire Senior Project
Architect & Senior
Managing Architect
Implement formal job descriptions
Employee training related to changes and new skills
Devise and implement performance review process
Outline dispute guidelines for selfmanaging team initiative
Upgrade Tracker software/e-commerce enhancements
JUL-DEC
Howard
Howard
& Henry
Howard
& Henry
6 mo
JAN-JUN
9 mo 1 yr
Enhance website – for external customer initiatives
Kimberley
Devise OT, billing, bonus and process change policies with
JAV-TAB
Howard/Henry/Senior Mgmt/
Finance & Admin Mgr
Hire a Landscape
Architect
Howard
& Henry
Senior Mgr
Architect
Partners and Mgmt team-led - ongoing
Partners and Mgmt team-led - ongoing
JUL-DEC JAN-JUN
2 years
2007
+ MEASUREMENT OBJECTIVE
Salary 60K, candidate
CMA, CA, 5 yrs exp.
Manage finances and to oversee finance changes with partners
Salary 80K, licensed architect with 10+ yrs exp
Better manage the project architect team and design staff
Describe responsibilities and roles for employees
Set guidelines for performance and evaluations and firm expectations
Enhance website – for external customer initiatives
Enhance marketability and support clientfocused initiatives
New policies on staff compensation/ performance will be introduced
Salary 46K, licensed architect with 5+ years exp.
Employees to participate in industry seminars
Clarify roles/responsibilities while lowering OT costs and providing staff incentives
Compliment services offered to clients, evidenced-based design, etc.
Improve staff overall industry/business skills
Implement performance appraisals, ½ and 1 year evaluations
Align company expectations with employee objectives
Employees are established into selfmanaging teams
Improve staff synergy in all phases of project
Implement and monitor new policy changes
Deploy life-cycle costing initiatives
Kimberley - Ongoing
Partners and Mgmt team-led - ongoing
Incorporation of accounting software/customer data
Review effectiveness of new OT and A/R policies
Allow for internal reporting systems to be accessible via the web
Assess that new policies have reduced costs
Senior Mgr
Architect
Use life-cycle costing to enhance proposals related to cost assessment
Improve Information to customers and differentiate design
9
Taken from “Cameron Roark Architects, Example of a Good Report,” Exhibit 15, pg. 74, 2004.
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