CHAPTER 9 Strategy
Implementation:
Organizing for Action
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN
Prentice Hall, Inc. © 2006
J. DAVID HUNGER
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Strategy Implementation
STRATEGY IMPLEMENTATION
--Sum total of activities & choices
required for strategic plan execution
It is a process by which;
objectives + strategies + policies
are put into action through the development of;
programs + budgets + procedures
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Strategy Implementation
The most mentioned problems related to
poor strategy implementation:
•Poor communication
•Unrealistic synergy expectations
•Structural problems
•Missing master plan
•Lost momentum
•Lack of top management commitment
•Unclear strategic fit
Research; A.T.Kearney
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Strategy Implementation
The most frequently experienced problems
related to poor strategy implementation:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Implementation took more time than originally planned
Unanticipated major problems arose
Activities were ineffectively coordinated
Competing activities and crises took attention away from
implementation
The involved employees had insufficient capabilities to perform
their jobs
Lover level employees were inadequately trained
Uncontrollable external environmental factors created problems
Departmental managers provided inadequate leadership and
direction
Key implementation tasks and activities were poorly defined
The information system inadequately monitored activities
Research; L.D.Alexander
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Strategy Implementation
Key Implementation Questions –
–Who carries out strategic plan?
–What needs doing for alignment w/
strategy?
–How is work coordinated?
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Strategy Implementation
Who carries out strategic plan ?
The implementers are;
everyone in the organization
Unless changes in mission, objectives, strategies
and policies and their importance to the company
are communicated clearly to all operational
managers, there can be a lot of resistance and foot
dragging.
This is the reason why involving people from all
organizational levels in the formulation and
implementation of strategy tends to result in better
organizational performance.
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Strategy Implementation
WHAT MUST BE DONE ?
The managers of divisions and functional areas work
with their fellow managers to develop;
-Programs
-Budgets, and
-Procedures
to implement strategy
They also work to achieve synergy among the
divisions and functional areas in order to
establish and maintain a company’s distinctive
competence
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Strategy Implementation
Programs –
The purpose of a program is to
make a strategy “Action oriented”
–Matrix of change
•Feasibility
•Sequence of execution
•Location
•Pace & nature of change (evolution or revolution)
•Stakeholder evaluations
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The Matrix of Change
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Strategy Implementation
Budgets –
Planning a budget is the last real
check a corporation has on the
feasibility of its selected strategy
–Standard Operating Procedures (SOP’s)
–Organizational Routines
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Strategy Implementation
Achieving Synergy –
–Shared know-how
–Coordinated strategies
–Shared tangible resources
–Economies of scale or scope
–Pooled negotiating power
–New business creation
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Strategy Implementation
How is strategy to be implemented ?
•Organizing
•Staffing
•Directing
•Controlling
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Strategy Implementation
ORGANIZING
Any change in corporate strategy
is very likely to require
some sort of change
in the way
an organization is structured
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Strategy Implementation
Organizational Structure
The formal arrangement of jobs within an
organization.
Organizational Design
A process involving decisions about six key
elements:
•Work specialization
•Departmentalization
•Chain of command
•Span of control
•Centralization and decentralization
•Formalization
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Strategy Implementation
Structure follows strategy –
–New strategy is created
–New administrative problems emerge
–Economic performance declines
–New appropriate structure is invented
–Profit returns to previous level
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Strategy Implementation
Departmentalization by Type
• Functional
– Grouping jobs by
functions performed
• Product
– Grouping jobs by
product line
• Geographical
– Grouping jobs on the
basis of territory or
geography
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• Process
– Grouping jobs on the
basis of product or
customer flow
• Customer
– Grouping jobs by
type of customer and
needs
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Strategy Implementation
Stages of Corporate Development –
–Stage I: Simple structure (crisis of leadership)
–Stage II: Functional structure (crisis of autonomy)
–Stage III: Divisional structure (crisis of control)
SBU’s; performance-and-results-oriented-control
–Stage IV: Beyond SBU’s (red tape crisis)
Company becomes so large and complex that it tends to
become relatively inflexible
Procedures takes precedence over problem solving
PROPOSED SOLUTION:
MATRIX OR NETWORK ORGANIZATION
(pressure-cooker crisis)
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Strategy Implementation
Blocks to Changing Stages –
–Loyalty to comrades
–Task oriented
–Single-mindedness
–Working in isolation
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Organizational Life Cycle
Even though a company’s strategy may still be sound,
its aging structure, culture, and processes may be such
that they prevent the strategy from being executed
properly.
Its core competencies become
core rigidities that are no longer adapt to
changing conditions – thus the company moves
into
decline.
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Changing Structural Characteristics of Modern Organizations
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Strategy Implementation
Advanced Types of Organizational
Structures –
–Matrix
•Temporary cross-functional task forces
•Product/brand management
•Mature matrix
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Strategy Implementation
Advanced Types of Organizational Structures –
–Network structure (virtual organization)
–Cellular organization
Cells:
self managing teams, autonomous business units, etc
…can operate alone – can interact with other cells
The combination of
Independence - Interdependence
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Network Structure
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Strategy Implementation
Reengineering
Radical redesign of business
processes to achieve major gains
in;
•Cost,
•Service, or
•Time
“If this were a new company,
How would we run this place ?”
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Strategy Implementation
Six Sigma –
(3,4 defects per million)
–Define
–Measure
–Analyze (pinpoint where things are going wrong)
–Improve
–Establish controls
Lean Six Sigma –
Lean Manufacturing + Six Sigma
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Strategy Implementation
Job design to implement strategy –
–Job enlargement
(combining tasks)
–Job rotation
(moving workers through other jobs)
–Job enrichment
(altering jobs for more autonomy and
control by the worker)
Job characteristics model
(combination of the above)
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Strategy Implementation
International Issues –
–MNC’s (multidomestic – global)
For an MNC to be considered global, it must
manage its worldwide operations as if they
were totally interconnected.
–International Strategic Alliances
Partners contribute key strengths but protect
core competencies.
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Strategy Implementation
International Development Stages–
–Domestic company
–Domestic company w/export division
–Domestic company w/int’l division
–MNC w/multidomestic emphasis
–MNC w/global emphasis
(Any one corporation can be at different stages
simultaneously, with different products in
different markets at different levels.)
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Strategy Implementation
Centralization vs. Decentralization
Centralization
The degree to which decision-making is
concentrated at a single point in the
organizations.
Organizations in which top managers make all the
decisions and lower-level employees simply carry
out those orders.
Decentralization
Organizations in which decision-making is
pushed down to the managers who are closest
to the action.
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Strategy Implementation
Centralization vs. Decentralization
How to organize authority centrally so that it
operates as a vast interlocking system that
achieves synergy
and at the same time
decentralize authority so that local managers
can make the decisions necessary to meet the
demands of the local market or host
government
–Product-group structure
–Geographic-area structure
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Geographic Area Structure
Simultaneous pressures for decentralization to be locally
responsive and centralization to be maximally effective are
causing interesting structural adjustments.
“think globally – act locally”
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