Beruflich Dokumente
Kultur Dokumente
Introduction
Implementation of strategy is the process through which a chosen strategy
Allocation of resources to new course of action needs to be undertaken besides need to adapt organizations structure
STRATEGY FORMULATION
B (success)
FLAWED
SOUND
C
WEAK
D
EXCELLENT
STRATEGY IMPLEMENTATION
implementation
implementation.
skills.
Thus
they
should
redesign
their
strategy
before
Square C shows neither the sound strategy formulation nor is effective in strategy implementation. They should redesign business model by implementation execution
readjustment.
Square B is ideal situation where company has succeeded in designing a sound competitive strategy besides effectively implementing it.
with
efficient
output/input
ratio.
1. Thrive
2. Die Slowly
Inefficient
3. Survive
4. Die Quickly
Ineffective
Effective
Strategic Management
STRATEGY IMPLEMENTATION
It is managing forces during action. It focuses on efficiency. It is primarily and operational process. It requires special motivational and leadership skills. It requires combination of many
analytical skills. It requires coordination among few individuals. Concepts and tools do not differ greatly for small, large, profit or non
individuals. Concepts and tools varies substantially among small, large, profit or non profit
profit organization.
organization.
departments,
closing
facilities,
hiring
new
employees,
changing
organizational pricing strategy, developing financial budgets, developing new employee benefits, establishing cost control procedures, changing advertising strategies, building new facilities, training new employees, building MIS etc. These types of activities differ greatly between manufacturing, service, and governmental organizations.
incremental changes over a period of time take the organization from where
it is to where it wishes to be.
These activities are not performed in the same order (can be performed
There is no optimal organizational design or structure for a given strategy or the type of organization and what is appropriate for one organization may not work for other organization even though industry is organized in same way.
For example consumer good companies tend to emulate the divisional structure by product form or organization. Small firms are functionally structured (centralized) Medium sized firms are divisionally structured (decentralized) Large firms are structured on basis of SBU (Strategic Business Unit / Matrix Structure).
With growth of organization structure usually changes from simple to complex as a result of linking of several basic strategies.
Corporate R&D
Corporate Finance
Strategic Planning
Corporate Marketing
Finance
Production
Engineering
Accounting
Human Resources
Proper match between strategy and structure gives competitive edge or else it will result into failure. Companies must be flexible, innovative, and creative in global economy to exploit their core competencies. Useful Information contributes the for the formation and use of effective structures and controls, which yield improved decision making.
SBU Disadvantages
Difficulty with contact with higher management
May cause of internal tension due to difficult access to internal and external sources of funding, May be the cause of the unclear situation with regard to the management activities.
Matrix Structure
Network Structure
A group of legally independent companies or subsidiary business units that use various methods of coordinating and controlling their interaction in order to appear like a larger entity. In a business context, three main types of network organization are typically seen:
Internal where a large company has separate units acting as profit centers Stable where a central company outsources some work to others, and Dynamic where a network integrator outsources heavily to other companies.
A corporation organized in this manner is often called a virtual organization because it is composed of a series of project groups or collaborations linked by constantly changing non-hierarchical, cobweb like networks. This structure is important in unstable conditions where regular employees are replaced with contract laborer or suppliers contracts are for specific project and length of time etc. The 'wiring' of information-age organizations needs to be different and more complex. This has given rise to the concept of the Network Organization.
Network Structure
A joint venture of companies for sharing skill or core competencies to manufacture a product or provide a service. The companies rely on relationships between people across structural, temporal and geographic boundaries. It is more than outsourcing and has flexibility as in a network structure there is a continuous change in partners and the arrangements are goal oriented and loose. All efforts are made to bring about new products and services. The process changes more quickly for innovative products. The characteristics of a network organization are:
Independent teams Departments which share common values Projects which support each other Multiple links between projects Information and Communications Technology is used to connect the projects. There is a key coordinating role for the Chief Executive to construct the teams and manage the interrelationship of projects (a kind of 'air traffic control').
Network Structure
An example of a networked organization is Asea Brown Boveri. This giant corporation split its business into 1,300 companies as separate and distinct business units. All the energy and resources of the corporate centre are then geared to facilitating cross-company cooperation, with computer networks and knowledge sharing being at the centre of this process.
Attributes of SBU
A scientific method of grouping the businesses of multi-business corporation which helps firm in strategic planning. Improvement over territorial grouping of business / strategic planning. SBU is grouping of related businesses that can be taken up for strategic planning. Unrelated product / business in any group are separated based on criteria of functional relation. Grouping of businesses on SBU lines helps the firm in strategic planning by removing confusion and vagueness and provides right setting for correct strategic planning. Each SBU has distinct set of competitors and its own distinct strategy. Each SBU will have a CEO who will be responsible for strategic planning for the SBU and its profit performance. He will also exercise control over activities of SBU.
It may be different competencies on which the competitive advantage of different SBUs are built.
For example Unilever may argue that the marketing skills associated with the three product markets are similar etc.
Primary Activities
Inbound logistics is concerned with receiving, storing, distributing inputs
Secondary Activities
Procurement - concerned with the tasks of purchasing inputs such as raw
Core competency is an area of specialized expertise that is the result of harmonizing complex streams of technology and work activity. Identifying and developing your companys core competencies are management keys to sustaining your companys long-term competitive advantage.
Company executives should be aware that even the most successful strategy
Physical resources Material assets Immobility Machines Others Current assets Inventory Nature of assets age condition location
Human resources Number of employees Skills Education Experience Loyalty Corporate culture
Financial resources Equity Debt Credibility Relationship with Suppliers Investors Bankers Managing cash
Intangibles Goodwill Loyalty of consumers Brand name Good contacts with Politicians CEOs Corporate image
Easy to imitate
Difficult to imitate
Resources
Necessary Resources
Unique Resources
Core Resources
Same as competitors
COMPETENCES
How an organisation employs and deploys its resources Efficiency and effectiveness of physical, financial, human and intellectual resources How they are managed Cooperation between people Adaptability Innovation Customer and supplier relationships Learning The differences between resources and competences
Resources Tangible Measureble Intangible Mostly difficult to measure Competences
Value added
How well are matched the products/services to the identified needs of the chosen customers. Value added activity must be done from the viewpoint of the customer or user of the production or service.
Managing linkages
Competences are likely to be more robust and difficult to imitate if there are linkages within the organisations value chain and linkages into the supply and distribution channels.
Robustness
The strategic importance of an organisations competences relates to how easy or difficult they are to imitate.
Managing Linkages
Core competencies are likely to be ore robust and difficult to imitate if they
Linkages between Primary activities like Marketing and Production and so on.
Management of linkage between Primary activity and Support activity provides core competency (investment in infrastructure, computer technology etc.)
Managing Linkages
Linkages between different support activities. Eg. Extent to which human development is tune with new technologies etc. Besides managing internal linkages organizations needs to complement / coordinate activities with those of suppliers, channel members, and customers. This can be achieved by:
Vertical integration to improve performance through ownership of more parts of
relationships with specialists within the value chain. Like involving suppliers and
distributors at design stage of product or project. Merchandising activities which manufacturers undertake with their distributors is much improved.
Strategy-Supportive cultures
Stimulate people to take on the challenge of realizing the companys
Revolutionary technologies
New challenges Arrival of new leaders
Step 1
Diagnose which facets of present culture are strategy-supportive and which are not
Step 2
Step 3
Follow with swift, visible actions to modify culture - include both substantive and symbolic actions
Unhealthy Cultures
Adaptive Cultures
Customer needs
Competitive conditions Strategic requirements
A deep, abiding commitment to espoused values and business philosophy Practicing what is preached!
Promotion of managers more concerned about process and details than results Aversion to look outside for superior practices Must-be-invented here syndrome