Strategy

Implementation

Five-Stage Model of Strategy

Implementation Process
Determining how much the organization
will have in order to implement the strategy
under consideration
Analyzing the formal and informal
structures of the organization
Analyzing the culture of the organization.
Selecting an appropriate approach
Implementing the strategy and evaluating
the results.

Issues in Strategy Formulation and

Implementation
Strategy Formulation

Good

Good

Poor

Success

Roulette

Trouble

Failure

Strategy
Implementation
Poor

Four Variables

Success- organization has a good

strategy and implements well.
Roulette- a poorly formulated strategy is
implemented well.
Trouble- a well-formulated strategy is
poorly implemented.
Failure- poorly formulated strategy is
poorly implemented.

Step 1-Analyzing Strategic Change

Levels of Strategic Change

Industry

Organization Products Market Appeal

Continuation strategy

same

same

same

same

Routine strategy change

same

same

same

new

Limited Strategy change

same

same

new

new

Radical strategy change

same

new

new

new

new

new

Organizational redirection

new

new

The Five Levels of Strategic Change

Continuation strategy- same strategy used in

the previous planning period is repeated.
Routine strategy- involves normal changes in the
appeals to attract customers.
Limited Strategy change- involves offering new
products to new markets within the same general
product class.
Radical Strategy Change- major reorganization
within the firm.
Organizational Redirection- mergers and
acquisitions of firms in different industries/when a
firm leaves one industry and enters a new one.

An Operational Approach to Product

Positioning

Identify the competitors.

Determine how competitors are perceived
and evaluated.
Determine the competitors position.
Analyze the customers.
Select the position.
Monitoring the position.

Step 2- Analyzing Organizational

Structure
Formal-

this is conveyed in the

organizational chart.
Informal- represents the social
relationships based on friendships
or interests shared among
members of the organization.

Five Types of Organizational

Structure
Simple
Functional
Divisional
Strategic
Matrix

Business Unit Structure

Simple Organizational Structure

It has only two levels, the owner-manager

and the employees.
Owner-Manager

Employees

Functional Organizational Structure

Reflect greater specialization in functional

business areas as firms grow and develop
a number of related products and markets.
CEO

Operations

Marketing

Finance

Divisional Organizational Structure

As firms acquire or develop new products in

different industries and markets
CEO

Division 1 Manager

Division 2 Manager

Strategic Business Unit Structure

When a divisional structure becomes

unwieldy because a CEO has too many
divisions to manage
CEO
VP- SBU 1
Division Managers
1

VP- SBU 2
Division Managers
4

Matrix Organizational Structure

Used to facilitate the development and

execution of various programs.
CEO

VP Production
Project
Manager 1
Project
Manager 2

VP Marketing

VP R&D

VP Finance

Simple Organizational Structure

a.
b.
c.

Advantages:
Facilitates control of all the businesss
activities.
Makes possible rapid decision making and
ability to change with market signals.
Offers simple and informal
motivation/reward/control system.

Simple Organizational Structure

a.
b.
c.
d.

Disadvantages:
Is very demanding on the owner-manager.
Grows increasingly inadequate as volume
expands.
Does not facilitate development of future
managers.
Tends to focus owner-manager on day-to-day
matters.

Functional Organizational Structure

a.
b.
c.
d.

Advantages:
Boosts efficiency through specialization.
Fosters improved development of
functional expertise.
Differentiates and delegates day-to-day
operating decisions.
Retains centralized control of strategic
decisions.

Functional Organizational Structure

a.
b.
c.
d.

Disadvantages:
Promotes narrow specialization and
potential rivalry of conflict.
Fosters difficulty in functional coordination
and interfunctional decision-making.
Can occasion staff-line conflict.
Limits internal development of general
managers.

Divisional Organizational Structure

a.
b.

c.

Advantages:
Forces coordination and necessary authority
down to the appropriate level for rapid response.
Places strategy development and
implementation in closer proximity to the
divisions unique environment.
Frees chief executive officer for broader
strategic decision making.

d.
e.
f.

Sharply focuses accountability for

performance.
Retains functional specialization within
each division.
Serves as good training ground for
strategic managers.

Divisional Organizational Structure

a.
b.
c.

Disadvantages:
Fosters potentially dysfunctional
competition for corporate-level resources.
Creates a problem with the extent of
authority given to division managers.
Fosters the potential for policy
inconsistencies between divisions.

Strategic Business Units

a.

b.
c.

Advantages:
Improves coordination between divisions with
similar strategic concerns and product/market
environments.
Tightens the strategic management and
control of large, diverse business enterprises.
Channels accountability to distinct business
units.

Strategic Business Units

a.

b.
c.

Disadvantages:
Places another layer of management
between the divisions and corporate
management.
May increase dysfunctional competition
for corporate resources.
May make defining the role of the group
vice-president difficult.

Matrix Organizational Structure

a.
b.
c.
d.
e.

Advantages:
Accommodates a wide variety of projectoriented business activity.
Serves as good training ground for strategic
managers.
Maximizes efficient use of functional managers.
Fosters creativity and multiple sources of
diversity.
Provides broader middle-management
exposure to strategic issues for the business.

Matrix Organizational Structure

a.
b.

Disadvantages:
Can create confusion and contradictory
policies by allowing dual accountability.
Necessitates tremendous horizontal and
vertical coordination.

Step 3- Analyzing Organizational

Culture
Organizational

Culture- a set

of shared values and beliefs that

influences the effectiveness of
strategy formulation and
implementation.

Five Primary Mechanisms

What leaders pay attention to, measure and

control.
Leaders reactions to critical incidents and
organizational crises.
Deliberate role modeling, teaching and coaching.
Criteria for allocation of rewards and status.
Criteria for recruitment, selection, promotion and
retirement of employees.

Secondary Mechanisms

The organizations design and structure.

Organizational systems and procedures.
Design of physical space, facades, and
buildings.
Stories, legends, myths and parables about
important events and people.
Formal statements of organizational
philosophy, creeds and charters.

Illustrative Example: Stories that

Influence Organizational Culture

Remember, when Ray Kroc (founder of

McDonalds Restaurants) visited a McDonalds
franchise in Winnipeg? He found a single fly.
Even one fly didnt fit with QSC&V (Quality,
Service, Cleanliness and Value- the McDonald's
creed). Two weeks later the Winnipeg
franchisee lost his franchise. Youd better
believe that after this story made the rounds, a
whole lot of McDonalds people found nearly
mystical ways to eliminate flies-every fly-from
their shop. Mr. Kroc did do things like that.

A Procter & Gamble executive recounted a late-night

phone call he received several years ago. The
executive had just been promoted to management at
that time and the call was from his district sales
manager: George, youve got a problem with a bar
soap down here. Down here, George explained,
was three hundred miles away. George, think you
could get down here by six-thirty in the morning?.
Our informant added, It sounded like more than an
invitation. And finally, he concluded, After youve
finished your first three-hundred mile ride through
the back hills of Tennessee at seventy mile an hour
to look at one damned thirty-four-cent bar of soap,
you understand that P&G is very, very serious about
product quality. You dont subsequently need a twohundred page manual to prove it to you.

Step 4- Selecting an Implementation

Approach
Commander

Approach
Organizational Change Approach
Collaborative Approach
Cultural Approach
Crescive Approach

Commander Approach

The manager concentrates on formulating

strategy by applying rigorous logic and
analysis.
The manager may either develop strategies
alone or supervised by a team of strategists
charged with determining the optimal
course of action for the organization.

Organizational Change Approach

Focuses on how to get an organization to

implement a strategy.
Managers assume that a good strategy has
been formulated and view their task as
getting the company moving toward new
goals.

Collaborative Approach

The manager in charge of the strategy calls

in the rest of the management team to
brainstorm strategy formulation and strategy
implementation.
Managers with different perspectives are
encouraged to contribute their points of
view in order to extract whatever group
wisdom emerges from these multiple
perspectives.

Cultural Approach

It enlarges the collaborative approach to

include lower levels in the organization.
The manager guides the organization by
communicating and instilling his or her
vision of the overall mission for the
organization and allowing employees to
design their own work activities in
accordance with this mission.

Crescive Approach

The manager who adopts this approach

addresses strategy formulation and
strategy implementation simultaneously.
Crescive means increasing or growing.
The manager does not focus on doing
these tasks but on encouraging
subordinates to develop, champion and
implement sound strategies on their own.

Step 5- Implementing the Strategy and

Evaluating the Results

Four Key Implementation Skills

INTERACTING
ALLOCATING

MONITORING
ORGANIZING

Background

Leadership

Quality
Practice

Four Key Implementation Skills

Interacting skills- are expressed in managing ones

own and others behavior to achieve objectives.
Allocating skills- are brought to bear in managers
abilities to schedule tasks and budget time, money
and other resources efficiently.
Monitoring skills- involve the efficient use of
information to correct any problem that arise on the
process of implementation.
Organizing skills- are exhibited in the ability to
create a new informal organization or network to
match each problem that occurs.