Professional Documents
Culture Documents
Prof. K. Chander
Strategy Implementation
Interrelationship between formulation and implementation
Forward Linkage Backward Linkage
Implementation of Strategies
Interrelationship between formulation and implementation. Division of Strategic Management into different Phases is only for the purpose of orderly study. In real life Formulation & Implementation are intertwined
Forward Linkage
The different elements in strategy formulation starting with objective setting through environmental and organizational analysis, strategic alternatives and choices to strategic plan determine the course that an organization adopts. With changed new strategies or modified existing strategies, organizational structure, style of leadership have to be adopted for changed strategies. This way formulation has forward linkage with implementation.
Backward Linkage
Past strategic action also determines the choice of strategy. Organizational trend to adopt those strategy which can be implemented with existing structure, manpower, resources & some incremental changes. Note:
Strategy Formulation is entreprenual activity. Implementation is Administrative, task based on strategic & operational decision making.
Project Implementation
Project Management is defined as a one-shot, onetimetime-limited, goal-directed, major undertaking, goalrequiring the commitment of varied skills & resources. The goals for the project are derived from the plans & programmes, which are based on strategies adopted.
Project Implementation
Phases of Project Conception phase Definition phase Planning and organizing phase Implementation phase Clean up phase
Phases of Project
Conception Phase:Phase:
An extension of the strategy formulation phase. Ideas generated during the strategic alternations form core for future projects.
Implementation Phase:Phase: Detailed engineering, order placement for equipment, material, awarding construction contracts, etc. leading to testing, trial, and commissioning of plant.
Procedural Implementation
Formation of Company Licensing procedure Security and Exchange Board of India requirement Foreign collaboration FEMA requirements MRTP requirements Labour legislation requirement Import and export requirements (Exim Policy) Patenting & Trade Mark requirements Incentives and facilities benefits Pollution control and environment protection Human rights and consumer protection
Formation of Company
The formation of Company is under Company Act 1956 and consist of:
Promotion; Registration; and Floatation.
Registration involves:
Registration of the memorandum of the company, Article of Association; and Agreement with Register of companies, who incorporate & issue a Certificate.
Floatation
Raising of funds.
Licensing Procedures
A License is a written permission from the Government for stetting up a industrial unit. After liberalization (1991) the licensing is abolished irrespective of the level of investment for all industries except few. Industries requiring licensing relate to defense and environmental concerns.
SEBI Requirement
The SEBI Act, 1992 has replaced the Capital Issues Control Act, 1956, to deal with Capital Markets. It is to develop securities market & protect interest of small investors. It has judicial powers & covers primary, secondary market, mutual funds & foreign institution investors. For the purpose of strategy implementation, this act is relevant so far as the provision of financial resources is concerned and this act also affects mergers and amalgamations.
The MRTP act is to be replaced by comprehensive competition law with the purpose of fostering fair competition among Indian Industry and shall be compatible with WTO norms.
Environment Protection & Pollution Control Requirement & Consumer Protection Req.
The major responsibility to deal with Environment issues lies with the State Pollution Control Board. Any new project has to seek a no-objection nocertificate from the board, which then regulates, the emission of smoke and vapour, effluents and Noise. In India Consumer Protection is ensured through a Plethora of Legislation. Some of these are essential Commodity Act, Trademarks and Merchandise Act, Sales of Goods Act, etc.
RESOURCE ALLOCATION
Approaches to resource allocation Means of resource allocation Factor affecting resource allocation Difficulties in resource allocation
Resource Allocation
Procedural implementation provides the GOGOahead Signal. Without Resource allocation nothing happens. Resource allocation is both a one time and continuous process.
Procurement of Resources
The different types of Resources are:
Financial; Physical; and Human.
Procurement of Resources..
External Resources are
Equity; Bank credit; hire purchase; Debt; trade credit and Fix deposit (Generally short term)
Management Policy related to Financing. The cost of capital from different sources.
IFCI; ICICI; IDBI, etc.
2nd approach
Bottom up approach.
Minimizing goals Executive management Position papers (e.g. Environment, distinctive Competencies, marketing, Past performance, etc). Operating management Targets/ operational plans
Proposals
Implementation
Structure Mechanisms.
6. 7. 8. 9.
Design & Administration control system. Design & Administration Appraisal system. Design & Administration of motivation system. Design & Administration of the dev. System. system.
Structure Mechanisms. The first four of these mechanisms will lead to the creation of structure. The other six mechanism are devised to hold and sustain the structure (we call them org. systems) The organizational chart illustrates five major aspects of organization structure:
1. 2. 3. 4. 5. Division of work. Manager and subordinate relation Combination or grouping of work Type of work being performed Level of management
Role of Structure
Organizational chart follows the gross strategy of organization i.e. strategy exerts more influence than does structure in effective organizational A stage wise development sequence exist for the strategies & structures of organization. Organization do not change their structure until provoked by competition.
Strategy > structure Structure > Strategy
Structure Mechanism.
Growth strategy provide new managerial problems that are generally solved by the reshaping of the organizational structure to fit the new strategy. Organizational, as it grows in size and diversity, moves from the simple to a complex organizational form.
Types of Structures
1. Entrepreneurial structure
Advantages Quick Decision Informal & simple organization. organization. Excessive Reliance on owner manger & proves to the demanding. demanding. May divert attention of owner manger and spend time on day to day operational matters and ignore strategic decisions. decisions. Owner - Manager Employees
Disadvantages
Functional Type
President MISMIS-PR Staff Function Production/ Operation Finance/ Accounting Legal
Marketing
Engineering
Advantages Efficient distribution of work through specialization. Delegation of day to day operation functions. Provide tune for top management to focus on strategic decisions Disadvantages Creates difficulty in coordinates. Creates specialists which result in narrow specialization at the cost of overall benefit of organization. Lead to functional and line and staff conflicts.
Matrix Type
President
Vice President Research & Development Vice President Engineering Vice President Production Vice President Purchasing Vice President Personnel
Projects
Project Manager - A
R&D Group
Engineering Group
Production Group
Purchasing Group
Personnel Group
Engineering Group
Production Group
Purchasing Group
Personnel Group
Engineering Group
Production Group
Purchasing Group
Personnel Group
Project Authority
Line Authority
Advantages of Matrix Structure Allows individual specialist to be assigned where their talent is the most needed. Fosters Creativity because of pooling of diverse talent. Provides good exposure is specialists in general management. Disadvantages Dual accountability creates confusion and difficulty. Requires a high level of vertical horizontal coordination. Shared authority my create communication problem.
Claims
Claims
Claims
Claims
Marketing
Marketing
Marketing
Marketing
Administration
Administration
Administration
Administration
Personnel
Personnel
Personnel
Personnel
Advantages of Product Division Type Structure Enables grouping of functions required fro the performance of activities related to a division. Generates quick response to environment changes affecting the Business. Enables Top Management to focus on strategic matters. Allocation of resources & corporate over heads. Inconsistency arising from sharing of authority between corporate & divisional level. Policy inconsistencies between the different divisions.
Disadvantages
Marketing
Marketing
Marketing
Finance
Finance
Finance
Canadian Operations
Finance Production
Third World
Finance Production
European Operations
Finance Production
Personal
Personal
Personal
Personal
Marketing
Marketing
Marketing
Marketing
Legal
Legal
Legal
Legal
Network Type
Manufacturing Contractor Distribution Contractor
Design Contractor
Information System.
Information system coordinates divided responsibility. Provides information to perform task effectively. Advances in technology provide information to all important level including top management. As the complexity & diversity of operation increases, the need for MIS & informal system becomes essential.
Control System
Essentially deal with the measurement and correction of the performance activities of SubSubordinates to meet objective and plans of organization. Control ensures that the implementation of strategy takes place according to predetermined plans. Control is needed due to dispersal of total strategic task. Control are devices to enforce strategic behaviour for achieving organizational goals.
Appraisal System
Performs role of evaluating managerial performance. Part of total control system. Provides inputs for promotion, incentives, Reward etc. It is essential to have mix of quantitative or objective Factors and quantitative factors so that results of appraisal are reliable & valid. Appraisal Methods are
Rating Forms; Ranking Appraisal; behaviroval Methods.
Motivation System: Plays a positive role in inducing strategically desired behaviour to work towards goal of organization. Development system: Process of gradual, systemic Improvement in knowledge, skills, Attitudes and performance. Career Planning & Development.
Planning System: Role of planning in Modified & new strategy. Forward linkages between the formulation of strategy and the implementation of plans do exist. People who formulate & who implement relation matters.
Emerging at UB Group
The UB group is newly structured group of 64 companies, most of which have traditionally been in the liquor and brewery business set up by the well-known industrialist, the Vittal Malaya who was the father of present Group Chairman, Vijay Mallya. The management style of both father and son is a study in contrast. While Vittal Mallyas style could be characterized as conservative, Vijay Mallyas style is flamboyant and extroverts. The predominant strategy followed earlier was that of stability, consolidation, and slow expansion. The current strategy is of fast-paced growth and expansion through diversification, mainly from the liquor and brewery business to the petrochemicals sector. The structural changes slow a distinct shift from a centralized to the divisionalised structure presently consisting of eleven business groups of divisions. The UB Group is unique in the sense that it allows for a limited entrepreneurial structure to coexist with this main structure The organizational system characteristics at the UB Group could be indicated Below:
1. Information System Change from a restrictive style of decision-making to a participative style sported by better communication through a decentralized structure.
Emerging at UB Group
2.. Control System Change from a system of monthly performance reports to more resultoriented review and control mechanism with updates operating results of each line of business through monthly operating reviews by presidents/ group VPs. 3. Appraisal system Change from a traditional appraisal to a performance based appraisal system aimed at creating an atmosphere which supports professionalism. 4. Motivation System Change to a informal an accommodating style of management from a restrictive, traditional style; traditional style; compensation packages for managers based on assigned job values system and not aon designation. Beyond a certain rank, there is only a minimum for a salary grade and no maximum. There are no fixed increments. 5. Development system For senior mangers, a planned system of deputation from corpoate planning to line function exists. External recruitment is done if positions cannot be filled throguh promotion from within. 6. Planning system Change form an entrepreneurial style of planning and decision making to a participative mode. The planning function is performed by a corporate executive committee comprising the Group Chairman, all President and Group VPs, which meets frequently and, besides a review of implementation, evaluates new proposals and recommends strategic action. A full-fladged corporte plannign and coordination group suports and planning ssytem.