Strategy Implementation

Strategy Implementation
Translating thought into a Strategic action Three Concern Areas:

Identification of Measurable, Mutually determined annual objectives Development of Specific Functional Strategies Communication of Concise policies to guide decisions

Annual Objectives
Translation of Long Term aspirations into Years budget Specific basis for Monitoring & Controlling organizational Performance Alert Top Management to variations in Key Performance Areas Specific, Measurable statements of what an organization subunit is expected to achieve in contributing to accomplishment of Businesss Grand Strategy

Annual Objectives
Qualities of Effective Annual Objectives: Linkage to Long Term objectives

Add breadth & specifies what must be accomplished in order to achieve long term objective Provide Targets for performance of operating areas What, When & How Measurement Measurable activity & measurable outcomes Prioritize short term objectives Objectives critical to success deserve additional attention

Consistency in Annual Objectives:

Measurable:

Priorities:

Qualities of Effective Annual Objectives

Acceptable Flexible Suitable Motivating Understandable Achievable

Annual Objectives
Benefits of Annual Objectives: Tangible & Meaningful focus through which managers translate long term objectives & grand strategies into specific actions Clarity of Purpose: A better understanding of each persons role in business mission Link b/w Strategic Intent & operating reality: Process to form annual objectives form for addressing conflicting political concerns Basis for Strategic Control: Developing budgets, schedules, Trigger points & other mechanisms for controlling strategy implementation

Annual Objectives
Motivational Pay Offs in strategy Implementation - Link to Business reward structure

Functional Strategies
Functional Strategy is short term game plan for a key functional area within a company Specific details about how key functional areas are to be managed in the near future Areas of Marketing, Finance, Production, R&D & Personnel Implementing Grand Strategy by organizing & activating specific sub units of the company to pursue the business strategy in daily activities Translate Grand Strategy into action designed to accomplish specific annual objectives Identify & coordinate actions that support the grand strategy & improve the likelihood of accomplishing annual objectives

Distinction B/W Grand & Functional Strategy

Time Horizon:

Shorter for Functional Strategy Identify & coordinate short term actions Shorter time span focuses managers attention on what needs to be done now to make grand strategy work Shorter time framework allows functional managers to recognize current conditions & adjust to changing conditions in developing functional strategies

Distinction B/W Grand & Functional Strategy

Specificity:

More specific than Grand Strategy Functional actions but Grand Strategy provides general direction Specific guidance to acc annual objectives How to meet annual objectives Adds Substance, Completeness & meaning to what a specific sub unit of a business must do Clarifies Top Management how functional managers intend to accomplish grand strategy Facilitate coordination b/w operating units within orgn by clarifying areas of interdependence & potential conflict

Distinction B/W Grand & Functional Strategy

Participants:

Functional strategy is delegated by business level manager to principal subordinates for running operating area of the business Involvement of operating managers essential as he is the front runner & active involvement increases commitment to strategies developed

Functional Strategies in the Marketing Area

Product:

Identification of customer needs Features, Product Lines, Packaging, Quality & NPD Product Service Concept & Target Markets Most profitable Product lines Changes to influence customer orientation Which products do we emphasize

Price
Approach to pricing strategy: Cost oriented, market oriented or competition oriented Discounting structures Pricing policies: National or Regional differences Price Segments to be Targeted Profit margins Market Skimming or Market Penetration

Place
Decisions regarding channel management Level of Market Coverage Priority geographic areas Channel objectives & Structures Sales organization structure SCM

Promotion
Key Promotion priorities & Approaches Advertising, Communication priorities & approaches linked to different products or markets Media Management Promotion Budgeting

Functional Strategies in the Finance Area

Capital Acquisition:

Acceptable cost of capital Desired proportion of short term & long term debt; Preferred & common equity Balance b/w Internal & External Funding Appropriate Risk & Ownership structures Levels & Forms of leasing for providing assets

 Capital Allocation:

Priorities for Capital Allocation Projects Final selection of Projects Capital Allocation by operating Managers w/o approval Proportion of earnings as dividends Importance of dividend stability Cash Flow Requirements; Minimum & Maximum Cash balances Liberal/ Conservative Credit Policies Payment timings & Procedures

Dividend & Working Capital Management:

Functional Strategies in the R & D Area

Research vs. Commercial Development:

Emphasis on Innovation & Break Through Emphasis on product development, Refinement & modification Short Term or Long Term Orientation to support business strategy

Time Horizon:

Functional Strategies in the R & D Area

Organizational Fit:

In House R & D or contracting out Centralized or Decentralized

Basic R&D Posture:

Offensive posture leading Innovation & Development in Industry Defensive posture reacting to competitors development

Functional Strategies in Personnel

Development of Managerial Talent:

Employee Recruitment, Selection & Orientation Career Development & Counseling, Training & Development Compensation, Labor/Union Relations Discipline, Control & Evaluation Performance Appraisal, 360 degree Feedback

Compensation & Regulatory Concerns:

Competent & Well Motivated:

Developing & Communicating Concise Policies

Policies: Directives designed to guide the thinking, decisions & actions of managers & subordinates in implementing orgn strategy Guidelines for establishing & controlling ongoing operations consistent with Firms strategic objectives Increase managerial effectiveness by standardizing routine decisions & controlling discretion of managers Policies are derived from functional strategies with key purpose of aiding strategy execution

Purpose of Policies
Indirect control over Independent Action Uniform Handling of Similar Actions Quicker decisions by standardizing answers Institutionalize the basic aspects of Orgn. Behavior Reduce Uncertainty in Repetitive & day to day decision making Counteract resistance to or rejection for chosen strategies by organization members Predetermined answer to routine problems Afford managers a mechanism for avoiding hasty & ill conceived decisions in changing operations

Policies
Policies can vary in their strategic significance Policies can be externally imposed or internally driven