Functional and Operational

Implementation

Jitender
singh(6593)
Jagjeet
singh(6551)
Mohit
bhola(6563)
Functional strategies
 Functional strategies deals with a relatively
restricted plan designed to achieve objectives in
a specific functional area

 Allocation of resources among different

operations within that functional area and
coordination among different functional areas
for optimal contribution to the achievement of
the business and corporate level objectives.
Cont…
 Functional strategies are derived from
business and corporate strategies and are
implemented through functional and
operational implementation.
 The task of strategy implementation is to
align or fit the activities and capabilities of
an organization with its strategies.
Cont…
 Strategies operate at different levels and there
has to be congruence and coordination among
these strategies, such congruence is the vertical
fit.
 There has to be congruence and coordination
among different activities taking place at the
same level, this is the horizontal fit.
 The consideration of vertical fit leads to
defining functional strategies in terms of their
capability to contribute to creating strategic
advantage for the organization.
Cont…
 Any functional strategy becomes strategic when
it is vertically fitted to the upper-level business
and corporate strategies.
 The consideration of horizontal fit means that
there has to be an integration of all operational
activities undertaken to provide a product or
service to a customer.
 It takes place in the course of operational
implementation.
Overview of strategic evaluation
and control

 The purpose of strategic evaluation is to

evaluate the effectiveness of a strategy in
achieving organizational objectives.
 It is the process of determining the
effectiveness of a given strategy in achieving the
organizational objectives and taking corrective
action whenever required.
Strategic control and operational
control
 Strategic controls take into account the
changing assumptions that determine a strategy,
continually evaluate the strategy as it is being
implemented and take the necessary steps to
adjust the strategy to the new requirements.
 Strategic controls are the early warning systems
and differ from post-action controls that
evaluate only after the implementation has been
done.
Types of Strategic controls
 PREMISE CONTROL
 IMPLEMENTAION CONTROL
 STRATEGIC SURVEILLANCE
 SPECIAL ALERT CONTROL
Premise control
 Premise control is necessary to identify the key
assumptions and keep track of any change in
them so as to assess their impact on strategy
and its implementation.
 Premise control serves as the purpose of
continually testing the assumptions to find out
whether they are still valid or not.
Implementation control
 Implementation control is aimed at evaluating
whether the plans, programmes and projects
are actually guiding the organization towards its
predetermined objectives or not.
 If it is felt that the commitment of resources to
a plan,programme or project would not benefit
the organization as envisaged they have to be
revise, in this implementation control may lead
to strategic rethinking.
Strategic Surveillance
 It is aimed at a more generalized and
overarching control designed to monitor a
broad range of events inside and outside the
company that are likely to threaten the course
of a firm’s strategy.
 It can be done through a broad-based general
monitoring on the basis of selected information
sources to uncover events that are likely to
affect the course of the strategy of the
organization.
Special Alert control
 It is based on a trigger mechanism for rapid
response and immediate reassessment of
strategy in the light of sudden and unexpected
events.
 It can be exercised through the formulation of
contingency strategies and assigning the
responsibility of handling unforeseen events to
crisis management teams.
Operational control
 Operational control is aimed at allocation
& use of organizational resources through
evaluation of the performance of
organizational units such as divisions,
SBUs, etc .., to assess their contribution
to the achievement of organizational
objectives.
Process Of Evaluation
1. Setting standards of performance
2. Measurement of performance
3. Analyzing variances
4. Taking corrective action
Techniques of strategic evaluation &
control
 Evaluation techniques for strategic
control
Techniques for strategic control could be
classified into 2 groups on the basis of the
type of environment faced by the
organization.
Strategic Momentum Control
 These types of evaluation techniques are
aimed at assuring that the assumption on
the basis of which strategies were
formulated are still valid and what needs
to be done in order to allow the
organization to maintain its existing
momentum
 For achieving this aim there are three
techniques could be use
Cont..
1. Responsibility control centres
 Form the core of management control
systems
 Are of 4 types… Revenue, Expense,
Profit & Investment centres
2. The underlying success factors
 It enable organizations to focus on the
critical success factors
Cont..
3. Generic strategies
 It approach to strategic control is based
on the assumption that the strategies
adopted by firms similar to another firm
are comparable
Strategic Leap Control
 Organizations are required to make
strategic leaps in order to make significant
changes when environment is relatively
unstable
 There are four techniques of evaluation
used for exercising strategic leap control
Cont…
1. Strategic issue management
 Aimed at identifying one or more
strategic issues & assessing their impact
on the organization
2. Strategic field analysis
 way of examining the nature & extent of
synergies that exist or are lacking
between the components of an
organization.
Cont..
3. Systems modeling
 Based on computer-based models that
stimulate the essential features of the
organization
4. Scenarios
 Perceptions about the likely environment
a firm could face in the future.
Evaluation techniques for
operational control
 Internal Analysis- It consists of VRIO
framework, value chain analysis,
quantitative analysis and qualitative
analysis, deals with identification of
strength and weakness of a firm in
absolute terms.
Cont…
 VRIO Framework- Basic idea behind
the VRIO framework is that sustainable
strategic advantage results through the
use of capabilities that are valuable, rare ,
inimitable and organized for usage
 Value chain analysis- Focuses on a set
of inter related activities performed in a
sequence, for producing and marketing a
products or services.
Cont…
 Quantitative Analysis- Takes up the
financial parameters and non- Financial
Quantitative parameters such as physical
units or time in order to assess
performance.
 Qualitative Analysis- Supplements the
Quantitative Analysis by including those
aspects which are not feasible to measure
on the basis of figures and numbers.
Comparative Analysis
It consists of historical analysis, industry
norms and benchmarking, compares the
performance of a firm with its own past
performance or with other firms.
 Historical Analysis- It is a frequently
used method for comparing performance
of a firm over a given period of time.
Cont…
 Industry Norms- It is a comparative
method for analyzing performance that
brings with it the advantage of making a
firm competitive in comparison to its
rivals in the same industry.
 Benchmarking- It is a comparative
method where a firm finds the best
practices in an area and than attempts to
bring its own performance in that area in
line with the best practice.
Comprehensive Analysis
It includes balanced scorecard and key
factor rating, adopts a total approach
rather than focusing on one area of
activity or a function or department.
 Key Factor Rating- It is a factor that
takes into account the key factor in
several areas and than set out to evaluate
performance on the basis of these.
Cont…
 Business Intelligence systems- It is one
of the concepts used for discovering
knowledge from various internal and
external data repositories available to an
organization, to support effective decision
making.
 Balanced scorecard- This method is based
on identification of 4 Key performance
measures of customer perspective, Internal
business perspective, innovation and learning
perspective and the financial perspective.
Cont…
 Role of control systems- It is at the
heart of any valuation process for setting
standards, measuring performance,
analyzing variances and corrective action.
Strategic evaluation and control is a part
of the strategic management process, it is
to be planned for.
Cont…
 Role of Reward System- Organizations
design and operate their reward system
on the basis of the appraisal of
performance of individuals. The appraisal
system performs the critical role of
evaluating managerial performance in the
light of organizational objectives.
THANK YOU