Strategy Implementation &

Control
STRATEGY IMPLEMENTATION AND CONTROL

Introduction

Interrelationship Between Strategy

Formulation and Implementation
Issues in Strategy Implementation

Organization and Strategy Implementation

Strategic Business Unit and Core Competence

Leadership and Strategic Implementation

Building Strategy and Supportive Corporate

Culture
 Introduction

Implementation ofstrategyis the process through which a

chosen strategy is put into action. It involves the design and
management of systems to achieve the best integration of
people, structure, processes and resources in achieving
organizational objectives.
Implementation of Strategy affects an organization from top
to bottom, it affects all the functional and divisional areas of
business.
Institutionalization of strategy

Setting Proper Organizational Climate

Developing Appropriate Operating Plans

Developing Appropriate Organization Structures

Review of Implemented Strategy
Strategy Formulation Implementation:
Interrelationship
Strategy
implementation
means putting
chosen strategic
decision into action
(strategic choice).

Allocation of
resources to new
course of action
needs to be
undertaken besides
 Strategy Formulation
Implementation: Interrelationship

Strategy formulation
and Strategy

SOUND
Implementation are

STRATEGY FORMULATION
different and it needs to
be sound and excellent.

Strategy fails because

of failed FLAWED
implementation and not
because of strategy
model.
WEAK EXCELLENT
The matrix shows STRATEGY IMPLEMENTATION
various combination of
strategy formulation
and implementation.
 Strategy Formulation
Implementation: Interrelationship
Square A shows formulation of competitive strategy but has
difficulties in implementing it successfully. This may be due to
various factors like lack of experience, lack of resources, missing
leadership etc. Companies like to move from square A to square B by
realizing their implementation difficulties.
Square D shows formulation of flawed strategy but company has
excellent implementation skills. Thus they should redesign their
strategy before implementation.
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.
 Strategy Formulation
Implementation: Interrelationship
Strategy is not a long term plan but rather consists of
organizations attempt to reach some future state by
adapting is competitive position as circumstances change.
In organizations that lack strategic direction there is
tendency to look inwards at time of stress, management to
cut costs and shedding unprofitable division. This means that
focus is on efficiency (relationship between inputs and
outputs in short time horizon) rather than effectiveness
( attainment of desired competitive position).
Efficiency is introspective whereas effectiveness highlights
the links between the organization and its environment.
 Strategy Formulation
Implementation: Interrelationship

In cell 1 organization thrives,

since it is achieving what it

Efficient
aspires to achieve with

Operational Management
efficient output/input ratio.
Where in cell 2 and cell 4
organization is doomed unless
it can establish strategic Inefficient

direction. In cell 3 strategic

direction is present to ensure
effectiveness even if rather
Effective Ineffective
too much input is being used
Strategic Management
to generate outputs. Thus to
be effective is to survive
 Strategy Formulation
Implementation: Interrelationship
STRATEGY It is
STRATEGY
managing
forces during
FORMULATION IMPLEMENTATION
It is positioning forces before action.
action. It focuses on efficiency.
It focuses on effectiveness. It is primarily and operational
It is an intellectual process process.
It requires good intuitive and It requires special motivational
analytical skills. and leadership skills.
It requires coordination among It requires combination of many
few individuals. individuals.
Concepts and tools do not Concepts and tools varies
differ greatly for small, large, substantially among small, large,
profit or non profit profit or non profit organization.
organization.
 Strategy Formulation
Implementation: Interrelationship
Implementing strategy requires altering sales territories,
adding new 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.
Two types of linkage exists between tow phases of strategic
management.
Forward linkage deals with impact of formulation and
implementation
 Strategy Formulation
Implementation: Interrelationship
Forward Linkage - Different elements in strategy formulation
(objective setting, environmental and organizational
appraisal, strategic alternatives and choice to strategic plan)
determines the course that organization adopts itself.
Formulation and reformulation is continuous process.
Backward Linkage While dealing with strategic choice past
strategic actions also determine choice of strategy.
Organizations tends to adopt those strategies which can be
implemented with the help of present structure of resources
combined with some additional effort. Such incremental
changes over a period of time take the organization from
where it is to where it wishes to be.
 Issues in Strategy Implementation

Implementation task tests strategist ability to allocate

resources, design structures, formulate functional policies,
identify leadership styles etc.
Strategies have to be activated through implementation and
realize the intent.
Strategies leads to plans. Plans result in different kinds of
programmes which includes goals, policies, procedures, rules
and steps to be taken in putting them into action.
Programs leads to formulation of the project which is time
scheduled and costs are predetermined. It requires allocation
of funds based on capital budgeting of the organization.
Projects creates need for infrastructure for day to day
 Issues in Strategy Implementation

Sequence in which strategy implementation issues are to be

considered:
Project Implementation

Procedural Implementation
Resource Allocation
Structural Implementation
Functional Implementation

Behavioral Implementation

These activities are not performed in the same order (can be

performed simultaneously, can be repeated etc.).
Transition from strategy formulation to strategy
implementation requires shift in responsibility from strategist
 Issues in Strategy Implementation

Management issues central to strategy implementation

includes establishing annual objectives, devising policies,
allocating resources, altering an existing organizational
structure, restructuring, reengineering, revising rewards and
incentive plans, minimizing resistance to change, matching
manager with strategy, developing strategy supportive
culture, adapting production and operation processes,
developing effective human resource function and even
downsizing to give firm a new direction.
Strategy implementation is key, top down communication
must be clear for developing bottom up support,
competitions intelligence gathering and benchmarking effort
of employees is very important and challenge for a
 Organization and Strategy
Implementation
Strategic change requires change in structure of
organization.
Structure largely dictates how objectives and policies will be
established and can significantly impact all other strategy
implementation activities.
Structure dictates how major resources will be allocated.
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.
 Organization and Strategy
Implementation
Structural change is not affected by change in external and
internal factors.
With change in firms strategy organizational structure
becomes ineffective. For example Too many levels of
management, too many meetings attended by too many
people, interdepartmental conflict resolution, large span of
control, and too many unachieved objectives.
Sometimes structure can shape the choice of strategy and to
know what type of structural change is needed to implement
new strategies and how these changes can be best
accomplished.
The organizational structures studied are : Division by
Strategy Structure Relationship:
Chandlers
 The Functional Structure

The most common structure found within organizations,

functional structure consists of units or departmental groups
identified by specialty, such as engineering, development,
marketing, finance, sales or human resources that are
controlled from the top level of management.
Advantages: Functional structure promotes specialization of
labour, encourages efficiency, minimizes the need for an
elaborate control system, and allows rapid decision making.
Disadvantages: It forces accountability at the top, minimize
career development opportunities, low employee morale,
line/staff conflicts, poor delegation of authority, inadequate
planning for products and markets. Mostly it is abandoned in
 The Functional Structure
Strategic
Corporate
SalesPlanning
Finance
Marketing
Human
and Marketing
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.
 The Functional Structure

With growth of companies in size, and level of diversification,

new strategies my be required. Organizational structure is
companies formal configuration of its intended roles,
procedures, governance mechanism, authority and decision
making processes etc. The structure adopted must fit with
the companies strategy.
Simple organization structure offers little specialization of
tasks, few rules, little formalization, direct involvement of
owner-manager in all operations and decision making.
Functional structure is used by large companies and
companies having low level of diversification. It also impedes
communication and coordination and have narrow view.
Use of multidivisional structure where each division
represents separate business entity, each division would
house its own functional hierarchy, divisional managers will
be responsible to manage day to day responsibility besides a
small corporate office that would determine long term
strategic direction and exercise overall financial control over
 The Divisional Structure

When a company expands to supply goods or services to a

variety of customers, offers a variety of different products or
are engaged in business in several different markets, the
company could adopt a divisional organizational structure.
A divisional structure groups its divisions according to the
specific demands of products, markets or customers.
Unlikethe functional organizational structure, where the
different organizational functions of the company conduct
activities satisfying all customers, markets and products, the
divisional structure focuses on a higher degree of
specialization within a specific division, so that each division
is given the resources, and autonomy, to swiftly react to
changes in their specificbusiness environment. Therefore,
each division often has all the necessary resources and
functions within it to satisfy the demands put on the division
Each division will likely be structured as a functional
structure.A company with a divisional
structurethereforehas a subset of different and
 The Divisional Structure
In divisionalstructure, the
organization is organized
into various divisions
based on basically three
criteriaproduct, market of
geographical structures.
Advantages:
Market Information
Management Motivation
Management Development
Specialist Knowledge
Timely Decisions
Allowing Strategic roles for Top
Management
 The Divisional Structure

The benefit of this organizational structure is that companies

are able to specialize its activities into self-reliant divisions,
each capable of satisfying e.g. customer demands and
changes within the business environment.
 The Strategic Business Unit (SBU)
Structure
Large, diversified companies organize themselves into
divisions to break the management of the company into
smaller, organizationally cohesive parts. The company
headquarters still gives the divisions strategic direction.
Strategic Business Units, or SBUs, are organizationally
complete and separate units that develop their own strategic
direction. They still report back to company headquarters but
operate as independent businesses organized according to
their target markets. They are often large enough to have
their own internal organizational divisions.
SBU advantages
SBU supportscooperationbetween the departments of the
company which has a similar range of activities;
Improvement of strategic management
Improvement of accounting operations,
Easier planning of activities
 The Strategic Business Unit (SBU)
Structure

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
 The Matrix Structure

The matrix structure is an organizational design that groups

employees by both function and product. The organizational
structure is very flat, and the structure of the matrix is
differentiated into whatever functions are needed to
accomplish certain goals. Each functional worker usually
reports to the functional heads, but do not normally work
directly under their supervision.
Instead, the worker is controlled by the membership of a
certain project, and each functional worker usually works
under the supervision of a project manager. This way, each
worker has two superiors, who will jointly ensure the progress
of the project. The functional head may be more interested in
developing the most exiting products or technologies,
whereas the project manager may be more concerned with
keeping deadlines and controlling product costs.
When work is accomplished, the project team may get
dissolved, and workers from different functional areas may
get reassigned to other projects and tasks.
Matrix Structure
 The Matrix Structure

The peculiarities orcharacteristicsa matrix organization are:-

Hybrid Structure: It combines functional organization with
aproject organization.
Functional Manager: The Functional Manager has authority over
the technical (functional) aspects ofthe project.
Project Manager:The Projectmanager has authority over the
administrative aspects ofthe project. He has full authority over the
financial and physical resources which he can use for completingthe
project.
Problem of Unity of CommandThis is so, because the
subordinates receive orders from two bosses viz.,the
ProjectManager and the Functional Manager.
Specialization: In a Matrix organization, there is a
specialization.The projectmanager concentrates on the
administrative aspects ofthe project while the functional manager
concentrates on the technical aspects ofthe project.
Suitability: Matrix organization is suitable for multi-project
organizations. It is mainly used by large construction companies, that
construct huge residential and commercial projects in different
places at the same time. Each project is looked after (handled) by a
 Advantages of Matrix Structure

Theadvantages of a matrix organization are:-

Sound Decisions: In a Matrix Organization, all decisions are
taken by experts.
Development of Skills: It helps the employees to widen their
skills.
Top Management can concentrate on Strategic Planning:
They can delegate all the routine, repetitive and less important
work tothe projectmanagers.
Responds to Changes in Environment: because it takes quick
decisions.
Specialization: In a matrix organization, there is a
specialization.
Optimum Utilization of Resources: In the matrix organization,
many projects are run at the same time. Therefore, it makes
optimum use of the human and physical resources.
Motivation: In a matrix organization, theemployees workas a
team. So, they are motivated to perform better.
Higher Efficiency: The Matrix organizationresults ina higher
efficiency. It gives high returns atlower costs.
 Limitations of Matrix Organization

The limitations of a matrix organization are:-

Increase in Work Load: In a matrix organization, work load is
very high.
High Operational Cost: In a matrix organization, the
operational cost is very high. This is because it involves a lot of
paperwork, reports, meetings, etc.
Absence of Unity of Command: In a matrix organization, there
is no unity of command. This is because, each subordinate has
two bosses, viz., Functional Manager and Project Manager.
Difficulty of Balance: It is also difficult to balance the authority
& responsibilities ofthe projectmanager and functional manager.
Power Struggle: In a matrix organization, there may be a power
struggle betweenthe projectmanager and the functional
manager. Each one looks after his own interest, which causes
conflicts.
Morale: In a matrix organization, the morale of the employees is
very low. This is because they work on different projects at
different times.
Complexity: Matrix organization is very complex and the most
difficult type of organization.
 Old New Organization Design

Old Organization Design New Organization Design

One large corporation Mini business units and
cooperative relationships
Vertical Communication Horizontal Communication
Centralized Top Down Decision Decentralized Participative
Making Decision Making
Vertical Integration Outsourcing and Virtual
Organizations
Work Quality Teams Autonomous Work Teams
Functional Work Teams Cross Functional Work Teams
Minimal Training Extensive Training
Specialized Job Design Focused on Value chain Team Focused Job
Individual Design
 Network Structure

Agroupof
legallyindependentcompaniesorsubsidiarybusiness
unitsthat use variousmethodsof coordinating
andcontrollingtheir interaction inorderto appear like a
largerentity. In abusinesscontext, three
maintypesofnetworkorganization are typically seen:
Internal where a large company has separateunitsactingasprofit
centers
Stablewhere a central company outsources somework to others,
and
Dynamicwhere 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
 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
 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 co-
operation, with computer networks
and knowledge sharing being at the
centre of this process.
 SBU and Core Competence

Strategic business units are absolutely essential for multi

product organizations. These business units are basically
known as profit centres. They are focused towards a set of
products and are responsible for each and every
decision /strategyto be taken for that particular set of
products.
An autonomousdivisionororganizational unit, small enough
to be flexible and large enough toexercisecontrolover most
of thefactorsaffecting itslong-termperformance. Because
strategic business units are more agile (and usually
haveindependentmissionsandobjectives), they allow
theowningconglomerateto respond quickly to changing
economic ormarketsituations.
 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.
 Related Set of SBU or Not? /
Characteristics
SBU might be build on similar technologies and provide
similar sorts of products / services.
SBU might be serving similar or different markets. Even if
technology / products differ it may be that customers are
similar.
Technologies for frozen food, washing powders, and butter
production may be very different but they are all sold through
retail operations (Unilever).
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.

The three Important Characteristics of SBU are:

It is a single business or collection of related businesses
It has its own competitors
It has a manager who is accountable for its operation
It is an area that can be independently planned for within the
The Value Chain Analysis: By Michael
Porter
Can be used to examine the various activities of the firm and
how they interact in order to provide a source of competitive
advantage by:
Performing these activities better and At a lower cost than the
competitors
 Types of Firms Activities

The value chain is basically the set of activities that an

organization performs. Primary activities are directly involved
in serving the customer while secondary support the primary
ones.
Most importantly of all, understand which ones add value to
the customer. This type of analysis can help in understanding
which activities should be outsourced and which ones should
remain in house or be bought in (insourcing).
Primary - Those that are involved in the creation, sale and transfer
of products (including after-sales service)
Support - those that merely support the primary activities.
 Primary Activities

Inbound logistics is concerned with receiving, storing,

distributing inputs (e.g. Handling of raw materials,
warehousing, inventory control) .
Operations - comprise the transformation of the inputs into
the final product form (e.g. Production, assembly, and
packaging)
Outbound logistics - involve the collecting, storing, and
distributing the product to the buyers (e.g. Processing of
orders, warehousing of finished goods, and delivery)
Marketing and sales - how buyers can be convinced to
purchase the product (e.g. Advertising, promotion,
distribution)
 Secondary Activities

Procurement - concerned with the tasks of purchasing inputs

such as raw materials, equipment, and even labor
Technology Development - these activities are intended to
improve the product and the process, can occur in many
parts of the firm.
Human Resource Management - involved in recruiting, hiring,
training, development and compensation
Firm Infrastructure - the activities which are not specific to
any activity area such as general management, planning,
finance, and accounting are categorized under firm
infrastructure.
 Identifying Core Competences

Core competencies differentiate an organization from its

competitionthey create a companys competitive
advantage in the marketplace. Typically, a core competency
refers to a companys set of skills or experience in some
activity, rather than physical or financial assets. An
organizational core competency is an organizations strategic
strength.
Eg: Hondas strategic strength, for example, lies in its small
engine design and manufacturing; Sony has a core competency in
miniaturization; Federal Express has a core competency in
logistics and customer service.

Core competency is an area of specialized expertise that is

the result of harmonizing complex streams of technology and
 Identifying Core Competences

Three tests can be applied to determine a core

competency:
A core competency must be capable of developing new products
and services and must provide potential access to a wide variety
of markets.
A core competency must make a significant contribution to the
perceived benefits of the end product.
A core competency should be difficult for competitors to imitate.
In many industries, such competencies are likely to be unique.

In determining your companys core competencies, you need

to ask what is the underlying skill, ability, knowledge,
experience, technology or process that enables your
company to provide its unique set of products / services.
 Identifying Core Competences

You next need to determine how you can use your companys
core competencies to develop strategic responsiveness to
gain competitive advantage. High-performing companies
develop new core competencies and expand their existing
ones to enter new and future markets.
Apples unique competence seems to be its product design
process.Simplicity turned out to be the core attribute that made
the iPod a revolutionary product, one that changed consumer
expectations.

Company executives should be aware that even the most

successful strategy will fail unless it is continually monitored
and refreshed to meet changing market conditions.
 Three Tests to True Core
Competences:
Relevance:Firstly, the competence must give your
customer something that strongly influences him or her to
choose your product or service. If it does not, then it has no
effect on your competitive position and is not a core
competence.
Difficulty of Imitation:Secondly, the core competence
should be difficult to imitate. This allows you to provide
products that are better than those of your competition. And
because you're continually working to improve these skills,
means that you can sustain its competitive position.
Breadth of Application:Thirdly, it should be something
that opens up a good number of potential markets. If it only
opens up a few small, niche markets, then success in these
markets will not be enough to sustain significant growth.
An example: You might consider strong industry knowledge and
expertise to be a core competence in serving your industry.
However, if your competitors have equivalent expertise, then this
is not a core competence. All it does is make it more difficult for
new competitors to enter the market.
 Examples of Core Competency
Eg: How small shops compete with supermarkets in grocery
retailing.
Supermarkets core competency is lower prices is due to
merchandizing, lower cost supplies and in store management
where as corner shop gains advantage by concentrating more on
convenience and service.
Note core competency between rival supermarkets.

In auto industry Japanese core competency was zero defect

manufacturing, Ford and GM by market access and dealer
network, to provide unique product design and low volumes
of manufacturing / reduced life cycle of products.
Core competency helps organizations to stretch into new
opportunities and provide value added service.
 Audit resources- core resources

The
The resource
resource audit
audit identifies
identifies the
the resources
resources available
available to
to an
an organisation
organisation in
in supporting
supporting
its
its strategies
strategies both
both from
from within
within and
and outside
outside the
the organisation
organisation

Resources
Resources can
can be
be grouped
grouped

Physical
Physical resourcesresources Human
Human resources
resources Financial
Financial resources
resources Intangibles
Intangibles

Material assets Number
Material assets Number of of employees
employees Equity
Equity Goodwill
Goodwill
Immobility
Immobility Skills
Skills Debt
Debt Loyalty
Loyalty of of consumers
consumers
Machines
Machines Education
Education Credibility
Credibility BrandBrand name
name
Others
Others Experience
Experience Relationship
Relationship with with
Good contacts with
Good contacts with
Current assets
Current assets Loyalty
Loyalty Suppliers
Suppliers Politicians
Politicians
Inventory
Inventory
Corporate
Corporate culture
culture Investors
Investors CEOs
CEOs
Nature
Nature of of assets
assets Bankers
Bankers Corporate
Corporate image image
ageage Managing
Managing cashcash
condition
condition
location
location
 Audit resources- core resources

Define
Define core
core resources
resources

Easy
Easy to
to Difficult
Difficult to
to
imitate
imitate imitate
imitate

Resources Necessary
Necessary Unique
Unique Core Resources
Resources
Resources
Resources Resources
Resources

Same
Same as
as Better
Better than
than
competitors
competitors competitors
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 Competences
Tangible Intangible

Measureble Mostly difficult to measure

Easy to identify the owners Difficult to identify the owners

You can buy and sell You can acquire by learnind by doing
 Analysing competences and core competences

The
The competence
competence undertake
undertake the
the activities
activities of
of the
the organisation.
organisation. ItIt shows
shows how
how toto link
link the
the
different
different activities
activities together
together and
and how
how to
to deploy
deploy resources
resources to
to sustain
sustain excellent
excellent performance
performance

Bases of
competences

Economies
Economies ofof scale:
scale: offers
offers the
the ability
ability in
in mass
mass consumer
consumer advertising,
advertising,
Cost
Cost efficiency
efficiency Supply
Supply costs:
costs: well
well managed
managed input
input costs,
costs, with
with IT
IT or
or personal
personal networks
networks
Experience:
Experience: the cumulative experience decrease the R+D and unit
the cumulative experience decrease the R+D and unit costs
costs

How
How well
well are
are matched
matched the
the products/services
products/services to
to the
the identified
identified needs
needs of
of the
the
Value
Value added
added chosen customers. Value added activity must be done from the viewpoint
chosen customers. Value added activity must be done from the viewpoint
of
of the
the customer
customer or
or user
user of
of the
the production
production or
or service.
service.

Competences
Competences areare likely
likely to
to be
be more
more robust
robust andand difficult
difficult to
to imitate
imitate ifif there
there
Managing
Managing linkages
linkages are linkages within the organisations value chain and linkages into the
are linkages within the organisations value chain and linkages into the
supply
supply and
and distribution
distribution channels.
channels.

Robustness
Robustness The
The strategic
strategic importance
importance of
of an
an organisations
organisations competences
competences relates
relates to
to how
how
easy or difficult they are to imitate.
easy or difficult they are to imitate.
 Managing Linkages

Core competencies are likely to be ore robust and difficult to

imitate if they relate to the management of linkages within
the organization value chain and linkages into supply and
distribution chains.
Specialization is key and so is coordination of activities.

The management of internal linkages in the value chain

would create competitive advantage in number of ways such
as:
There may be important linkage between primary activities. ( high
levels of inventory may ease production but will add to overall
cost of production).
Linkages between Primary activities like Marketing and Production
and so on.
 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 value system making more linkages internal to the
organization.
Controlling performance of suppliers is critical to enhance quality
and reduce costs.
Total quality management which improves performance through
closer working relationships with specialists within the value
chain. Like involving suppliers and distributors at design stage of
product or project.
 Leadership and Strategic
Implementation
Businesses today facechange on all fronts economic,
regulatory, competitive, customer, and access to resources.
Consequently, every company is adjusting its strategy and
that implies change. The success of your strategy depends
on your people will they be able to implement the strategy
and achieve the goals?
Strategic leadership provides the vision, direction, the
purpose for growth, and context for the success of the
corporation. It also initiates "outside-the-box" thinking to
generate future growth. Strategic leadership is not about
micromanagingbusiness strategies. Rather, it provides the
umbrella under which businesses devise appropriate
strategies andcreate value.
If you are a leader at any level, your people look to you for
guidance on what needs to be done, and how. The key
requirements of leaders are to:
Set the strategy
Communicate the strategy
 Roles to Play For Good Strategy
Execution
Staying on top of what is happening, closely monitoring progress,
fretting out issues, learning what obstacle lie in path of good
strategic implementation.
Promoting the culture of Esprit de corps that mobilizes and energizes
organizational members to execute strategy in competent fashion
and perform at high level.
Keeping organizations responsive to changing conditions, alert for
new opportunities, innovative ideas, ahead of rivals in developing
competitively valuable competencies and capabilities.
Exercising ethics leadership and model conduct and Pushing
corrective actions to improve strategy execution and overall
performance.
The role of leader is Introducing Change, Integrating Conflicting
Interests, Developing Leadership Effectiveness of Managers,
 Leadership Role in Implementation

Strategic leadership entails the ability to anticipate, envision,

maintain flexibility, and empower others to create strategic
change as necessary.
A manager with strategic leadership skills exhibits the ability
to guide the company through the new competitive
landscape by influencing the behavior, thoughts, and feelings
of co-workers, managing thought of others and successfully
dealing with rapid, complex change and uncertainty.
Strategic leaders are CEO, Board of Directors, Top
Management Teams, Divisional General Managers. They must
be able to deal with the diverse and cognitive complex
competitive situations that are characteristic of todays
 Responsibilities of Strategic Leaders

Managing Human Capital

Effectively managing companys Operations
Sustaining High performance over time
Being willing to make candid, courageous, yet pragmatic
decisions.
Seeking feedback from face to face communication.
Having decision making responsibility that cannot be
delegated.
Navigator
Strategist
Entrepreneur
Mobilizer
Talent advocate
Captivator
Global thinker
Change driver
Enterprise Euardian
 Building A Strategy Supportive Corporate
Culture
An organizations capacity to execute its strategy depends
on its hard infrastructure--its organization structure and
systems--and on its soft infrastructure--its culture and
norms.
Building a Strategy-Supportive Corporate Culture
Where Does Corporate Culture Come From?
Culture and Strategy Execution
Types of Cultures
Creating a Fit Between Strategy and Culture
Establishing Ethical Standards
Building a Spirit of High Performance
Exerting Strategic Leadership
Staying on Top of How Well Things are Going
Establishing a Strategy-Supportive Culture
Keeping Internal Organization Innovative
Exercising Ethics Leadership
Making Corrective Adjustments
 What Makes Up a Companys
Culture?
Beliefs about how business ought to be conducted
Values and principles of management
Work climate and atmosphere
Patterns of how we do things around here
Oft-told stories illustrating companys values
Taboos and political donts
Traditions and Ethical standards
Where Does Corporate Culture Come From?
Founder or early leader
Influential individual or work group
Policies, vision, or strategies
Traditions, supervisory practices, employee attitudes
Organizational politics
Relationships with stakeholders and Internal sociological forces
 Culture and Strategy Execution:
Ally or Obstacle?
Culture can contribute to -- or hinder -- successful strategy
execution.
Requirements for successful strategy execution may -- or
may not -- be compatible with culture.
A close match between culture and strategy promotes
effective strategy execution

Why Culture Matters: Benefits of a Good Culture-

Strategy Fit
Strategy-supportive cultures
Shape mood and temperament of the work force, positively
affecting organizational energy, work habits, and
operating practices
Provide standards, values, informal rules and peer
pressures that nurture and motivate people to do their jobs
in ways that promote
good strategy execution
Strengthen employee identification with the company, its
performance targets, and strategy
 Strategy-Supportive cultures

Stimulate people to take on the challenge of realizing

the companys vision, do their jobs competently and with
enthusiasm, and collaborate with others to execute the
strategy
Optimal condition: A work environment that Promotes
can do attitudes, Accepts change, Breeds needed
capabilities.
Forces and Factors Causing Culture
to Evolve
Internal crises
Revolutionary technologies
New challenges
Arrival of new leaders
Turnover of key employees
Diversification into new businesses
Expansion into different geographic areas
Rapid growth adding new employees
Merger with or acquisition of another company
Globalization
Creating a Strong Fit Between Strategy
and Culture

Diagnose which facets of present culture

Step 1 are strategy-supportive and which are not

Talk openly about why aspects

Step 2 of present culture need
to be changed

Follow with swift, visible actions to modify

Step 3 culture - include both substantive and
symbolic actions
Types of Corporate Cultures

Strong vs. Weak Cultures

Unhealthy Cultures

Adaptive Cultures
Characteristics of Strong Culture
Companies
Conduct business according to a clear, widely-understood
philosophy
Management spends considerable time communicating and
reinforcing values
Values are widely shared and deeply rooted
Typically have a values statement
Careful screening/selection of new employees to be sure they
will fit in
Visible rewards for those following norms; penalties for those
who dont
How Does a Culture Come to Be
Strong?
Leader who establishes values consistent with
Customer needs
Competitive conditions
Strategic requirements
A deep, abiding commitment to espoused values and
business philosophy
Practicing what is preached!
Genuine concern for well-being of
Customers
Employees
Shareholders
 Characteristics of Weak Culture
Companies
Many subcultures
Few values and norms widely shared
Few strong traditions
Little cohesion among the departments
Weak employee allegiance to companys vision and strategy
No strong sense of company identity
Characteristics of Unhealthy or Low
Performance Cultures
Politicized internal environment
Issues resolved on basis of turf
Hostility to change
Experimentation and efforts to alter status quo
discouraged
Avoid risks and dont screw up
Promotion of managers more concerned about process and
details than results
Aversion to look outside for superior practices
Must-be-invented here syndrome
 Hallmarks of Adaptive Cultures

Introduction of new strategies to achieve superior

performance
Strategic agility and fast response to new conditions
Risk-taking, experimentation, and innovation to satisfy
stakeholders
Proactive approaches to implement workable solutions
Entrepreneurship encouraged and rewarded
Top managers exhibit genuine concern for customers,
employees, shareholders, suppliers
Types of Culture - Changing Actions

Revising policies and procedures to help drive cultural

change
Altering incentive compensation to reward desired cultural
behavior
Visibly praising and recognizing people who display new
cultural traits
Hiring new managers and employees who have desired
cultural traits and can serve as role models
Replacing key executives strongly associated with old culture
Communicating to all employees the basis for cultural
change and its benefits
Symbolic Culture - Changing Actions

Emphasize frugality
Eliminate executive perks
Require executives to spend
time talking with customers
Alter practices identified as cultural hindrances
Visible awards to honor heroes
Ceremonial events to praise people and teams who get with
the program
 Substantive Culture - Changing
Actions
Benchmarking and best practices
Set world-class performance targets
Bring in new blood, replacing traditional managers
Shake up the organizational structure
Change reward structure
Increase commitment to employee training
Reallocate budget, downsizing and upsizing