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Implementation of a strategy
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The greatest strategy is doomed if its implemented badly.
Successful strategy formulation does not guaranteesuccessful strategy implementation.
Less than 10% of strategies formulated are successfullyimplemented!
The Nature of Strategy Implementation
Implementation may fail due to:
Paying too much for a new acquisition Not recognizing benefit of computers in managinginformation
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Formulation vs. Implementation
Formulation focuses on effectiveness Implementation focuses on efficiency
Formulation is primarily an intellectual process
Implementation is primarily an operational process
Formulation requires good intuitive & analytical skills
Implementation requires special motivational &leadership skills
Formulation requires coordination among a fewindividuals
Implementation requires coordination among manyindividuals
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Varies among different types & sizes oforganizations
Nature of Strategy
Implementation
Strategy Implementation
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Altering sales territories
Adding new departments Closing facilities
Hiring new employees
Cost-control procedures
Modifying advertising strategies
Building new facilities
Nature of Strategy
Implementation
Implementation Activities
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Shift in responsibility
Nature of Strategy
Implementation
Management Perspectives
Division or
Functional
Managers
Strategists
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Management Issues
Management
Issues
Resources
Organizational structure
Restructuring
Annual Objectives
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Management Issues (contd)
Management
Issues Production/Operations
Resistance to Change
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Management Issues
Purpose of Annual Objectives --
Basis for resource allocation
Mechanism for management evaluation(e.g. IT management)
Metric for gauging progress on long-term
objectivesEstablish priorities (organizational, division,
& departmental)
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Management Issues
Requirements of Annual Objectives
Measurable
Consistent
Reasonable
Challenging
Clear to Understand
Timely
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Management Issues
Annual Objectives Should State
Quantity
Quality
Cost
Time
Be Verifiable
SMART Type
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Management Issues - Resource Allocation
Enables resources to be allocated according to
priorities established by annual objectives. However
it may cause conflict. Is this good or bad?
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
4 Types of Resources
-- Central management activity that allows
for the execution of strategy
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Management Issues
Matching Structure with Strategy
-- Changes in strategy= Changes in
structure
Structure dictates how objectives & policies
will be established and how resources will be
allocated; e.g. is structure based on locationor based on the product
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New administrative
problems emerge
New strategy
Is formulated
Organizational
performance
declines
Organizational
performance
improves
New organizationalstructure is established
Structure should be designed to
facilitate the strategic pursuit of a firm
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Management Issues
Restructuring
-- Reducing the size of the firmNumber of employees, divisions and/or
units, Number of hierarchical levels;
e.g. The ERP & Internet is ushering in anew wave of business transformations
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Management Issues
Re-engineeringIn re-engineering, a firm uses information
technology to break down functional barriers
and create a work system based on businessprocessesReconfiguring or redesigning
work, jobs, & processes to improve cost,
quality an example to quo te done by mewhich sp read across the Industry - Cost
reduct ion & Qual ity Improvements.
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Management Issues
Resistance to Change-- Singlegreatest threat to successful strategy
implementation
Raises anxiety; fear concerning:economic loss, Inconvenience or Uncertainty
Force Change Strategy
Educative Change Strategy
Rational or Self-Interest Change Strategy
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Management Issues
Production/Operations Concerns
Production processes typically
constitute more than 70% of firms total
assetsDecisions concern e.g. :
Plant size
Quality control
Technological innovation
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Failing to segment markets appropriately
Paying too much for a new acquisition
Falling behind competition in R&D
Not recognizing benefit of computers in
managing information
The Nature of Strategy Implementation
Strategy Implementation can have a low success rate
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Marketing of goods & services well
Raising needed working capital
Producing technologically sound goods
Sound information systems
The Nature of Strategy
Implementation
Successful Strategy Implementation
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Marketing Issues
Marketing variables affect success/failure
of strategy implementation
1. Market segmentation
2. Product positioning
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Marketing Issues
Market Segmentation: Subdividing of amarket into distinct subsets of customers
according to needs and buying habits
Market segmentation variables: Product
Place
Promotion
Price
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Marketing MixComponent Factors
Service level
Warranty
Transportation
carriersProduct line
Inventory
levels/locationsPackaging
PublicitySales territoriesBrand name
Payment termsSales promotionOutlet locationStyle
Discounts &
allowancesPersonal selling
Distribution
coverageFeatures
LevelAdvertising
Distribution
channelsQuality
PricePromotionPlaceProduct
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Acquiring needed capital
Developing projected financial statements
Preparing financial budgets
Evaluating worth of a business
Finance/Accounting Issues
Essential for implementation
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Management Information
Systems (MIS) Issues
Information is the basis forunderstanding the firm. One of themost important factors differentiatingsuccessful from unsuccessful firms
MIS used to :
Information collection, retrieval, & storage Keeping managers informed
Coordination of activities among divisions
Allow firm to reduce costs
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