Strategic Management Unit-4 By Dr. Amit Seth

Strategy Implementation: Functional Strategies

(c) Dr. Azhar Kazmi Functional strategies Functional strategy 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.

(c) Dr. Azhar Kazmi Functional plans and policies Nature of functional plans and policies Need for functional plans and policies Development of functional plans and policies

(c) Dr. Azhar Kazmi Vertical and horizontal fit Corporate-level strategies Business-level strategies Functional-level strategies Marketing plans and policies HRM plans and policies Financial plans and policies Operations plans and policies Information management plans and policies Horizontal fitVertical fit

(c) Dr. Azhar Kazmi Operational implementation Operational implementation is the approach adopted by an organisation to achieve operational effectiveness. When an organisation performs value-creating activities optimally and in better way than its competitors can perform it results in operational effectiveness.

(c) Dr. Azhar Kazmi Configuration of functional plans and policies Financial plans and policies Marketing plans and policies Operations plans and policies Information management plans and policies Integration of functional plans and policies Personnel plans and policies

(c) Dr. Azhar Kazmi Financial plans and policies Sources of funds Usage of funds Management of funds

(c) Dr. Azhar Kazmi Marketing plans and policies Segmentation, targeting and positioning Product Pricing Place Promotion Integrative and systemic factors

(c) Dr. Azhar Kazmi Operations plans and policies Production system Operations planning and control Research and development.

(c) Dr. Azhar Kazmi Personnel plans and policies Personnel system Organisational and employee characteristics Industrial relations

(c) Dr. Azhar Kazmi Information management plans and policies Acquisition and retention of information Processing and synthesis of information Retrieval and usage of information Transmission and dissemination of information Integrative, systemic and supportive factors

(c) Dr. Azhar Kazmi Integration of functional plans and policies Information management plans and policies Financial plans and policies Marketing plans and policies Operations plans and policies Personnel plans and policies Integration of functional plans and policies

(c) Dr. Azhar Kazmi Five consideration in integrating functional plans and policies Relevance to development of organizational capability Making trade-off decisions Need for internal consistency Timing of implementation of functional plans and policies Determination of intensity of linkages INTEGRATION OF FUNCTIONAL PLANS AND POLICIES Based on theoretical matter in W. F. Glueck & L. R. Jauch: Business Policy and Strategic Management (New York: McGraw-Hill, 4th. edn., 1984) p

(c) Dr. Azhar Kazmi Mechanisms to integrate functional plans and policies Information systems Direct contact Task forces Full-time integrators Teams

(c) Dr. Azhar Kazmi Operational implementation plays a key role in achieving effectiveness STRATEGIC PLAN ACTIVATING STRATEGIES MANAGING CHANGE ACHIEVING EFFECTIVENESS EVALUATION AND CONTROL FUNCTIONAL IMPLEMENTATION OPERATIONAL IMPLEMENTATION OPERATIONAL EFFECTIVENESS: PRODUCTIVITY PROCESSES PEOPLE PACE MONITORING FEEDBACK

(c) Dr. Azhar Kazmi Four P’s of operational implementation Productivity Processes People Place Operational effectiveness

Strategic Evaluation and Control

(c) Dr. Azhar Kazmi Nature of strategic evaluation and control Strategic evaluation and control is the process of determining the effectiveness of a given strategy in achieving the organisational objectives and taking corrective action wherever required Two sets of questions are relevant in strategy evaluation and control:  Are the premises made during strategy formulation proving to be correct? Is the strategy guiding the organisation towards its intended objectives? Are the organisation and its managers doing things which ought to be done? Is there a need to change and reformulate the strategy?  How is the organisation performing? Are the time schedules being adhered to? Are the resources being utilised properly? What needs to be done to ensure that resources are utilised properly and objectives are met?

(c) Dr. Azhar Kazmi Importance of strategic evaluation Ability to coordinate the tasks performed by individual managers Need for feedback, appraisal and reward Check on the validity of strategic choice Congruence between decisions and intended strategy Successful culmination of the strategic management process Creating inputs for new strategic planning

(c) Dr. Azhar Kazmi Participants in strategic evaluation Shareholders Board of directors Chief executives SBU or profit centre heads Financial controllers, company secretaries, and external and internal auditors Audit and executive committees Corporate planning staff or department Middle-level managers

(c) Dr. Azhar Kazmi Barriers in evaluation Limits of control Difficulties in measurement Resistance to evaluation Short-termism Relying on efficiency versus effectiveness

(c) Dr. Azhar Kazmi Requirements for effective evaluation Control should involve only the minimum amount of information Control should monitor only managerial activities and results Controls should be timely Long-term and short-term controls should be used Controls should aim at pinpointing exceptions Reward of meeting or exceeding standards should be emphasised

(c) Dr. Azhar Kazmi Four types of strategic controls 1.Premise control 2.Implementation control 3.Strategic surveillance 4.Special alert control

(c) Dr. Azhar Kazmi How do strategic control and operational control differ? AttributeStrategic control Operational control Basic question"Are we moving in the right direction"?"How are we performing? 2. AimProactive, continuous questioning Allocation and use of the basic direction of strategy organisational resources 3. Main concern‘Steering’ the organisation’s future directionAction control 4. FocusExternal environmentInternal organisation 5. Time horizonLong-termShort-term 6. Exercise of controlExclusively by top management, Mainly by executive or middle may be through lower-level support level management on the direction of the top management 7. Main techniquesEnvironmental scanning, information Budgets, schedules and MBO gathering, questioning and review Based on J. A. Pearce III and R. B. Robinson, Jr.: Strategic Management: Strategy Formulation and Implementation (3rd edn.), (Homewood, Ill.: Richard D. Irwin, 1988), pp

(c) Dr. Azhar Kazmi Process of evaluation The process of evaluation basically deals with four steps:  Setting standards of performance  Measurement of performance  Analysing variances  Taking corrective action

(c) Dr. Azhar Kazmi The evaluation process for operational control Strategy / plan / objectives Setting standards of performance Actual performance Analysing variance Management of performance Feedback Reformulation Check standards Check performance

Techniques of Strategic Evaluation & Control

(c) Dr. Azhar Kazmi Evaluation techniques for strategic control Strategic momentum control  Responsibility control centres  The underlying success factors  Generic strategies Strategic leap control  Strategic issue management  Strategic field analysis  Systems’ modelling

(c) Dr. Azhar Kazmi Evaluation techniques for operational control Internal analysis  VRIO framework  Value chain analysis  Quantitative analysis  Qualitative analysis Comparative analysis  Historical analysis  Industry norms  Benchmarking Comprehensive analysis  Key factor rating  Business intelligence systems  Balanced scorecard Special purpose techniques  Network techniques  Management by objectives  Parta system  Memorandum of association Auditing techniques  Corporate social audit  Environmental audit

(c) Dr. Azhar Kazmi Role of organisational systems in evaluation Role of information system Role of control system Role of reward system