Strategy Implementation

Strategy Implementation 

Process by which strategies and policies are put into action through development of programs and procedures

Strategy Implementation

• Programs – single use plans (projects)

• Budgets – costs associated with a program

• Procedures – system of sequential steps that describe how a particular task or job is to be done

Evaluation and Control 

Process by which corporate activities and performance results are monitored so that actual performance can be compared with desired performance.

Punctuated Equilibrium 

Corporations usually take 15 – 20 years before making a significant change in strategy orientation

Triggering Event 

• New CEO 

• External Intervention 

• Threat of change in ownership 

• Performance Gap 

• Strategic inflection point (industry)

Strategic Decisions

Rare – unusual, no precedent

Consequential – commit substantial resources

Directive – set precedents for decision making

Mintzberg’s Modes

Entrepreneurial mode – founders vision 

Adaptive mode – “muddling through” (reactive) 

Planning mode – systematic gathering and analysis of information 

Logical incrementalism – interactive strategy development (Planning + Adaptive)

5 Elements of Good Strategy

1. Arenas – Where? 2

. Vehicles – How to get there? 

3. Differentiators – How to win? 

4. Staging – Speed and sequence - tactics 

5. Economic logic – How will we gain a return?

Environmental Scanning

Environmental Scanning 

Monitoring, evaluation, and disseminating information from external and internal environments –to key people in the firm.

SWOT Analysis 

• Strengths – Weaknesses 

• Opportunities – Threats

Environmental Variables 

• Societal – technological, political, legal, social, economic 

• Task/Industry – customers, suppliers, competitors 

• Internal – structure, resources, culture

Strategy Formulation 

Development of long-range plans for effective management of opportunities and threats in light of corporate strengths and weaknesses

Mission Statement

• Purpose/reason for organization 

• Promotes shared expectations 

• Communicates public image 

• Who we are; what we do; what we aspire to

Corporate Goals/Objectives flow from the Mission/Vision statement 

–Profitability (net profit) 

–Growth –Resource utilization (ROE, ROI) 

–Market leadership

Corporate Goals/Objectives need to be: 

Specific 

Measurable 

Action oriented 

Realistic 

Timing is identified

Hierarchy of Strategy

Corporate strategy – general direction (stability, growth, retrenchment)

Business strategy – industry or market segment focus (competitive vs. cooperative)

Functional strategy – functional planning to support the Corporate and Business strategy. (technology leader or follower)

Strategic Management

Strategic Management 

Set of managerial decisions and actions that determines the long-run performance of a firm.

4 Phases in the Evolution of Strategic Management

1. Basic financial planning – internal focus on budgeting (1 yr horizon) 

2. Forecast-based planning – extrapolate the current situation into the future (3-5 yr horizon) 

3. Externally-oriented planning – planning department and/or consultants develop a top-down strategy with no lower level involvement. 

4. Strategic management – involves various departments and levels across the organization. An ongoing process that includes implementation, evaluation and control issues.

Highly Rated Benefits

• Clearer sense of strategic vision 

• Sharper focus on strategic importance 

• Improved understanding of changing environment

Not Always a Formal Proces

• Where is the organization now? (not where do we hope it is) 

• If no changes are made, where will the organization be in 1, 2, 5 or 10 years? 

• What specific actions should management undertake?  

• What are the risks and payoffs?

Globalization 

Internationalization of markets and corporations Global (worldwide) markets rather than national markets

Electronic Commerce 

Use of the Internet to conduct business transactions Basis for competition on a more strategic level rather than traditional focus on product features and costs

Regional Trade Organizations 

• European Union (EU) – 25 member nations promote 60% local content to avoid tariffs 

• North American Free Trade Agreement (NAFTA) – Canada, Mexico and US 62.5% local content. 

• Mercosur/Mercosul – South American equivalent of NAFTA 

• Central American Free Trade Agreement (CAFTA) – duty free textiles, consumer goods and farm exports. 

• Association of South Eastern Asian Nations (ASEAN) – less powerful due to due to Chine, Japan and Korea exclusion.

Electronic Commerce -- Trends

• Forcing company transformation – networking of suppliers, customers and partners 

• Market access & branding changing – disintermediation of traditional distribution channels 

• Balance of power shift to consumer – access to many options and comparative shopping 

• Competition changing – due to low barriers to entry

• Pace of business increasing – dog years = Internet years 

• Internet pushing companies beyond traditional boundaries – supply chain management and virtual companies 

• Knowledge key asset – source of competitive advantage