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Unit-4 Strategy Formulation and Implementation

Program : MBA

Semester : IV

Subject Code : MB0052

Subject Name : Strategic Management and Business Policy

Unit number : 4

Unit Title : Strategy Formulation and Implementation

Lecture number : 4

Lecture Title : Strategy Formulation and Implementation

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Objectives

The objective of this lecture is to :

Define strategy formulation and its processes Explain strategy implementation and its stages

Analyse the reasons for strategy failure and the methods to overcome it

Describe strategy leadership and its importance in strategic implementation

Explain the concept of SBUs

Strategy Formulation andImplementation

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Introduction

Strategy Formulation

Process in Strategy Formulation

Strategy Implementation and its Stages

Reasons for Strategy Failure and Methods to Overcome

Strategy Leadership and Strategy Implementation

Strategic Business Units (SBUs)

Summary

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Activity

Lecture Outline

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Strategic management is influenced by the global transformation process

Strategic formulation and strategic implementation smoothen the

management process of an organisation

Strategic formulation defines the corporate mission and specifies theachievable objectives

Strategic implementation is the individual project action plan that helps in

strategic evaluation

Introduction

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Strategic formulation, which is a long-term development plan in an

organisation involves effective strategic decision making and strategic choice

process

Steps of strategic decision making process:

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Strategy Formulation

1.Creating a constructiveenvironment

2.Generating goodalternatives

3.Exploring the chosenalternatives

4.Choosing the bestalternative

5.Checking andconfirming your

decision

6.Communicate yourdecision and move to

action

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Features of strategic choice are:

It focuses on decisions and judgements made in a particular planning

situation

It creates a framework which balances the present and future decisions

It highlights judgements involved in handling uncertainties

It creates a framework for communication and collaboration between

different people with vivid backgrounds and skills

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Strategy Formulation Contd..

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Processes involved in strategy formulation:

Stimulation of information identification

Utilisation and transfer of useful information as per the business strategies

Henry Mintzbergs contribution to strategic planning:

Henry Mintzberg believes that strategic planning is a formalised procedure to

produce a coherent result in the form of an integrated system of decisions.

Mintzberg stated following factors as the reason for planning failure:

Processes

Data

Detachment

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Process in Strategy Formulation

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Strategic implementation helps in strategic evaluation

A broad action plan drives strategic implementation process which

basically drives an individual project action plan

Strategic implementation in terms of organisational structure and

system:

Every levels of organisational structure has its own set of plans that are

executed accordingly for proper strategic implementation

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Strategy Implementation and itsStages

Organisational Structure

Tall structure Flat structureHierarchical

structure

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Strategic implementation in terms of resource procurement:

Resource procurement means acquiring resources. The steps involved in

procurement are:

Recognition of the need for goods/services

Qualify the specifics of the services

Evaluation of potential suppliers

Taking possession of the desired goods or services

Resource procurement processes:

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Project detailingProcedural

issuesResourceallocation

Resourceprocurement

Strategy Implementation and itsStages contd..

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Strategy Implementation and itsStages contd..

Strategic implementation in terms of functional and operational plans:

The functional plan in strategic implementation decides what a functionalunit in the organisation like manager, staffs etc has to do

Operational planning decides the way of performing the function by

functional units

Building core competencies: Designs competitive positions and strategies

Decides where to allocate resources

Critical Success Factor (CSF):

CSF is the critical factor which ensures proper success in a business.

Develops mission statement and high level goals

List the requirements, problems and assumptions

Obtain results of the analysis

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Reasons of strategic failure:

Improper communication

Lack of effective leadership and planning

Passive management

Lack of motivation and personal ownership

Methods to overcome strategic failure are:

Defining the system value

Defining the mission and vision

Live from choice

Developing change management and strategic planning

Managing employees and workers effectively

Replacement of the committee with a mastermind group

Reasons for Strategic Failure andMethods to Overcome

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Strategic leadership refers to the potential to express a strategic vision and to

motivate others to acquire that vision. It is the ability to influence

organisational members and to execute organisational change.

Types of leadership:

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Strategic Leadership and StrategicImplementation

Leadership

Direct Organisational Strategic

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Features of strategic leader:

Loyalty and compassion

Judicious use of power

Wider perspective

Motivation and reliability

Skillful communication

Quality of understanding the moods and emotions

Importance of strategic leadership in strategic implementation:

Leadership is essential to implement decisions successfully

Competent leadership is the trait of successful strategy implementation

Leaders influence behaviour, change the course of events and overcome

resistance

Strategic Leadership and StrategicImplementation cont..

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SBU is the autonomous division in an organisation which deals with specific

business concerns. The SBU adds value through parenting advantages by

defining its roles and strategic priorities.

The features of SBU:

Encourages new ways of thinking and act as an autonomous unit

Has managerial and capital resource allocation for serving the overall

interest of the organisation

Segments the activities of the company in a strategic manner and

allocates resources competitively

Reduces the affect of bureaucracy in the organisation

Follows the corporate strategic plan but differs in significant aspects

Strategic Business Units

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Strategic formulation process defines the corporate mission, developingstrategies and setting companys policy guidelines

Strategic decision making enhances managers abilities to obtain insight

of strategic problems. Strategic choice creates a framework which

explicitly balances present and future decisions.

Henry Mintzberg, who concluded that planning is a formalised procedure

to produce a coherent result, also stated certain factors as the reason

for planning failure like processes, data and detachment.

Strategy implementation is vital in organisational structure, resource

procurement, functional and operational plans of the organisation

Critical success factors are required to ensure success in a business by

developing analysis matrices and reviewing the results

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Summary

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The reasons for strategic failure are lack of motivation, lack of effective

leadership etc. The methods to overcome strategic failures are creating a

proper plan, taking necessary actions and so on.

Strategic leadership is the potential to express a strategic vision for the

organisation and to motivate others. Few features are loyalty, judicious

use of power, reliability etc.

SBUs are the autonomous units which serve a clear market segment with

a defined strategy. It controls the strategic factors of the parent

company.

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Summary contd..

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1. Define strategy formulation.

ANS: Strategy formulation is a long-term plan which defines the corporate

mission and goals, specifies achievable objectives, develops strategies and

sets company policy guidelines.

2. What is core competency?

ANS: Core competency is a management tool that enables an organisation

to deliver a unique value to its customer.

3. Explain Critical Success Factor (CSF).

ANS: CSF is the critical factor required to ensure proper success in a

business.

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Assume that you are the project manager of a software company. Your

company has to launch a new product in the global market. How will you

handle the situation with proper strategic planning?

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