Strategy Implementation

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Session 21

• Strategy Implementation

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Strategic Management Model
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Strategy Implementation
Identify short-term objectives
Initiate specific functional tactics
Communicate policies to empower people
Design effective reward systems
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What are Short-Term Objectives?
Provide specific guidance for what is to be done,
translating vision into action
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Role of Short-Term Objectives in Implementing
Strategy
1. Operationalize long-term objectives
2. Raise issues and potential conflicts requiring
coordination to avoid dysfunctional consequences
3. Identify measurable outcomes of functional
activities to be used to make feedback,
correction, and evaluation more relevant
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Potential Conflicting Objectives and Priorities
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Relationship of Action Plans to Short-Term
Objectives
Specificity - Identify functional activities to
be undertaken to build competitive advantage
Provide a clear time frame for completion
Identify who is responsible for each action in
the plan
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Qualities of Effective Short-term Objectives
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Creating Measurable Objectives
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Value-Added Benefits of Short-Term Objectives
Give operating personnel a better understanding
of their role in a firms mission
Provide basis for accomplishing conflicting
concerns
Provide basis for strategic control
Motivation - Clarify personal and group roles in
a firms strategies
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Functional Tactics (aka Short Term Strategies)

• key, routine activities that must be undertaken
  in each functional area to provide the businesss
  products and services
• In a sense, functional tactics translate thought
  into action 
• Every value chain activity in a company executes
• functional tactics that support the businesss
  strategy and help accomplish strategic objectives

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Functional Tactics at General Cinema Corporation
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Functional Tactics

• Functional tactics are different from business or
  corporate strategies in three fundamental ways
• Time horizon
• Specificity
• Participants who develop
• them

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Characteristics of Functional Tactics in
Production/Operations

• Viewed as core function of an organization
• Involves converting inputs into value-enhanced
  output
• Focuses on decisions regarding
• Basic nature of firms POM system,
• Seeks optimum balance between investment input
  and production/operations output
• Location
• Facilities design
• Process planning on a short-term basis

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Key Functional Tactics in POM
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Characteristics of Functional Tactics in Marketing

• Lead to strategic success of the firm through the
  profitable sale of products/services in target
  markets
• Clearly identify customer needs that
  products/services aim to meet
• Identify where, when, and by whom
  products/services are to be sold
• Define how firm will communicate with target
  markets
• Directly influence supply, demand, profitability,
  consumer perception, and regulatory response
  through pricing

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Key Functional Tactics in Marketing
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Characteristics of Functional Tactics in
Accounting and Finance

• Time frame of finance tactics varies because they
  direct use of financial resources supporting the
  business strategy, long-term goals, and annual
  objectives
• Long-term tactics guide decisions in
• Long-term capital investment
• Debt financing
• Dividend allocation
• Leveraging
• Short-term tactics guide decisions in
• Managing working capital and short-term assets
• Accounting-focused tactics have taken on
  increased strategic significance in last decade

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Key Functional Tactics in Finance and Accounting
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Characteristics of Functional Tactics in RD

• Assumed a key strategic role in many firms due to
  increasing rate of technological change
• May be more critical instruments of business
  strategy in some industries than in others

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Key Functional Tactics in RD
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Characteristics of Functional Tactics in HRM

• Assumed increasing strategic importance in the
  1990s
• Aid long-term success in
• Development of managerial talent and competent
  employees
• Creating systems to manage compensation or
  regulatory concerns
• Guiding effective utilization of human resources
  to achieve both the
• Firms short-term objectives
• Employees satisfaction and development

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Key Functional Tactics in HRM
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Empowering Operating Personnel Policies

• Empowerment is the act of allowing an individual
  or team the right and flexibility to make
  decisions and initiate action
• Policies are directives designed to guide the
  thinking, decisions, and actions of managers and
  their subordinates in implementing a firms
  strategy

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Creating Policies That Empower

1. Policies establish indirect control over
   independent action
2. Policies promote uniform handling of similar
   activities
3. Policies ensure quicker decisions by
   standardizing answers to recurring questions
4. Policies institutionalize basic aspects of
   organization behavior
5. Policies reduce uncertainty in repetitive and
   day-to-day decision making
6. Policies counteract resistance
7. Policies afford managers a mechanism for avoiding
   hasty decisions

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Advantages of Formal, Written Policies

1. They require managers to think through the
   policys meaning, content, and intended use
2. They reduce misunderstanding
3. They make equitable and consistent treatment of
   problems more likely
4. They ensure unalterable transmission of policies
5. They communicate the authorization or sanction of
   policies more clearly
6. They supply a convenient and authoritative
   reference
7. They systematically enhance indirect control and
   organization wide coordination of the key
   purposes of policies

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Executive Compensation Plans

• Stock options provide the executive with the
  right to purchase company stock at a fixed price
  in the future
• Restricted stock is designed to provide benefits
  of direct executive stock ownership
• Golden handcuffs occur where the stock
  compensation is deferred until vesting time
  provisions are met or a bonus is deferred
• Golden parachutes are a form of bonus
  compensation that is designed to retain talented
  executives
• Cash bonuses based on accounting measures