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Implementation of a strategy. The Nature of Strategy Implementation. Successful strategy formulation does not guarantee successful strategy implementation. Less than 10% of strategies formulated are successfully implemented!. Implementation may fail due to : e.g.

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Implementation of a strategy

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The Nature of Strategy Implementation

Successful strategy formulation does not guarantee successful strategy implementation.

Less than 10% of strategies formulated are successfully implemented!

  • Implementation may fail due to: e.g.
    • Not recognizing benefit of computers (I.T.) in managing information: use of data warehouse and data mining to improve intensive strategies

Formulation vs. Implementation

  • Formulation focuses on effectiveness
  • Implementation focuses on efficiency
  • Formulation requires good intuitive & analytical skills
  • Implementation requires special motivational & leadership skills
  • Formulation requires coordination among a few individuals
  • Implementation requires coordination among many individuals
management issues with implementation
Management Issues with implementation

Annual Objectives




Organizational structure

Business process reengineering

Resistance to Change


Management Issues

Annual Objectives --

  • Basis for resource allocation
  • Mechanism for management (e.g. IT management) evaluation
  • Metric for gauging progress on long-term objectives
  • Help Establish priorities (organizational, division, & departmental)

Management Issues

Resource Allocation

The process that enables resources to be allocated according to priorities established by annual objectives. However it may cause conflict between the different functions:

Financial resources

Physical resources

Human resources

Technological resources


Management Issues

Matching Organisational Structure w/ Strategy

Changes in strategy=> Changes in structure

  • Structure dictates how objectives & policies will be established
  • How resources will be allocated;
  • E.g. is structurebased on location or based on the product…How do you think this may affect the above?

Management Issues

Reengineering the business process

In reengineering, a firm uses information technology to break down functional barriers and create a work system based on business processes…Reconfiguring or redesigning work, jobs, & processes to improve cost, quality… (alteration of Scott Morton’s value chain)

Think of an examples


Management Issues

Resistance to Change-- Single greatest threat to successful strategy implementation

Raises anxiety and fear concerning: economic loss, inconvenience or uncertainty…

  • Implemented via:
    • Force Change Strategy
    • Educative Change Strategy
    • Rational or Self-Interest Change Strategy

Key areas of Strategy Implementation

Strategy Implementation can have a low success rate if attention is not paid to key areas of the business e.g.:

  • 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

Marketing Segmentation

Market Segmentation: Subdividing of a market into distinct subsets of customers according to their needs and buying habits

  • Market segmentation variables include:
    • Product: quality, features, brandname
    • Place: Distribution channels, outlets, logistics
    • Price: level, payment terms

Finance/Accounting Issues

Essential for implementation

  • Acquiring needed capital
  • Developing projected financial statements
  • Evaluating worth of a business or product

Management Information Systems (MIS) Issues

Information is the basis for understanding the firm and is one of the most important factors differentiating successful from unsuccessful firms

  • MIS used to :
    • Data collection, retrieval, & storage
    • Converting data into information; creating charts
    • Keeping managers informed: Executive information system (E.I.S.) of KPI
    • Coordination of activities among divisions
    • Allow firm to reduce costs
  • Explain, using suitable examples, 3 keys issues that managers need to consider in implementing strategies derived during strategy formulationprocesses. (12 marks)