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1
BUSINESS STRATEGY
Implementation
Lecturer: PHD. PHM QUC KHNH
Banking Academy (Vietnam)
khanhhvnh@gmail.com
Mobile: 0913210000
After finishing this chapter, you will understand:
Key issues in strategy management
Department plans and objectives
Concepts of MBO
Strategy implementation
Learning outcomes
Concepts of MBO
Resources requirement and allocation
The importance of budget
Implementation issues.
It is impossible to plan for every eventuality.
Implementation often involves adjusting the plan in the
light of changed conditions.
Strategy Implementation
An organisation has to ensure that its resources are
deployed at two levels.
Corporate; that is, between different businesses
Unit or operations; that is, between functions and departments
Decisions at operations level may be taken without any
consideration of their overall strategic implications.
Implementation problems.
Strategy Implementation
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Implementation problems.
Implementation takes longer than expected.
Major unexpectedproblem arise.
Inadequatelyco-ordinated.
Strategy Implementation
q y
Employees do not have the necessary capability.
Information systems are not adequate.
Overall goals are not communicated
Guidelines for strategy implementation.
Strategy Implementation
Envisioning Envisioning Activating Activating Supporting Supporting Envisioning Envisioning Activating Activating Supporting Supporting
Installing Installing Controlling Controlling Reconising Reconising
Installing- Detail plan.
Strategy Implementation
Step1 Identify
consequencesofthe
h
Step1 Identify
consequencesofthe
h
Step2 Identifythe
actionsrequiredto
setupthechange,in
Step2 Identifythe
actionsrequiredto
setupthechange,in
Step3 Allocate
responsibilityforthe
ti t b t k
Step3 Allocate
responsibilityforthe
ti t b t k change change
p g ,
detail
p g ,
detail
actionstobetaken actionstobetaken
Step4 Establish
priorities
Step4 Establish
priorities
Step5 Provide
budgets
Step5 Provide
budgets
Step6 Setupteams
andorganisation
structures,allocating
human
resources
Step6 Setupteams
andorganisation
structures,allocating
human
resources
Tasks.
Document the responsibilities of divisions,
departments and individual managers.
Prepare responsibility charts for managers at
Strategy Implementation
DEPARTMENTAL PLANS AND OBJECTIVES
divisional, departmental and subordinate levels.
Prepare activity schedules for managers at divisional,
departmental and subordinate levels.
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Responsibility charts.
The manager's major objective.
The manager's general programme for achieving that
objective.
Strategy Implementation
DEPARTMENTAL PLANS AND OBJECTIVES
Sub-objectives.
Critical assumptions underlying the objectives and the
programme.
Activities schedule
Management by objectives:
MBO is a scheme of planning and control which co-
ordinates short-term plans with longer-term plans and
goals: the plans (and commitment) of junior with senior 1
t d th ff t f diff t d t t
Strategy Implementation
DEPARTMENTAL PLANS AND OBJECTIVES
management and the efforts of different departments.
MBO aims to harmonise individual managers objectives
with those of the organisation, seeking to achieve a
sense of common purpose.
Achieving your objectives:
Direction.
Target.
Performance measurement
Strategy Implementation
DEPARTMENTAL PLANS AND OBJECTIVES
Performance measurement.
Each manager must know what his or her targets of
performance are.
Interlink of functional objectives:
Vertical interlink
Horizontal interlink
Over time: short- term and long-term objectives
Strategy Implementation
DEPARTMENTAL PLANS AND OBJECTIVES
Level#1ofObj. Level#2ofObj. Level#3ofObj. Level#4ofObj.
2016
2017:
bj ti
Marketing dept.objectives
Target1 andtime
Target2andtime
HRMdept.objectives
Target1 andtime
Target2andtime
5year
objective
statement
objectives
ITdept.objectives
Target1 andtime
Target2andtime
2018
2020:
objectives
Marketing dept.objectives
Target1 andtime
Target2andtime
HRM.dept.objectives
Target1 andtime
Target2andtime
IT.dept.objectives
Target1 andtime
Target2andtime
Financedept.objectives
Target1 andtime
Target2andtime
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Strategy Implementation
DEPARTMENTAL PLANS AND OBJECTIVES
Level#3ofObj. Level#4ofObj. Activities/ Tasks
Marketing dept.objectives
Target1 andtime
Target2andtime
HRMdept.objectives
Target1 andtime
Target2andtime
ITdept.objectives
Target1 andtime
Target2andtime
Marketing dept.objectives
Target1 andtime
Target2andtime
HRM.dept.objectives
Target1 andtime
Target2andtime
IT.dept.objectives
Target1 andtime
Target2andtime
Financedept.objectives
Target1 andtime
Target2andtime
How to achieve companys objectives?
Unit/ department objectives
Strategy Implementation
DEPARTMENTAL PLANS AND OBJECTIVES
Primarytargets
Unitimprovementplan
Managersinapositiontoinfluencetheachievement
Secondarytargets(orsubtargets)
How to achieve companys objectives?
Key results for each managers
Strategy Implementation
DEPARTMENTAL PLANS AND OBJECTIVES
Theplan>seriesofkeyresultsandperformance
Asystematicperformancereviewofeachmanager's
results
Apersonaljobimprovementplan
standards
Resource planning at corporate level:
Degree of change. Will the organisation need more or
fewer resources?
Strategy Implementation
ALLOCATING RESOURCES
Extent of central direction:
By the corporate centre.
According to the requests and decisions of the operating units
themselves.
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Four methods for allocating resources:
Strategy Implementation
ALLOCATING RESOURCES
Change
Low High
Central
direction
Low
Bargaining between
departmentsorSBUs
Competition betweenunits
High
Formula (e.g.increaseall
depts.by5%)
Plannersimpose priorities
Resource planning at operational level:
Strategy Implementation
ALLOCATING RESOURCES
Resource
identification
Fitwith
existing
resources
Fitbetween
required
resources
Critical success factors- CSFs:
[?] How can we measure marketing results?
Strategy Implementation
ALLOCATING RESOURCES
Critical success factors- CSFs:
Strategy Implementation
ALLOCATING RESOURCES
Marketing Sales volume
Market share Market share
Gross margins
Production Capacity utilisation
Quality standards
Logistics Capacity utilisation
Level of service
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Critical success factors- CSFs:
Strategy Implementation
ALLOCATING RESOURCES
Activity CSFs
Advertising Awareness levels g
programmes
Pricing programmes
Distribution
programmes
Attribute ratings
Cost levels
Price relative to industry average
Price elasticity of demand
Number of distributors carrying the product
Components of the resource plan
Budgets
Plans for obtaining and using human resources.
Network analysis indicating howresources will
Strategy Implementation
ALLOCATING RESOURCES
Network analysis, indicating how resources will
be deployed in a particular sequence.
Outsourcing:
Sub-contracting work to external suppliers.
Key issues:
Strategy Implementation
ALLOCATING RESOURCES
Resource
usage
Supplier
commitment
Control
Quality
assurance
Compulsion/
pressure
Vulnerability/
weakness
Contract
compliance
Expertise
Budgetary control and strategic management
Strategy Implementation
BUDGETS AND STRATEGIC MANAGEMENT
Strategic
direction
Resource
allocation
Continuous
improvement
Goal
congruence
Add value
Cost reductions
Targets and
Responsibilities
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Typical application of budgets
Strategy Implementation
BUDGETS AND STRATEGIC MANAGEMENT
Capital
b d t
Working
it l budgets capital
Departmental
budgets
Consolidated
budgets
The budget should be properly related to the
strategic plan. The factors which should influence
the budget period are as follows:
Strategic plans have a planning horizon in excess of one
Strategy Implementation
BUDGETS AND STRATEGIC MANAGEMENT
g p p g
year.
Implementation.
Resources.
Error: all budgets involve some element of forecasting
and guesswork, since future events cannot be quantified
with accuracy.
The greater the rate of change that is likely in the
future, the nearer the planning horizon should be.
Problems with budgets:
Recent developments require managers to think in terms
of processes, with the customer at the end of them, not
of a static organisation structure.
Strategy Implementation
BUDGETS AND STRATEGIC MANAGEMENT
Incremental: Departmental budgets are then prepared
based on last year's costs and year- to-date actual.
There is a need for management to satisfy shareholders
that their company is achieving good results, and for this
reason, the arbitrary one-year financial period is usually
selected for budgeting. It is not necessarily relevant to
the business strategy.
Contingencies are uncontrollable events which are
not provided for in the main corporate plan.
Contingency plans should be prepared in advance
to deal with the situation if and when it arises. Such
Strategy Implementation
CONTINGENCY PLANS
to deal with the situation if and when it arises. Such
plans might be prepared in detail, or in outline only,
depending on the likelihood that the contingency
will become a reality.