Strategic implementation (09)

Question 1

What is Strategic Implementation?

Answer 1

Strategic implementation is the process of planning, allocating and controlling resources to support the chosen strategy.

Question 2

What is Organisational Design?

Answer 2

Organisational design is the process of creating, implementing, monitoring, and modifying the structure, processes and procedures of an organisation.

Question 3

What are the key components of Organisational design?

Answer 3

The key components of organisational design are organisational structure and organisational culture.

The goal is to design an organisation that allows managers to effectively translate their chosen strategy into a realised one.

Question 4

What is Organisational Structure?

Answer 4

An organisational structure is the internal, formal framework of a business that shows the way in which management is linked together and how authority is transmitted.

Question 5

What are the elements of an Organisational structure?

Answer 5

The elements of organisational structure include hierarchy of authority; span of control; authority, responsibility and delegation; and degree of centralisation.

Question 6

What are the approaches to organisational structure?

Answer 6

1) Mechanistic approach
2) Organic approach

Question 7

How can the Organisational structure be designed?

Answer 7

The organisational structure can
be designed into simple, functional, divisional and matrix.

Question 8

What are Organisational structures with a Mechanistic approach?

Answer 8

Organisational structures with a mechanistic approach are highly formalised; many rules and regulations are in place to govern employee behaviour and work.

Question 9

When is the Mechanistic approach typically used?

Answer 9

The mechanistic approach allow for standardisation and economies of scale, and are often used when a business pursues cost leadership strategy at strategic level.

Question 10

What are Organisational structures with an organic approach?

Answer 10

Organisational structures with an organic approach are flexible and authority is decentralised and there are fewer rules and procedures.

Question 11

Why would an Organisational structure with an organic approach be used?

Answer 11

The organic approach
tends to result in fluid and flexible information flow among employees, faster decision-making, higher employee motivation, and creativity.

The organic approach typically exhibits a higher rate of entrepreneurial behaviours and innovation, and allows businesses to foster Research and Development, as well as marketing as a core competency.

Businesses that pursue a differentiation strategy at business-level frequently uses an organic approach.

Question 12

What is a Functional Structure?

Answer 12

A functional structure is recommended when a business has a
fairly narrow focus in terms of product offerings combined with a small geographical reach.

It matches well with business-level strategies such as cost leadership and differentiation.

In a cost leadership strategy, the business sells a standardised
product to a mainstream customer.

Thus, the management must create a functional structure with a mechanistic approach, one that is centralised, with well-defined lines of authority along the hierarchy.

This allows the cost leader to nurture and upgrade the necessary core competencies in manufacturing and logistics, and also to foster improvements in processes to drive down costs.

In a differentiation strategy, businesses sell non-standardised products in which customers are willing to pay a higher price.

Thus, management should use a functional structure with an organic approach, one where decision-making is decentralised to foster and
incentivise innovation and creativity.

This allows the differentiator to nurture and upgrade core competencies in Research and Development, innovation and marketing.

Question 13

What is a Divisional Structure?

Answer 13

When a business diversifies into different product lines, geographies or industries, it could adopt the divisional structure, whereby each product line, geographic location or industry is a division on its own, led by a CEO
(or equivalent General Manager) who is responsible for the division’s business strategy and its day-to-day operations.

Each division’s CEO then reports to the headquarters, which is led by the highest-ranking executives that include the president or CEO for the entire business.

Businesses using the divisional structure in a product or geographic diversification strategy tend to concentrate decision-making at the top.

Doing so allows better synergy and helps the corporate headquarters to leverage and transfer core competencies across the different divisions.

A business that uses the divisional structure in industrial diversification is likely to decentralise decision-making so that divisional heads could respond to circumstances that are specific to the industry.

A business that integrates vertically with its customers or suppliers is also likely to adopt a divisional structure where the supplier or customer forms a separate division.

Question 14

What is a Matrix Structure?

Answer 14

A conglomerate that deals in multiple industries in more than one country is likely to adopt the matrix structure. In this structure, the business could be organised into the various industries along the horizontal axis, with a second dimension of organisational structure in terms of countries or regions along the
vertical axis, each of which would house a full set of functional activities.

Hence, each employee would report to the head of the industry as well as the head of the
region.

Both heads would report to the corporate headquarters led by the CEO.

Adopting such a structure would allow the conglomerate to respond quickly to the
different needs of the regions or countries across the industries, and at the same
time drive down costs through economies of scale as well as other efficiencies.

This structure also promotes knowledge sharing as it allows separate areas of knowledge
to be integrated across industrial boundaries.

This matrix structure is more advanced as compared to the conventional matrix structure where cross-functional
teams work on different projects.

Question 16

What is Matrix Structure?

Answer 16

A conglomerate that deals in multiple industries in more than one country is likely to adopt the matrix structure.

In this structure, the business could be organised into the various industries along the horizontal axis, with a second dimension of organisational structure in terms of countries or regions along the vertical axis, each of which would house a full set of functional activities.

Hence, each employee would report to the head of the industry as well as the head of the
region.

Both heads would report to the corporate headquarters led by the CEO.

Adopting such a structure would allow the conglomerate to respond quickly to the different needs of the regions or countries across the industries, and at the same time drive down costs through economies of scale as well as other efficiencies.

This structure also promotes knowledge sharing as it allows separate areas of knowledge to be integrated across industrial boundaries.

This matrix structure is more advanced as compared to the conventional matrix structure where cross-functional
teams work on different projects.

Question 17

What is Organisational Culture (Corporate Culture)?

Answer 17

Organisational culture, also known as corporate culture, describes the collectively shared values and norms of the organisation’s members.

Values define what is considered important; and

Norms define appropriate employee attitudes and behaviours.

Question 18

Note:

Businesses with different cultures would implement strategies and important changes differently.

For example, a business culture where power is concentrated among a few people will not consult or communicate with employees affected by major strategic changes, and instead be imposed on them.

This approach may stir up resentment and resistance to change, and the cooperation of employees is most
unlikely to be obtained in future.

In contrast, businesses with people-oriented cultures are more likely to encourage active participation in implementing major strategic change.

Consultation and participation through two-way communication could lead to employees willingly accepting change and contributing to a successful change process.

Question 19

Why is the strength of the culture an important factor in strategic implementation?

Answer 19

The strength of the culture is another important factor in strategic implementation.

Strong culture promotes and facilitates successful strategy implementation while
weak culture does not.

In businesses with a strong culture, there is very widespread sharing of common beliefs, practices and norms within the business.

Nearly all employees would have accepted what the business stands for and the way things are done.

This energises employees to promote successful strategy implementation, where they want the new strategy to be successful.

For example, if the culture of a business is built around people, such as listening to customers and empowering staff, then this promotes the implementation of a strategy that leads to an improvement in customer service.

In businesses with weak cultures, employees may have no agreed set of beliefs and there is no pride in ownership of work.

They may form their own groups within the business that are based around cultures that conflict with the weakly expressed business culture.

Such situations provide little or no assistance to strategic implementation.

Question 20

Why is a positive culture important for businesses?

Answer 20

It is important for businesses to have a positive culture as it motivates and energises `employees by appealing to their higher ideals.

By internalising the values and norms of the business, employees will feel they are part of a larger, meaningful community attempting to accomplish important things.

When employees are intrinsically motivated this way, the business can rely on fewer levels of hierarchy, and hence close monitoring and supervision is not needed as much.

Motivating through inspiring values allows businesses to tap on employees’ emotions so they use both
their heads and hearts when making business decisions.

Strong organisational cultures that are strategically relevant, therefore align employees’ behaviours more
fully with strategic objectives.

They also strengthen employee commitment, engagement and effort.

Effective alignment in turn allows the business to develop and refine its core competencies, which can form the basis for competitive advantage.

Question 21

What is Strategic Leadership?

Answer 21

Strategic leadership pertains to
executives’ use of power and influence to direct the activities of others when pursuing business objectives.

Question 22

What are the three key roles significant for top management in leading strategic change?

Answer 22

1) Envisioning future strategy
2) Aligning the business to deliver strategy
3) Embodying change

Question 23

What is Envisioning future strategy?

Answer 23

Effective strategic leaders at the top of a business need to ensure there exists a clear and compelling vision of the future and communicate clearly a strategy to achieve it both internally and to external stakeholders.

If they are unable to do so, those
who attempt to lead change, such as middle managers, are likely to construct such a vision themselves.

This could lead to confusion.

Question 24

What is Aligning the business to deliver strategy?

Answer 24

This involves ensuring that employees are committed to the strategy, motivated to make the changes required and empowered to deliver these changes.

In doing so, there is a need for leaders to build and foster relationships of trust and respect
across the business.

It can however, be necessary to change the management of the
business to ensure such commitment, which is a reason why the top management team often changes as a precursor to strategic change.

Question 25

What is Embodying change?

Answer 25

A strategic leader will be seen by others, not just those within the business but also external stakeholders and observers, as closely associated with a future strategy and strategic change. A strategic leader is thus, symbolically highly significant in the change process and needs to be a role model for future strategy.

Question 26

What is Leadership style?

Answer 26

Leadership style refers to the way in which leaders make decisions and communicate with employees. A leader may adopt either: 1) Autocratic; 2) Democratic; 3) Paternalistic; 4) Laissez-faire; or 5) Situational leadership style.

Question 27

What is Direction by autocratic leaders?

Answer 27

Autocratic leaders would adopt direction in strategic implementation. This involves the use of authority to establish clarity on both future strategy and how change will occur. It is a top-down management of strategic change where the strategy and how to implement it are directed at those tasked with implementing them. This approach provides a clear direction and focus, but the danger is that it can result in explicit resistance to change, hence less support and commitment from employees.

Question 28

What is Persuasion by Democratic leaders?

Answer 28

Democratic leaders would adopt persuasion in strategic implementation. This involves gaining support for change by generating understanding and commitment through small group briefings or delegation of responsibility for change. However, such an approach may not fully convince employees of the need for strategic change, and can take a long time and be costly in terms of training and management time.

Question 29

What is Participation by paternalistic leaders?

Answer 29

Paternalistic leaders tend to adopt participation in strategic implementation. The leaders would retain overall coordination and authority over processes of change, but delegate elements of the strategic change process to employees. This allows employees to be in partial implementation of strategy, helping to build commitment to the change. This essentially spreads ownership and support of change, but within a controlled environment, making it easier to shape decisions. However, employees may see this approach as manipulation, and consequently become disenchanted and demotivated.

Question 30

What is Collaboration by laissez-faire leaders?

Answer 30

Laissez-faire leaders would adopt collaboration, where employees affected by strategic change are involved in setting the change agenda. This includes making decisions about what and how to change. Such involvement can foster a more positive attitude to change, and increase the commitment and ownership of employees to the decision or change process. However, the strategic leader has little control over decisions made and employees may come up with change solutions that are not aligned with the strategic objectives, or not meet the expectations of top management.

Question 31

Situational Leaders

Answer 31

A popular view is that successful strategic leaders should be able to adjust their leadership styles to the context they face. They would review the different styles of leadership, and consider how these may need to differ by the context or situations they face.

Question 32

In communicating a strategy to employees, what should be considered?

Answer 32

In communicating a strategy to employees, the following should be considered: 1) Focus. Communications should focus on the key issues that the strategy addresses and its key components. If top management cannot show they are clear on this, it cannot be expected that employees would be. It is also helpful to avoid unnecessary detail or complex language. 2) Medium. It is important to choose an appropriate medium to convey the new strategy. Medium such as emails, newsletters and the intranet can ensure all employees receive the same message promptly, helping to avoid damaging uncertainty and rumour-mongering. However, face-to-face communications are important to demonstrate the personal touch of managers in interacting with concerned employees. 3) Employee engagement. Multiple levels of management needs to be involved to achieve two-way communication. It is helpful to engage employees more widely in the communication strategy, so that they can see what it means for them personally, and how their role will change. 4) Impact. Communications should be impactful, with powerful and memorable words and visuals. A strong ‘storyline’ can help by encapsulating the journey ahead and new futures imagined for the business and its customers.

Question 33

What is Change Management?

Answer 33

Change management refers to the planning, implementing, controlling and reviewing the movement of a business from its current state to a new one. As economic or technological disruptions require a business response, it is common for business to necessitate change.

Question 34

What are the reasons for change?

Answer 34

1) Technological advancements 2) Macroeconomic changes 3) Legal changes 4) Actions of competitors

Question 35

What are some reasons why managers and employees may resent and resist strategic change?

Answer 35

1) Fear of the unknown. Change means uncertainty and this is uncomfortable for some employees. Not knowing what may happen to one’s job or the future of the business leads to increased anxiety. This results in resistance to change. 2) Fear of failure. The changes may require new skills and abilities that, despite training, may be beyond the capabilities of employees. They are well aware of current processes and operations of the business, but could be concerned with the new processes and operations. 3) Losing something of value. Employees could lose status or job security as a result of change, and they are unsure how the change would affect them exactly. 4) False beliefs about the need for change. To put themselves at ease and to avoid the risks of change, some employees force themselves into believing that the existing system is good enough and will work out in the future without the need for any radical change. 5) Lack of trust. Perhaps due to past experiences, there may be a lack of trust between workers and the managers who are introducing the change. The workers may not believe the reasons given to them for change or the reassurances from managers about the impact of it. 6) Inertia. Many employees suffer from inertia or reluctance to change and try to maintain the status quo. Change often requires considerable effort, so the fear of having to work harder to introduce it may cause resistance.

Question 36

What are some methods management could use to manage and overcome employee's resistance to change?

Answer 36

1) Education and communication The management must provide adequate information and ensure that the change is communicated to all employees involved. Employees should be educated about the reasons for the change, the methods to be used, the timeline to implement the change, the desired results and the expected benefits. All employees should be made aware of the options available and steps taken to mitigate any negative impact as a result of the change. 2) Participation and involvement The management could reduce resistance by allowing employees who are affected by the change to participate in the planning and implementing of the change. This increases the understanding of the change and its necessity, and allows employees to offer their own ideas in making it successful. As the employees are involved in the development of the solution from an early stage, it develops commitment to the decision made as they have a personal stake in its success. 3) Facilitation and support Encouragement and help from the manager and co-workers often reduces the fear and anxiety experienced by employees affected by the change. The management should also provide training and development in the new skills and procedures required due to the change, and provide sufficient time for employees to adjust to the new processes. Managers can also lead by example and demonstrate the importance of the change by displaying their commitment to the change. They can also provide moral support to ease anxiety especially if employees lack confidence in their ability to perform effectively under the new conditions. 4) Negotiation The management could negotiate with employees who resist the change and come to an agreement. This is useful in overcoming resistance from a group of employees who perceive they would lose significantly as a result of the change, but are sufficiently powerful as a group to resist and influence other employees.

Question 37

What are some ways to measure the success of the strategy?

Answer 37

1) Employee motivation and engagement The following are some indicators of an increase in employee motivation and engagement:  Employee turnover and absenteeism rates have reduced or remained the same  Scores in employee engagement surveys have improved  There is no new breach of tripartite guidelines  Complaints to the trade union have reduced or remained the same 2) Market share and growth The following are some indicators of an increase in market share and growth:  Sales revenue or volume has increased  Market share has increased  A newly launched product received favourable reviews from consumer reports and blogs  An existing product is well-received when launched in a new country or region 3) Productivity and efficiency The following are some indicators of an improvement in productivity and efficiency:  Increased in volume of output  Reduction in waste produced  Production at full or near-maximum capacity  Product recall or customer complaints due to poor quality is reduced  Inventory storage costs are reduced and/or no out-of-stock situations 4) Return on investment The following are some indicators of a higher returns in investments to shareholders:  Absolute profits have increased significantly  Financial ratios have improved  Financing costs have reduced  There is no liquidity or cash flow problems

Question 38

SUMMARY

Answer 38

In summary, the following are covered in this topic: 1. Strategic implementation is the process of planning, allocating and controlling resources to support the chosen strategy. 2. Organisational design is the process of creating, implementing, monitoring, and modifying the structure, processes and procedures of an organisation. 3. The management will need to consider and assess the appropriateness of the existing organisational structure in supporting strategic implementation, and propose a new one, if necessary. 4. Organisational culture, also known as corporate culture, describes the collectively shared values and norms of the organisation’s members. 5. A positive organisational culture influences employee behaviour and can develop into a source of competitive advantage. 6. Strategic leadership pertains to executives’ use of power and influence to direct the activities of others when pursuing business objectives. 7. The leadership style adopted by the strategic leader will influence employees’ acceptance of the strategic direction of the business. 8. The way the strategic leader communicates any change in strategy will determine how well employees accept and support the change. 9. Change management refers to the planning, implementing, controlling and reviewing the movement of a business from its current state to a new one. 10. The management will need to understand why employees resist change and manage this resistance accordingly. 11. The effectiveness and success of a strategy can be measured by increased employee motivation and engagement, an increase in market share and growth, an improvement in productivity and efficiency, and a higher return on investment.