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Chapter 10 Consolidate, Prioritize and Implement the Strategies

Chapter 10 Consolidate, Prioritize and Implement the Strategies. LEARNING OBJECTIVES. After reading this chapter, you should be able to: Gather the strategies generated from the various models Consolidate them by rational means

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Chapter 10 Consolidate, Prioritize and Implement the Strategies

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  1. Chapter 10Consolidate, Prioritize and Implement the Strategies

  2. LEARNING OBJECTIVES After reading this chapter, you should be able to: Gather the strategies generated from the various models Consolidate them by rational means Select suitable criteria to be used for prioritizing the strategies Come up with an applicable action plan Plan an implementation plan

  3. GATHERING THE STRATEGIES GENERATED • There are many strategies generated from the various models • The various models would have used different approaches • The results could be quite diverse; portfolio or overall • Listing them out in a common table can be done easily • But all the strategies are still for the same company/ organization

  4. CONSOLIDATING THE GENERATED STRATEGIES • The strategies can be grouped by some criteria • Either according to the functional activities • Or duplicate, being synergistic, complement, similar, supportive etc. • For example, the following strategies seemed complementary to each other: • – To increase market share in the new market • – Increase budget for product promotion • – Find ways to increase the number of distributors • – Find new market in the eastern region • – Recruit more sales personnel

  5. CONSOLIDATING THE GENERATED STRATEGIES (cont.) • The five strategies could be condensed into one • All could be classified as marketing effort and will result in an increase in sales or market share • Thus, condensing them into “new efforts to increase market share” and sales would make sense • Ensure that all the condensed strategies are in the same direction

  6. CONDENSING THE GENERATED STRATEGIES • illustration A • To illustrate let us look at the following number of strategies: • Increase sales through increasing control of downstream activities • Grow by diversification concentrically • Growth by controlling resources • Look for a partner to diversify within the same sector • The four strategies listed above seemed compatible as all are geared towards growth

  7. CONDENSING THE GENERATED STRATEGIES (cont.) • illustration B: continued from previous slide • Strategies (b) and (d) considered as a concentric diversification • Strategies (a) and (c) as contributing towards growth • Thus all four could be grouped under growth strategy • On further scrutiny strategies (a) and (c) are not that compatible • Forward and backward integration are without doubt integration strategies but if they are grouped together then implementing it later will be a nightmare • Their directions are quite opposite and, therefore incompatible. • It would be wiser to treat them as two separate strategies

  8. LISTING THE GENERATED STRATEGIES

  9. GROUPING THE STRATEGIES GENERATED

  10. LISTING THE 11 CONDENSED STRATEGIES AND PRIORITIZING THEM All the 34 strategies are now condensed to 11 strategies

  11. LISTING THE 11 CONDENSED STRATEGIES AND PRIORITIZING THEM • Table 10.3 proposes a methodology • List a few criteria relevant to the issue (5–10 criteria) • Give a range of scores for each criteria (1–?) • The maximum score of 10 denotes higher weights for that criterion • Ensure that the higher the score the better it is for the organization • Example: The lower the costs, the higher the score; the lower the risk, the higher the score

  12. LISTING THE 11 CONDENSED STRATEGIES AND PRIORITIZING THEM Based on the final scores (right most column) then the top four prioritized strategies are: 1. Outsourcing of production 2. Increase market share through promotion and finding new market 3. Backward integration by controlling the raw material 4. Incentives to ensure enough sales personnel

  13. IMPLEMENTING THE CHOSEN STRATEGY • Before implementing the strategy (say when the new year begins): • There is a need to plan what are the things that need to be done • This is called the Action plan • Action plan is a 3–5 year planning horizon which assists the organization in ensuring that the strategy can be implemented successfully

  14. STRATEGIC ACTION PLANWHY 80% OF STRATEGIC PLAN FAILS? • Management staff not clear of the role • Absence of clear, understandable and acceptable vision and mission (first element of strategic planning) • Unstated and unclarified values of top management (second element) • Unsure of the process that had to be followed • Choosing the appropriate strategic planning model • Not able to forecast the future • 50% of why plans failed is because of the absence of an effective action plan

  15. STRATEGIC ACTION PLANNON EFFECTIVE ACTION PLAN? • Do not know what to do • Do not know when to do • Not enough resources • Who is to do what? • How do you monitor? • Unforeseen changes

  16. STRATEGIC ACTION PLAN • Some clear actions to do: • If it is not measurable, it is not implementable • Convert the strategy to strategic objective, i.e. reword the strategic decision to something that is specific, measurable, achievable, realistic and targeted within a 3 or 5 years time (SMART) • Determine what the 1 year tactical objective will be • Build the strategic annual action plan (SAAP)

  17. STRATEGIC ANNUAL ACTION PLANA PROPOSED FORMAT For the first year (The above format attempts to remove the problems identified in slide 16)

  18. STRATEGIC ACTION PLAN • The Content • Made up of the details of SAAP • The yearly objective for the 2nd and 3rd year (if it is a 3-year SAAP) • 2nd and 3rd year details as in 1st year SAAP has been found to be unnecessary [as the rate of change today is so dynamic that a second year details are usually not relevant any more if forecasted a year ago!] • Thus just the yearly target is suffice for the 2nd and 3rd year

  19. STRATEGIC ACTION PLAN (cont.) Other Reasons for Failure: 1. Miscommunication 2. Lack of commitment 3. Does not know whose responsibility 4. Change in management personnel handling the plan 5. Unexpected change in the environment which was not predictable The SAAP is used as a monitoring device as well, and rewards and promotion are closely tied to the SAAP. This will remove problem 1 and 2 as the person responsible will be informed and aware

  20. STRATEGIC ACTION PLAN (cont.) Example For Project Manager: Check with the author same table is also going on Slide 17?

  21. IMPLEMENTING THE ACTION PLAN • Some considerations • A good SAAP is just a tool/document that needs to be implemented • Implementing it well is what everyone hopes for • But remember, we can afford only about 20 –30% of our time available to focus on strategic issues including implementing a strategy • 70 – 80% or our time are bogged down with our daily chores and operations

  22. IMPLEMENTING THE ACTION PLAN (cont.) • Other influential factors: • A sound SAAP will ensure the start of the implementation phase on a firm footing. But the real challenge is that there are other factors that have been found to play a significant role in influencing the success of the implementation process and these are: • Organization structure • The leadership role • The reward system • Allocation of resources • Managing change • Culture • Having a sound strategic planning system

  23. IMPLEMENTING THE ACTION PLAN (cont.) • A. The Organization structure • Organization structure compatible with the strategy • analyse the compatibility of the structure and the new strategy • A simple example: • Wanting to be recognized as a front runner in the product innovation of the business • Structure need to have not only a dominant R&D department but also the existence of a product development unit • Another illustration: • A tall bureaucratic structure would not fit “wanting to be a creative and dynamic” strategy • Thus structure must fit the strategy

  24. IMPLEMENTING THE ACTION PLAN (cont.) • B. The Leadership Factor • Time spent is relatively higher than other managers • Need to empowerment where necessary • Need to impart his values as captain of the ship, guiding, encouraging, showing support, be available when needed, and always seen supporting the strategy • His behaviour, words, command and lifestyle have to be in line with the strategy • Leadership in a company that pursues cost-cutting strategy will be different from one that pursues an increase in market share strategy • Normal leadership role of caring, concern, considerate might not be suitable for an organization that is in a critical survival phase and wanting to turnaround • THUS Leadership role and style too needs to fit with the strategy

  25. IMPLEMENTING THE ACTION PLAN (cont.) • C. The Reward System • The reward system must also be closely linked with the objectives of the strategic plan • In the SAAP, link award to the personnel and his team identified • Message is clear that implementation is being monitored and rewarded • Future actions will then get special attention • Reward is clear and worth the effort

  26. IMPLEMENTING THE ACTION PLAN (cont.) • D. The Allocation of Resources • Two columns specially labelled, the financial and non-financial resources needed • If this has been approved, it means that the cost estimation has been agreed upon or adjusted and financial allocation made for the job to be done • The implementation process will be smooth as all resource requirements have been made available • Ad hoc requests should not be encouraged, and given lesser priority • Resources should be focused on the approved SAAP activities

  27. IMPLEMENTING THE ACTION PLAN (cont.) • E. Managing Change • “Change” and managing it successfully is what needs to be done • Several new things need to be installed, need for new technology and new methods • The employees (being human) resist drastic changes • Training • Physically, mentally and psychologically • Working in a group for the first time, new methods of delivering • The promises to customers and many want it to be efficient and fast • The reasons for resisting drastic changes have been established

  28. IMPLEMENTING THE ACTION PLAN (cont.) • E. Managing Change (continued) • Humans do not like to move out of the comfort zone, they see changes as • Disruptive • Unsettling • Require new skills • Need to learn a new system, new methods • Even get to work with a different set of employees • Going out of this comfort zone will create • Stress • Uncertainty and

  29. IMPLEMENTING THE ACTION PLAN (cont.) • E. Managing Change (continued) • Humans will find ways and means to oppose the change • Change can create havoc and even crisis • Potential crisis needs to be managed effectively. Four different areas that need to be focussed [‘STIRS’] • Structure • Technology • Individual roles • System and strategy (Figure 10.1). • These four segments need to be addressed so that change can be administered effectively

  30. IMPLEMENTING THE ACTION PLAN (cont.) E. Managing Change (continued)

  31. IMPLEMENTING THE ACTION PLAN (cont.) • E. Managing Change (continued) • Four Segments to Handle in Managing Crisis: • 1. Structure: structure need to be compatible with the strategy • To achieve the flat structure as opposed to the tall and bureaucratic • Are also efforts towards creating a structure that is lean and effective • 2. Technology • Constant change in technology • The need to upgrade it is a constant issue • Have the latest technology • Making the needed changes fast

  32. IMPLEMENTING THE ACTION PLAN (cont.) 3. Individual roles • Humans participate in all the activities either directly or otherwise • Related closely to this will be the reward system 4. System and strategy • Need to have a sound workable system that can perform the needed coordination activities • Strategy is also considered as the fourth component because of its role in guiding the organization and showing the direction that it needs to follow

  33. IMPLEMENTING THE ACTION PLAN (cont.) • F. The Corporate Culture • Culture is a way of life in the organization • Can be embedded strongly • If the culture is not compatible then they need to be appropriately adjusted and changed • Thus, implement a strategy that fits the corporate culture

  34. IMPLEMENTING THE ACTION PLAN (cont.) • G. Having a sound Strategic Planning System • This is a significant component in determining the success of the implementation of a strategy • This is discussed at length in Chapter 11 • A sound strategic planning system would ensure that the strategic process can be carried out efficiently and effectively

  35. MONITORING AND RE-EVALUATING THE STRATEGIES • It is the last phase of the strategic planning process • SAAP document is a very useful tool for monitoring • Monitor the quarterly targets • It also specifies the date, the resources needed and the personnel responsible and accountable • Top management will be able to know the deviation when monitoring the quarterly objectives • If the factor that causes the deviation requires more than remedial actions then decision has to be made fast

  36. THE STRATEGIC MANAGEMENT PROCESS FLOW

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