Unit-4 Strategy Formulation and Implementation

Program Semester

: MBA : IV

Subject Code
Subject Name Unit number Unit Title Lecture number Lecture Title

: MB0052
: Strategic Management and Business Policy :4 : Strategy Formulation and Implementation :4 : Strategy Formulation and Implementation

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Unit-4 Strategy Formulation and Implementation

Strategy Formulation and Implementation

Objectives

The objective of this lecture is to : Define strategy formulation and its processes Explain strategy implementation and its stages Analyse the reasons for strategy failure and the methods to overcome it Describe strategy leadership and its importance in strategic implementation Explain the concept of SBUs

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Unit-4 Strategy Formulation and Implementation

Lecture Outline
Introduction Strategy Formulation Process in Strategy Formulation Strategy Implementation and its Stages Reasons for Strategy Failure and Methods to Overcome Strategy Leadership and Strategy Implementation

Strategic Business Units (SBUs)

Summary Check Your Learning Activity

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Unit-4 Strategy Formulation and Implementation

Introduction

Strategic management is influenced by the global transformation process

Strategic

formulation

and

strategic

implementation

smoothen

the

management process of an organisation Strategic formulation defines the corporate mission and specifies the achievable objectives Strategic implementation is the individual project action plan that helps in strategic evaluation

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Unit-4 Strategy Formulation and Implementation

Strategy Formulation
Strategic formulation, which is a long-term development plan in an organisation involves effective strategic decision making and strategic choice process

Steps of strategic decision making process:

6.Communicate your decision and move to action

1.Creating a constructive environment

2.Generating good alternatives

5.Checking and confirming your decision

3.Exploring the chosen alternatives

4.Choosing the best alternative

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Unit-4 Strategy Formulation and Implementation

Strategy Formulation Contd..

Features of strategic choice are: It focuses on decisions and judgements made in a particular planning situation It creates a framework which balances the present and future decisions It highlights judgements involved in handling uncertainties

It creates a framework for communication and collaboration between

different people with vivid backgrounds and skills

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Unit-4 Strategy Formulation and Implementation

Process in Strategy Formulation

Processes involved in strategy formulation: Stimulation of information identification

Utilisation and transfer of useful information as per the business strategies

Henry Mintzbergs contribution to strategic planning: Henry Mintzberg believes that strategic planning is a formalised procedure to produce a coherent result in the form of an integrated system of decisions. Mintzberg stated following factors as the reason for planning failure: Processes Data Detachment

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Unit-4 Strategy Formulation and Implementation

Strategy Implementation and its Stages

Strategic implementation helps in strategic evaluation A broad action plan drives strategic implementation process which basically drives an individual project action plan Strategic implementation in terms of organisational structure and system: Every levels of organisational structure has its own set of plans that are

executed accordingly for proper strategic implementation

Organisational Structure

Tall structure

Flat structure

Hierarchical structure

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Unit-4 Strategy Formulation and Implementation

Strategy Implementation and its Stages contd..

Strategic implementation in terms of resource procurement: Resource procurement means acquiring resources. The steps involved in

procurement are:
Recognition of the need for goods/services Qualify the specifics of the services Evaluation of potential suppliers

Taking possession of the desired goods or services

Resource procurement processes:

Project detailing

Procedural issues

Resource allocation

Resource procurement

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Strategy Implementation and its Stages contd..

Strategic implementation in terms of functional and operational plans: The functional plan in strategic implementation decides what a functional unit in the organisation like manager, staffs etc has to do

Operational planning decides the way of performing the function by

functional units

Building core competencies: Designs competitive positions and strategies Decides where to allocate resources

Critical Success Factor (CSF): CSF is the critical factor which ensures proper success in a business.

Develops mission statement and high level goals

List the requirements, problems and assumptions Obtain results of the analysis
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Unit-4 Strategy Formulation and Implementation

Reasons for Strategic Failure and Methods to Overcome

Reasons of strategic failure: Improper communication Lack of effective leadership and planning Passive management Lack of motivation and personal ownership

Methods to overcome strategic failure are:

Defining the system value

Defining the mission and vision Live from choice Developing change management and strategic planning Managing employees and workers effectively Replacement of the committee with a mastermind group

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Unit-4 Strategy Formulation and Implementation

Strategic Leadership and Strategic Implementation

Strategic leadership refers to the potential to express a strategic vision and to motivate others to acquire that vision. It is the ability to influence

organisational members and to execute organisational change.

Types of leadership:
Leadership

Direct

Organisational

Strategic

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Unit-4 Strategy Formulation and Implementation

Strategic Leadership and Strategic Implementation cont..

Features of strategic leader:

Loyalty and compassion

Judicious use of power Wider perspective Motivation and reliability Skillful communication Quality of understanding the moods and emotions

Importance of strategic leadership in strategic implementation:

Leadership is essential to implement decisions successfully

Competent leadership is the trait of successful strategy implementation Leaders influence behaviour, change the course of events and overcome resistance

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Unit-4 Strategy Formulation and Implementation

Strategic Business Units

SBU is the autonomous division in an organisation which deals with specific
business concerns. The SBU adds value through parenting advantages by defining its roles and strategic priorities.

The features of SBU:

Encourages new ways of thinking and act as an autonomous unit Has managerial and capital resource allocation for serving the overall interest of the organisation Segments the activities of the company in a strategic manner and allocates resources competitively Reduces the affect of bureaucracy in the organisation

Follows the corporate strategic plan but differs in significant aspects

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Unit-4 Strategy Formulation and Implementation

Summary
Strategic formulation process defines the corporate mission, developing strategies and setting companys policy guidelines

Strategic decision making enhances managers abilities to obtain insight

of strategic problems. Strategic choice creates a framework which explicitly balances present and future decisions.

Henry Mintzberg, who concluded that planning is a formalised procedure to produce a coherent result, also stated certain factors as the reason for planning failure like processes, data and detachment.

Strategy implementation is vital in organisational structure, resource procurement, functional and operational plans of the organisation

Critical success factors are required to ensure success in a business by developing analysis matrices and reviewing the results

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Unit-4 Strategy Formulation and Implementation

Summary contd..

The reasons for strategic failure are lack of motivation, lack of effective leadership etc. The methods to overcome strategic failures are creating a proper plan, taking necessary actions and so on.

Strategic leadership is the potential to express a strategic vision for the organisation and to motivate others. Few features are loyalty, judicious use of power, reliability etc.

SBUs are the autonomous units which serve a clear market segment with a defined strategy. It controls the strategic factors of the parent company.

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Unit-4 Strategy Formulation and Implementation

Check Your Learning

1. Define strategy formulation. ANS: Strategy formulation is a long-term plan which defines the corporate mission and goals, specifies achievable objectives, develops strategies and

sets company policy guidelines.

2. What is core competency? ANS: Core competency is a management tool that enables an organisation to deliver a unique value to its customer. 3. Explain Critical Success Factor (CSF). ANS: CSF is the critical factor required to ensure proper success in a business.
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Unit-4 Strategy Formulation and Implementation

Activity

Assume that you are the project manager of a software company. Your
company has to launch a new product in the global market. How will you handle the situation with proper strategic planning?

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