This chapter discusses strategy implementation and evaluation. It explains that implementing a strategy effectively is crucial and requires understanding, commitment, and coordination across all business functions. Key activities of implementation include setting annual objectives, devising policies, and allocating resources. Regular evaluation ensures the strategy remains aligned with the internal and external environment. Evaluation involves reviewing strategic assumptions, measuring performance against objectives, and taking corrective action when needed to ensure ongoing progress toward goals.
This chapter discusses strategy implementation and evaluation. It explains that implementing a strategy effectively is crucial and requires understanding, commitment, and coordination across all business functions. Key activities of implementation include setting annual objectives, devising policies, and allocating resources. Regular evaluation ensures the strategy remains aligned with the internal and external environment. Evaluation involves reviewing strategic assumptions, measuring performance against objectives, and taking corrective action when needed to ensure ongoing progress toward goals.
This chapter discusses strategy implementation and evaluation. It explains that implementing a strategy effectively is crucial and requires understanding, commitment, and coordination across all business functions. Key activities of implementation include setting annual objectives, devising policies, and allocating resources. Regular evaluation ensures the strategy remains aligned with the internal and external environment. Evaluation involves reviewing strategic assumptions, measuring performance against objectives, and taking corrective action when needed to ensure ongoing progress toward goals.
This chapter discusses strategy implementation and evaluation. It explains that implementing a strategy effectively is crucial and requires understanding, commitment, and coordination across all business functions. Key activities of implementation include setting annual objectives, devising policies, and allocating resources. Regular evaluation ensures the strategy remains aligned with the internal and external environment. Evaluation involves reviewing strategic assumptions, measuring performance against objectives, and taking corrective action when needed to ensure ongoing progress toward goals.
Intended Learning Outcomes: At the end of this chapter, the students are expected to:
1. Discuss the main activities related to strategy.
This chapter would tackle formulating a strategy, implementing a strategy, and
evaluating a strategy. Strategy Implementation • The strategic-management process does not end when the firm decides what strategy or strategies to produce. • There must be a translation of strategic thought into strategic action. This is much easier if everyone in the organization: – Understand their organization – Feel part of it – And through involvement in the strategy formulation activities, have become committed to helping the organization succeed. • Without understanding and commitment, strategy-implementation efforts face major problems. • Implementing strategy affects the organization from top to bottom. It affects all the functional areas in the business. Ex: when USM applied for ISO accreditation
Perfect plan? Or perfectly-implemented plan?
• Even the most technically perfect strategic plan will serve little purpose if it is not implemented. • Change comes through implementation and evaluation, not through the plan. • “A technically imperfect plan that is implemented well will achieve more than the perfect plan that never gets off the paper on which it is typed.” Nature of Strategy Implementation • Successful strategy formulation does not guarantee successful strategy implementation. It is always more difficult to do something (strategy implementation) than to say you are going to do it (strategy formulation)! • Though the two are linked, they are different from each other.
Comparative Economic Planning
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USMKCC-COL-F-050 Difference between strategy formulation and strategy implementation
Strategy Formulation Strategy Implementation
• The positioning forces before the • The managing forces during the action action. • Focuses on efficiency. • Focuses on effectiveness • Primarily an operational process. • Primarily an intellectual process. • Required special motivation and • Requires good intuitive and analytical leadership skills skills • Requires coordination among many • Requires coordination among a few individuals individuals
Strategy Implementation • Strategy implementation means “change” • It is widely agreed that “the real work begins after strategies are formulated.” • Successful strategy implementation requires the support of, as well as discipline and hard wok from, motivated managers and employees. Strategy Implementation Activities • These activities are common to all organizations. 1. Annual objectives • PURPOSE OF ANNUAL OBJECTIVES: – Annual objectives serve as guidelines for action, directing and channeling efforts and activities of organization members. – They serve as standards of performance. – Serve as important source of employee motivation and identification. • ARE ESSENTIAL FOR STRATEGY IMPLEMENTATION BECAUSE: – Represent the basis for allocating resources – Primary mechanism for evaluating managers – Major instrument or monitoring progress toward achieving long- term objectives – Establish organizational, divisional, and departmental priorities. 2. Devising policies • On day-to-day basis, policies are needed to make a strategy work. • Policy – refers to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals.
Comparative Economic Planning
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USMKCC-COL-F-050 • Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior. They clarify what can and cannot be done in pursuit of an organization’s objectives.
3. Allocating resources • Central management activity that allows for strategy execution. Strategic management enables resources to be allocated according to priorities established by annual objectives. • Four types of resources: ✓ Financial ✓ Physical ✓ Human
✓ Technological Strategy Evaluation • The best formulated and best implemented strategies become obsolete as a firm’s external and internal environments change. • Therefore, it is essential that strategists systematically review, evaluate, and control the execution of strategies. • Erroneous strategic decisions can inflict severe penalties and can be exceedingly difficult, if not impossible, to reverse. • Thus, strategy evaluation is important to an organization’s well-being. - Timely evaluations can alert management to problems or potential problems before a situation becomes critical. Prerequisites of Strategy Evaluation • Adequate and timely feedback is the cornerstone of effective strategy evaluation. Strategy evaluation can be no better than the information on which it is based. • Strategy evaluation is essential to ensure that stated objectives are being achieved. For many organizations, strategy evaluation is simply an appraisal of how well an organization has performed. Importance of Strategy Evaluation • Strategy evaluation is impossible to demonstrate conclusively that a particular strategy is optimal or even to guarantee that it will work. Strategy must be evaluated for critical flaws.
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USMKCC-COL-F-050 • It is important because organizations face dynamic environments in which key external and internal factors often change quickly and dramatically. Success today is no guarantee of success tomorrow!
When to conduct strategy evaluation?
• Strategy evaluation should be performed on a continuing basis, rather than at the end of specified periods of time or just after problems occur. • This allows benchmarks of progress to be established and more effectively monitored. Successful strategies combine patience with a willingness to promptly take corrective actions when necessary. • As critical factors change, organizational members should be involved in determining appropriate corrective actions. • In strategy evaluation, like strategy formulation and strategy implementation, people make the difference. • Through involvement in the process of evaluating strategies, managers and employees become committed to keeping the firm moving steadily toward achieving objectives.
3 Basic Activities in Strategy Evaluation
1. Review the underlying bases of strategy - Compared revised to existing IFE/EFE Matrix ➢ This can be done by developing a revised EFE Matrix and IFE Matrix. 1. A revised IFE Matrix should focus on changes in the organization’s management, marketing, finance/accounting, production/operations, R&D, and management information systems strengths and weaknesses. 2. A revised EFE Matrix should indicate how effective a firm’s strategies have been in response to key opportunities and threats. ➢ Key questions to address in evaluating strategies: 1. Are our internal strengths still strengths? 2. Have we added other internal strengths? If so, what are they? 3. Are our internal weaknesses still weaknesses? 4. Do we now have other internal weaknesses? If so, what are they? 5. Are our external opportunities still opportunities? 6. Are there now other external opportunities? If so, what are they? 7. Are our external threats still threats? 8. Are there now other external threats? If so, what are they?
Comparative Economic Planning
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USMKCC-COL-F-050 9. Are we vulnerable to a hostile takeover? (for businesses)
2. Measure organizational performance - Compare planned to actual progress
toward meeting stated objectives. • Includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives (both long-term and annual). • Failure to make satisfactory progress toward accomplishing long-term or annual objectives signals a need for corrective actions. Problems can result from ineffectiveness (not doing the right things) or inefficiency (poorly doing the right things). 3. Take corrective action
• If the organization has determined that strategies are no longer effective or
