Activating Strategies 313

STRATEGY IMPLEMENTATION
NATURE OF
inplementation concerns the managerial exercise of putting afreshly chosen
the organisation proposes the manner in which the strategy into place."2
strategicplandevised by strategies could be put into
by themsclves, do notlead to action. They are, in a sense, a statement of
sare meanttorealise the intent. Strategies, therefore, have to be activated throughintent:
Strategies,
e
aOn.
implemen-
implementation.
characteristics of strategy implementation listed below, serve to highlight the
tgyimplementation.
essential nature of
The
.chionorientation The essential nature of strategy implementation is that it entails action. Strategy
implementationinvolves putting the formulated strategies into action through the management processes.
puting
strategies into action, managers apply knowledge and techniques of management processes.
In management processes have been extensively researched and written about in management litera-
These
ture. Strategy implementation renders the intellectual content of strategy formulation into the opera-
tional process of practice.
Comprehensivein Scope The different aspects involvedin strategy implementation cover practically
everythingthatis included in the discipline of management studies. As we will observe in this and the
honters that follow, strategy implementation traverses a wide range of functions and activities. In fact,
Can think of anything that involves managerial action and tht will be apart of strategyimplementa
ton. Amarketing manager may develop the marketing budget, allocate sales to sales territories, launch
an advertising campaign or initiate a market research project. All these activities are a part of the strategy
implementation process. Similarly, various other activities such asestablishing cost control procedures,
selting operations schedules, designing training programmnes or altering the organisation's information
system are all strategy implementation activities.
Demanding varied skills Since strategy implementation involves a wide range of activities, a strategist
has to bring to his or her task, a wide range of knowledge, skills, attitudes and abilities. The implemen
and
tation tasksput to test the strategists' abilities, for instance, to allocate resources, design structures
systems, formulate functional policies, take into account the leadership styles required and plan for
operational effectiveness, besides dealing with various other issues.
Mie-ranging invovement As opposed to strategy formulation, which is primarily a top management
managers. This
ponsib1lity, strategy implementation necessitates the involvement of middle-level middle-manag
eans that the strategic plan has to be properly communicated to and understood by the
ers before they can play an effective role in strategyimplementation.
" Integrated process The various tasks in strategy implementation are not stand-alone activities. They are
Each task or activity
interrelated and therefore, strategy implementation has to act in a holistic manner.
of which has to be the
performed is related to another, creating an interconnected network, the hub simultaneously on
strategic plan. The flow of implementation process is moving forward
the strategy
Several fronts. how
Have alook at Exhibit 10.1 to integrated textile mill implements its strategies. Observe
he company learn how an
action, garners resources and creates
an elaborate
MtwOrk of illustrated there translates its strategies into
We willshortly return to
this network
plans, programmes
refcr to the and projects toimplement strategies.
barriers to strategy implementation.
Ehibit 10.A Strategy implementation at Nahar Industrial Enterprise Limited
Nahar covering value chain

erationInsdusTangi
trial ng from spinning. vetically-integrated textile manufacturer,
garments. Set up in 1983 as a
at of the Oswal Enterprises
family groupLimited
is a
(NIEL) NIEL readymade
COmpanies, is based at Ludhiana,
finished Punjab. It consolidated its core business
Weaving and processing to
 Business Policy
Management and
314 Strategic
and|
businesses of steel, oils soaps and
oftextiles and divested its non-related
expansion strategy
through integrated
integration, added focus on
required embarking on an textile e-Commerce.
Althis
And future
diversification
For putting

franchise
the related
intostrategy
its integration

outlets
field of
into action, NIEL 0simplementing an expansion plan envisar
diture of about Rs. 800 crore. This plan has various programmes such as augmenting production ea

for its Cotton County

branded garmente
The finance
inernalionan
expanding exclusive convertible bonds and internal for
sourced through term loans, foreign currency s putting
into action is
Apart of strategyimplementation
at NIEL requires the overhaul of various
functional strateaccrgieus,als.
geographical expansion into Southern
the functional strategy of marketing involves extension by moving from its mainly small-town India where
boostingits presence, as well as geographical opportunities in apparels for women and
bigger cities. Market developmernt involves seeking
garmentschildren hoM
present focus on menswear, while product
to expand
development seeks the range from
ments. Another functional area of information management got a
boost with the
implementation
of an
resource planning project.
It's not as if all of NIEL's plans, programmes and projects have gone ahead smoothly. For erters
shelve an expansion project at Raisen, Madhya Pradesh as it did not get the land allotted by the
ment.
instance,Sate govethatn ,
Sources:"Nahar plans Rs. 800 crore expansion", The Financial Express, 20 May, 2006; "Nahar to
business, focus on textiles", The Economic Times, Aug 8, 2006;"Nahar weaves Rs. exitn
814 crore spread
Standard, Oct 9, 2006; "Nahar retail to pump in Rs. 430crore", The Economic Times, Sept 13, 2007 ,Busines
10.2 BARRIERS TO STRATEGY MPLEMENTATION
Instrategy literature, we often come across statements like 'it's much more
difficult to implement astratn
than to formulate it' or 'a good enough strategy, implemented well is better than an
mented awfully'. It is indeed true that doing is more difficult than thinking about excellent strategy. inne
not because they were not formulated well, but for the doing. Strategies oftzni
reason that they were not implemented effectively.
Research studies report that strategists often find that
strategy formulation. Strategists have developed skillsstrategy implementation is much more difficult the
to formulate strategies well but when it comes ®
implementation, there is much left to be desired. For instance,
eight out of ten companies failed todeploy their strategies a consulting agency's report conclded tha
with 145 managers working in companies in and effectively. A study in the Indian context
around Delhi,
implementation is often unsuccessful. The study listed 11 mostattempted to uncover the reasons why siais
freguently cited reasons of which the
ones are: inadequate management skills, poor comprehension of roles, il-defind
tasks and lack of employee inadequate leadership,
commitment.
Hrebiniak points some general, overarching issues that impede strategy immplementation. Among dhemis
the fact that managers are often trained to plan and not to
soiltheir hands in the dirty tasks of arereluctant
execute strategies; the top managers interdependa
yet being done by two
tion, putting pressure ondifferent
implementation;
groups of managers; formulation andIimplementation being thanformul
typically,
within an organisation thanthedoesmanagers to show results; and implementation taking longer Imorepeopk
obstacles:6
" An
formulation. Hrebiniak' s ownimplementation
empirical
involving many
findings listed thefollowing
ma

" Poorinability
to
or vague manage change
" Not
having strategy or a
"Poor or guidelines model to guide
inadequate
information sharing implementation efforts
 04 AMODEL OF STRATEGY IMPLEMENTATION
ribit 10.4presents a model of strategy implementation that attempts tocapture the major themes in strat
implementation and the activities that make up each theme. The forward linkage from strategic plan
guides the implementation process and connects it to the preceding phase of strategy formulation. The feed
back flowing in reverse from the following step of strategy evaluation and control moves through the imple
nentation phase and goes back to strategy formulation establishing the backward linkage.

Exhibit 10.4 A model of strategy implementation

MANAGING ACHIEVING
ACTIVATING EFFECTIVENESS
STRATEGIES CHANGE

PROJECT
IMPLEMENTATION FUNCTIONAL
STRUCTURAL
IMPLEMENTATION IMPLEMENTATION

EVALUATION &
STRATEGIC
PLAN PROCEDURAL
LEADERSHIP
IMPLEMENTATION
CONTROL

IMPLEMENTATION
OPERATIONAL
BEHAVIOURAL
IMPLEMENTATION
IMPLEMENTATION

RESOURCE
ALLOCATION

FEED BACK
 Activating Strategies 319
Ehibit10.5 The pyramid of strategy activation
ial
his
STRATEGY
ng PLANS
uld
PROGRAMMES

his PROJECTS
Vi
BUDGETS

sof POLICIES, PROCEDURES,

hat RULES & REGULATION
er
 Exhibit 11.4 Environment, strateay, structure, and effectiveness
the,a

Environment

Strategy

Structure

Effectiveness

Structural implementation is moreconcerned with the match that should exist

In other worde between strategy and
 TYPES OF ORGANISATIONAL STRUCTURES
I.2
There are several types of structuresthat are found in organisations. Here, some major types of 'pure' stc
appropriateness for the different types of:
tures are described, with
practice, the actual
special
organisational
emphasis
structure
on their
may be acombination of these strastterugicteusr.e,
puree structures. Such n

are called hybrid structures.

Entrepreneurial Structure
structure and i
entrepreneurial structure, shown in Exhibit 11.6, is the mostelementary form of
The
by one person. A small-scale industrial unit. a c
priate for an organisation that is owned andmanaged which aro Le
exhibit the characteristics of organisations
proprietary concern or a mini-service outlet may
organisations are single- business, -product, or -serioe
on an entrepreneurial structure. Typically, these after all decisions, whether they are dav-fo.dn
firms that serve local markets. The owner-manager looks
operational matters or ofa strategic nature.

Exhibits 11.6 Entrepreneurial structure

Owner-Manager

Employees

The advantages that the entrepreneurial structure offers are:

Quick decision-making,as power is centralised;
Timely response to environmental changes; and
Informal and simple organisation systems.
The disadvantages of the entrepreneurial structure are:
Excessive reliance on owner-manager and so proves to be demanding for theowner-managerdecisions;
May divert attention of owner-manager to day-to-day operational matters and ignorestrategic
and
Increasingly inadequate for future requirements if volume of business expands.
 Structural Implermentation 353

ACtloaiStructure
volume ofbusincssexpands, the entrepreneurial structure may outlive its usefulness. The necd arises
of authority to nanagers who can look after the
and delegation different functional
4s Yvalisedskills
the
finctional structureis shown in Exhibit|1.7. Note that specialisation of skills is both accord-
A
stafl functions.
lineandstructure sceks to distribute decision-making and operational authority along functional
funetional
Ihe

Functional structure
Exhlbit11.7

Chief Executive
Officer

Public Relations Legal

Human Resource Production

Finance
Marketing Management

structure offers are:

The advantages that a functional
specialisation;
" Efficient distribution of work through
functions; and
"Delegation of day-to-day operational
management to focus on strategic decisions.
" Providing time for the top
The disadvantages of afunctional structure are:
different functional areas;
eates difficulty in coordination among specialisation, often at the cost of the overall benefit of the
narrow
vates specialists which results in
organisation; modified
Leads to functional and line and staff conflicts.
common and exists in its original or a
quite
Despite the the functional structure is
oe
disadvantages,
organisation evolves from the initial to the mature stages of development.

Divisional Structure satisfied bythe functional

only upto alimit.
structure, but geo-
The complexity in terms ofSome
Therestrcomes
ucturalneeds of expansion and growth are
a time in the life of organisations when
increasing
growth and functional structureinadequate.
make the structure is shown in
aphic expansion, market Segmentation and diversification situations. A divisional
served or geographic
form divisional
of necessary to deal with such customers
product lines, type under the divisional-level man-
of
Exhibit 1 structure
IS of
area 1.8. Basically,
basis
work is divided onthegroups are createdand placed
agementcover. ed,
and then, separate divisions or
Within the functional structure
divisions,
may still operate.
 and Business Policy
354 Strategic Management

Divisional structure
Exhibit 11.8 Chief Executive Officer

Corporate Legal / PR
Corporate Finance

General Manager
Division B
General Manager
DivisionA

Marketing Marketing

Operations Operations

Human Resource Human Resource

Management Management

The advantages that a divisional structure offers are:

related to a division:
" Enables grouping of functions required for the performance of activities
" Generates quick response to environmental changes affecting the businesses of different divisions and
" Enables the top management to focus on strategic matters.
The disadvantages of divisional structure are:
" Problems in the allocation of resources andcorporate overhead costs, particularly if the busines nd
corporate objectives are ill-defined;
"Inconsistency arising from the sharing of authority between the corporate and divisional levels; and
" Policy inconsistencies between the different divisions.
SBU Structure
Astrategic business unit (SBU) has been defined by Sharplin as any part of a business organisation wal
treated separately for strategic management purposes'.'When organisations face dificulty in manag1ug
sional operations due to increasing diversity, size and number of divisions, it becomes
difficult i0
management to exercise strategic control. Here, the concept of SBU is helpful in creating an SBUorganist-
tional structure.
Conceptually, an SBU is 'a discrete elementof theplanning withread-
ily identifiable competitors and for which strategic businesscanserving specific products-markets
be conducted"." Essentially, SBUscanbe
created by adding another level of management in adivisional structure after the divisions have beengrouped
under a divisional top management authority, on the basis of common strategic interests. Exhibit11.9prÝ
vides a diagram of an SBU
The advantages that the organisational structure.
SBU organisational structure offers are:
"
Establishes coordination between divisions having common strategic
Facilitates
" Fixes strategic management and control of large, diverse interests;
accountability at thelevel of distinct
business units. organisations;and
 organisational
11.9 SBU
pblt structure Structural Implementation 355
Chief
Execut
Officerive

Group
Head
SBU1 Group
Head
SBU 2 Group
Head
SBU 3

Division Division Division Division

A B
A Division Division
B Division Division
A B Divisicn
C

The disadvantages of the SBU

organisational structure are:
There are too many different SBUs to handle effectively, in large, diverse
Diffculty in assigning responsibility and
"Addition of another
layer of management defining autonomy for SBU heads;organisations;
and
between corporate and divisional
Matrix Structure management.
nlarge organisations, there is often a
need towork on major productsor projects, each of
ally significant. The result is the which is strategi
requirement
tals a matriIXstructure. Essentially.
of a matrix type of organisation
structure. Exhibit 11.10 illus
Work on a special suchatype of structure is created by assigning functional specialists to
dif erent areas form project or a new product or service. For the duration of the project,
specialists from
a group or team and report to ateam leader. Simultaneously, they may also workintheir
TSpect
meats, ive parent departments. Oncethe project tis completed, theteam membersrevert totheir parent depart-
The
" Aladvant
lows ages
individual
that
the matrix structure offers are:
specialists to be assigned where their talent is most needed:
Fosters creativity because off pooling of diverse talents;and
he Provides go0d exposure to specialists in general management.
" dReisaqduivaaccount
Dual nretsaages ability createsvertical
of the matrix structure are:
confusion and difficulty for individual team
members;

Shared authhigh level

ority may
of and horizontal combination; and
create communication problems.
Network Structure
The'increaSing
the creation of?volatility
anetworkof structure.
environment, Alsocoupled
ofknowledge-basedindustries,has led
known aswiththethe'spider's web structure' orthe 'virtual organisation',
emergence
356 Strategic Management and Business Policy

Exhiblt 11.10 Matrix Organisational structure

Chief Executive
Officer

Human Resource
Marketing
Finance Management
Operations
Project
Manager
A
Functional
specialist
Project
Manager
B

Project
Manager

the network structure is 'composed ofa series of project groups or collaborations linked by constantly chang
ing non-hierarchical, cobweb-like networks'." Exhibit 11.11 illustrates a network structure. This structure is
highly decentralised and organised around customer groups or geographical regions. Rather than being l
cated in one place, the business functions are scattered far and wide. The core organisation is only ashel,
with one small headquarters acting as a broker', connected to suppliers and specialised functions periorma
by autonomous teams and workforces. The network design underlying the network
structure 'subcontras
someor many of its operations to other firmsand coordinates them to accomplish specific go¡ls.12
The network structure is most suited to organisations that face a continually
changing environneul,
quiring quick response, high level of adaptability and strong innovation skills. This structure
use of outsourcing of support services required to makes ext
produce and market
resources internally and the network structure firm relies heavily products who
on outsiders or services.
1hei
are specialisedintheir
respective areas.
The advantages that the network
structure offers are:
High level of flexibility to change structural
Permits concentration on core arrangements in line with business requirente
Adaptability to cope with rapidcompetencies ofthe firm; and
The disadvantages of
network environmental change.
Loss of control and lack of structure are:
Risks of coordination as there are several partners;
overspecialisation
" High costs as as most tasks are
performed by others; and
duplication ofresources could exist.
 Structural Implementation 357
organisational structure
11.11 Network
phlbit

Project group
M structure

Region A Function X
structure
structure

Corporate
Headquarter

Region B Function Y
structure structure

Project Group
N structure

t
ng Other Types of Structuresti
structures that are used in
eis Besides the six major structures described above, there are several other types of
lo organisations. We briefly describe five structures below.
ell,
PTOduct-based Structures The grouping of activities on the basis of the product or product lines is
ned division, all functions related to that particu
OoWed by organisations where there is a need to delegate to a
cts
a product or product line. Such a need arises when the
strategy adopted requires exclusive attention to a
diversification strategies may require a product-based struc
re u a group of products. Expansion andproduct divisions. Besides, a product-based structure offers the
ive Tacilities the addition or deletion of increases coordination and enables fixa-
equipments,
few advantages optimum
tion
of an use ofspecialised skills and
resources. However, a product-based structure of re-
can only
ofresponsibility
be justified
usage of
for profit making and product line is large enough to create an optimum use
where the volume of sales of the
SOurces and skills.
created on the basis of the cus
tCust
omer omer-based Si divisions may be
Structure In some organisations, grouping ofactivities on the basis of
is that
groups served. The rationale for customer-based structure attention to separate and distinct customer
CusFoups.tomerSThus,
would enable the Organisation to provide exclusive
an organisation may have individual sales divisions and
customer-based structure offers
are:
to serve
institutional sales divisionsemploy-

COnimelysumers
ing marketingand
institutions Tespectively. The
advantagesthat a
specialised
-orientation to serve customers better: useaofcustomer-based structure
marketing;
is useful
and
skills, especially in only when the

sales Tesponse changing

to customer needs. However, creation of separate divisions.
volume individual
of
customer groups
justifies the
 Strategic Management and Business Policy
organisations which have
Geographic Structure Multi-plant or multi-unit geographic (or several
basis of
of
organised onthe
dispersed geographically are usually pansion and diversification. When an organisation:
structure cvolves in the process of ex ter itorial) structure
fim or wishes to set up additional factories at different sites, the geographic structure is
Such a structure offers the advantages of decentralisation to a
acquire,
local level, the use ofof locally availahi.
structurc can be
ources andraw materials and nearness to markcts. But geographic be put to
there is a high level of coordination at thetop level and communication between differens good
centralcorporate departments.
different units an0 wrth
Intrapreneurial SIructure As described in one of the previous sections in this chapter
chapter, the evolutka
organisational structure often starts with the entrepreneurial structure. Atthe other extreme, a state isS
when organisations become too large, diverse and complex. As aresult, they usually become siou Teaches
bureaucratic and resistant to change. It is at this point that an intrapreneurial structure could
usefuland appropriate. The term intrapreneur is acombination of two words, internal and entrenre
means 'an entrepreneur internal to the organisation', in contrast to an inndividual who sets upentan
slow-moving,
proYe to be
repreneuT ad
organisatig
independently. For instance, managers who are paid employees of a company but are entrepreneunal:
nature or whose tasks involve entrepreneurial capabilities are intrapreneurs. The itrapreneurial stneh
offers the advantages of revitalising organisations by creating opportunities for innovative and talented ink
viduals within organisations to act as intrapreneurs to apply exclusive attention to the development of nes
ideas, products, or services. Organisational resources may be allocated to such development efforts and f
they prove to be promising, a new venture department may be created which can see to further development
In time, the new products or services can be incorporated within the overall
organisation structure in the form
of divisionsor could be spun-off as separate companies to be managed by the
of the intrapreneurial structure are obvious: innovation and creativity intrapreneurs. The advantages
within organisations is
products or services are developed optimally and work becomes satisfying and motivating for fostered,
new
fied individuals. However, the intrapreneurial structure benefits only in highly-qual
and coordinate several small groups and the
cases where it is possible to manag®
organisation is in a position to risk time and resources Wna
projects are not successful.
All the structures described till here have their own
strategists to choose the type of structure that would suitadvantages and disadvantages, It is the task orui
their strategies best. The search for a better fiuiy
is. therefore,continual. The
type of structure would be adopted. Wewill
changing nature the environment and industry dictates in part, W
of
shortly take up these issues for discussion.
 374 Strategic Management and Business Policy
Exhibit 11.19. It is viewed as a
Basically,control operates in a cyclical manner as shown in
consisting of:
1. Establishing standards four-step prose,
2. Measuring actual performance
3. Evaluating actual performance against standards
4. Determining corrective action

Exhibit 11.19 The control cycle

Establish Measure
standards performance

Correct Evaluate
performance performance
if needed against
standards

The control process works to bring

12.4 STRATEGIC LEADERSHIP
Managers provide leadership to an organisation, Organisational leaders influence the behaviour of
nates so that they willingly and enthusiasticallywork towards the achievementof subordi.
Strategic leaders manage the strategicmanagement process that is designed to helporganisational objectives.
the organisation achieve
its objectives. Strategic leadership is the ability to lead an organisation towards the
tives. The tasks involved in exercising strategic leadership are typically to achievement of itsobjec
anticipate, envision, maintain
flexibility and empower others to create strategic change as and when necessary."21
 section, we
will
focus on the strategic leaders Behavioural Implementation 399
Iothis process ofaan who are charged with
stcategic,management
organisation. the
e process,
ofresponsíbility
Among the strategic leaders, we haveStrategic leaders are the lynchpin in the managing
COrporate-level business-level, functional-level andmanagers
Arment
j: operating at different levels ofstrategic
operational-level. man-
an organisa-
Corporate-levelImanagers include the chief
The corporate-level managers executive officer (CEO), senior executives and the
staf! manage the
organisation. These managers may carry designations: strategic management process for the whole
corporate
tororpresident.
such as CEO, managing director, executive direc-
Business-level managers are the strategic leaders at the business,
strategic management process at the business-level.division SBU levels. These manag-
or
ers manage the These may carry designations such
as the general manager or vice-president.
Functional-level managerS are the strategic leaders of a
specific function such as
eThey are called marketing managerS or marketing or opera-
operations managers. The functional managers
strategic management process at the functional level. manage the
At the operational-level, there are managers who are responsible for the
uithin their assigned functional areas. They occupyy positions such as deputyimplementation of strategies
assistant manager of operations.
manager of marketing or
letus start by discussing the tasks that strategic leaders are required to perform for effective strategic man
agement of organisations.

the Tasks of Strategic Leaders

The phenomenon of leadership has been studied and researched extensively, for a number of years in various
disciplines besides management studies, resulting in numerous theories and models.22 One of the themes in
kadership is the tasks that strategic leaders are called upon to perforn. In the terminology of Dubin (1979),
adership at the highest levels of the organisation (.e. strategic leadership) is concerned with performing the
BSk of leadership of organisations rather than leadership in organisations. By leadership of organisations is
eant those tasks that are performed by the top managers, while leadership in organisations refers to super
sOry management tasks performed by lower-level managers. This is an important distinction between
Stategic leaders and other organisational leaders. Strategic leaders are at the top level of the organisation,
while organisational leaders are to be found anywhere. Organisational leadership is about theleader-follower
deteWhile strategic leadership is, in addition, a strategic and symbolic activity." Since there is a
disThere
tinctionarebetween
strategic leaders and other organisational leaders, their respective tasks also
many the tasks of strategic leaders can be described.
differ.
We present here
different
he five more important tasks that in which leaders
ways strategic typically are required to perform. 25

diret8 Stategic Direction One ofthe more iscnucial tasks of a strategic leader is to provide asense
ofof direction tothe organisation. The strategic direction concerned with the future shape of the organisation.
The strategc and envisioned future. The core ideology ofthe
direction has two components ofcore ideology tremendous efforts
rganisattoionbemotivates the members through its heritage.
order
The envisioned future requires

achieved. Organisational Resources Porttolio Strategic leaders are called upon

EhumrmafniaaengectivelyeffectManagi ng Ihe
organisational resources. Such a
portfolio includes financial
to
capital,

capital,ivsocial
ely, thecapital land organisational capital. They do thisorganisation.
portfolio of by exploiting and
main'aining the core

Compet nces and developing the human and social capital of

the
 Business Policy
400 Strategic Management and
Opganisational Culture The organisational (or corporate) eule
Sustaining an Eflecthe
Strategic leaders try to build
factor in achieving strategic success.
ganisationis an important and sustain
effectivc organisationalcultur an
word
Emphasising Ethical Practices Sirategic leaders emphasise on ethical practices in and deed when
the strategics are bcing implemented.
Establishing Balaned Organisational Controls Strategic leaders use a combination of
non-financial controls to help the organisation achieve its objectives. financal and
The Sties of Stratedic Leaderc