Block 7 Flashcards
Implementing strategy and stakeholder management
What is strategy (4) ?
set of actions taken by top managers to achieve superior
profits and outperform competitors
- Focuses on long term implications and success rather than the short
term, to ensure growth in future - It needs managerial commitment for consistent and well considered
choices - So, better conceived company strategy and the competency in which
it is implemented, the more likely it will thrive beyond competitors
Define strategy formulation
- Deciding what needs to be done
- Involves developing the - vision, mission, external threats and opportunities and internal strengths and weaknesses,
- Choosing a strategy based on the SWOT/ PESTEL analysis – helping deciding what to do
Define strategy implementation
- The process of implementation is moving an idea from the
concept to reality by developing a plan - Implementation becomes the action plans- what you need to do to achieve the strategy formulated
Define strategy execution
- Carrying out the plan Act, manner or style of executing those processes by
means of actions, maneuvers and behaviours. - IOWs- The activities you undertake to turn your implemented strategy into commercial success.
Implementation challenges
- Implementation problems can arise because of the shift in responsibility from strategists to divisional/ functional managers
- So divisional/ functional managers need to be involved in both formulation and implementation stages, so the strategies don’t come as a surprise
- Managers and employees may be driven more by their self-interests than by organizational interests
Outline implementation strategies (9)
- Implementation varies substantially among different types of organization
- Examples include:
- Changing sales territories
- Adding new departments
- Closing facilities
- Hiring new staff
- Developing new employee benefits
- Changing the pricing strategy
- Establishing new cost-control procedures etc…
Challenges to strategy implementation (Allio) (6)
- Need to get back to my real job
- Can’t translate ideas into actions
- No reward for sticking with it
- Lose track/ can’t easily monitor
- Everyone’s responsible/ nobody’s responsible
- Reality intrudes : plans lose relevance
Elaborate on the interdependence of strategy formulation and implementation
- Neither formulation nor implementation can succeed without the other
- Successful firms are those that evaluate and adjust their strategies and execution according to the feedback from the implementation process itself
Explain the 5 step process of strategy implementation
1 Refine vision & strategies
2 Craft implementation programs
3 Integrate programs : Roll-up
4 Present to board / senior management ratification
5 Implement
Name and comment on Implementation barriers
Strategy failures and by extension, organisational failures, can be attributed to the inability of managers to overcome strategy implementation barriers. This is because strategy implementation barriers affect the overall functioning of the organisation.
Internal barriers:
* Resources: financial» budget
* Human: inadequate skills
* Role ambiguity
* Organisational culture : risk averse
External barriers
* Government over-regulation
* Market Dynamics
* Conflicting stakeholder interests
Define and support the implementation gap
- Disconnect between the strategists and the “implementers”-middle
managers/ line employees - Employees are not aware or do not understand the strategy
- Strategy is never implemented
- If employees lack knowledge about the strategy - leads to poor or no
implementation which leads to poor performance
Mankins & Steele’s Seven Rules for
Successful Strategy Implementation
- Keep it Simple
- Challenge Assumptions
- Speak the same language
- Discuss resource deployment early
- Identify priorities
- Continuously monitor performance
- Develop execution ability
Strategy implementation framework (see slides 24 & 25)
Corporate level strategy is followed by
Business level strategy is followed by
Functional planning is followed by
Operational level planning
Basic activities of strategy implementation involve:
- Establishment of objectives
- Formulation of policies for the imputation of strategies
- Allocation of resources
- Actual performance of tasks and activities
- Leading and controlling the performance of activities or tactics at various
levels of the organization.
Objectives are essential for strategy
implementation because:
- Guides on how to allocate resources
- Mechanism to evaluate managers
- Effective for monitoring progress towards achieving goals
- Help to determine organisational, divisional and departmental priorities
- Keep the strategic plan on track
Outline the characteristics of the Smart+C goals
Specific
Measurable
Attainable
Realistic
Timed
Challenging
Purpose of objectives
- Serve as guidelines for action- directing and channeling efforts and
activities of organizational members - Source of legitimacy in an enterprise by justifying actions to
stakeholders - Serve as standards of performance
- Employee motivation and identification
- They give incentives for managers and employees to perform
- Become a basis for organizational design
Name and explain the 3 Implementation levers- Critical variables of
implementation
- The Structure
The manner in which, responsibilities,
people and tasks are organised. Includes- Authority,
hierarchy, units, divisions and coordinating mechanisms.
Know “the chain of command”, know they are
accountable to, who they are responsible for - People and rewards-
People implement strategies,
successful implementation depends on having right
people, trained/ skilled to support successful
implementation. Rewards (incentivize) can accelerate or
undermine strategy implementation - Systems-
Are the organizational processes and
procedures used for daily operations- resource allocation
systems, budgeting, distribution etc- What systems are
currently in place to facilitate the strategy?
Stakeholder Management
- The ability to form, maintain positive relationships with these stakeholders and managing their expectations is known as stakeholder management
- Stakeholder engagement:
Through communication management can uncover unforeseen risks
Creating the right perception enhances success - In practice the meeting the goals or needs of all stakeholders is unrealistic
- Therefore, companies need to decide – identifying “the most important stakeholder” and prioritize strategies to meet their needs
- Stakeholder analysis is key for the identification process
Outline how a Stakeholder analysis works
- Identify your stakeholders
- Identify stakeholder interests and concerns
- Identify the claims stakeholders are most likely to make about the
organization - Identify the stakeholder’s who are important from the
organization’s perspective (stakeholder mapping) - Identify the resulting strategic challenges
Differentiate between primary and secondary Stakeholders
Primary: Direct involvement or stake.
Secondary: Have a special interest or public stake.
Stakeholder Interests
- It is impossible to satisfy all your stakeholders’ interests
Some of the ways the interests manifest are as follows:
- Economic interests- may be perceived as greedy/ selfish but they are also legitimate- companies need financing to survive, results in the ability to do good (hire more, employee wellbeing, CSR)
- Governmental interests- Good for society but stringent regulations may hurt profits of small business especially
- Legislation/ Legal concerns to be considered ( Ombudsman-
investigates complaints) - Social interests- May do well for both company and community (e.g security concerns, environmental)
Outline and come up with common stakeholder interest conflicts
- Pursuit of short-term profits at the expense of long-term investments
- Investing in growth strategies that requires more funds through share
issue/ loans risking financial security and independence - Going public on securities exchange brings unwelcome openness
- Expanding into mass market may lead to reduction in quality
- In multinational organisations conflict arising from differences
between host country and company head office
Name the 4 steps in stakeholder mapping:
Step 1 Determining influence on strategy formulation
Step 2 Identifying major stakeholder groups
Step 3 Determining effects of strategic decisions on stakeholders
Step 4 Determining stakeholder power & influence on strategic decision
Outline step 1 in stakeholder mapping
Step 1 Determining influence on strategy formulation
Which stakeholders are/ should be involved or consulted in strategy formulation?
Organisational stakeholders-
top-level, middle or frontline (low level) workers?
Capital stakeholders-
Affect the availability of capital – shareholders, venture capitalists, banks etc.
Product market stakeholders-
Are those whom the company shares its industry- suppliers/ distributors or customers
Social stakeholders-
External groups and organisations that may be affected by or exercise influence over firm strategy and performance- unions, government and activist groups
Outline step 3 in stakeholder mapping
Determine the stakeholders who are most important based on how the
firm’s strategy impacts the stakeholders (directly or indirectly)
Outline step 4 and Define stakeholder power see slide 48 for sources of power
Step 4 Determining stakeholder power & influence on strategic
decision
* Power- ability of individuals or groups to persuade, induce or coerce
others
* Not just on hierarchy but also a function of resources controlled,
know-how or networks they are part of. (See sources of power exhibit
7.1)
- Determine the degree to which a stakeholder group can exercise power
and influence over the decisions of the firm - What type of power is it- Direct control, veto power, nuisance, indirect
influence or no influence? - Although stakeholders affected by firm’s decisions often have power
and influence over those decisions, this is not always the case i.e
Employees (directly effected by the firm’s decision but no say in
decisions)
Describe the table for stakeholder management on page 48
Y axis - Effect of strategy on the stakeholder
X axis - Power of stakeholder over strategic decision
How can stakeholder mapping help in three aspects of the coalition building process:
- Analysing who the key blockers or facilitators of a strategy and developing the appropriate response
- Repositioning of certain stakeholders: for example to lessen the influence of a key player or to ensure there are more key players who will champion the strategy ( crucial in the public sector context)
- Maintaining the level of power of some key stakeholders, for example the endorsement or support by powerful supplier or customer may be critical for the success of a strategy
