MNG3702 – STUDY OUTCOMES_AND_EXAM_PAPERS.

MNG3702_ STUDY OUTCOMES_AND_EXAM_PAPERS. MNG3702 - Strategic Implementation And Control IIIB. Explain what strategy implementation entails, and how it relates to the strategic management process. Strategy Implementation/Execution - It’s the second phase in traditional strategic management process. It’s the doing part where both human and non-human factors in the organisation are applied to ensure that the strategy is executed in line with the devised plans. It is about the processes and actions to ensure that all aspects of the internal environment are aligned with the chosen strategic direction and strategy. These are the key elements to be considered: - Leadership and culture- a strategic leader must ensure that the culture of the organisation is aligned with strategic choice - Managing change- requires managing change and change initiatives. Strategy is not about business as usual - Learning organisation-The organisation must be a learning organisation through its staff and be willing to share knowledge - Organisational architecture and structure- To create a cohesive strategy, the implementation components need to be integrated well and the organisation needs appropriate structure to successfully execute the strategy – structure follows strategy - Strategy deployment- is the process of managing the strategy implementation process and the strategic initiatives through programme or project management - Strategic control and risk- Controls systems are needed to ensure both strategic implementation process and the content of strategy is reviewed. Managing risk gives an organisation a better chance of implementing strategy successfully There are four perspectives or approaches on strategy implementation 1) Strategy implementation as organisational architecture. This perspective views the organisation as an interrelated set of sub-systems, which must all aligned, in balance and consistent if a strategy is to be implemented successfully 2) Strategy implementation is about managing planned change (Kurt Lewin and John Kotter’s model) 3) Strategy implementation as a process of selecting and managing strategic initiatives that contribute towards the achievement of strategic objectives (strategy deployment) 4) Strategy implementation as organisational adaptation, organisations learn and adapt organically rather than as part of formal process 2. Explain and demonstrate the link between short-term objectives, functional tactics and resource allocation in strategy implementation. Short-term objectives can be defined as measurable outcomes achievable or intended to be achieved in one year or less. Short term objectives are translated from long term objectives, they should comply with the SMART requirements. Short term objectives formulated at lower levels of the organisation should annually contribute to the organisation ultimately achieving its long-term, strategic objectives. They aid strategic implementation by: - Operationising long term objectives - Acts as a strong motivational force and a means of avoiding conflict and disagreement with the organisation - serves a standards for measuring progress and outcomes, providing opportunity for timeous corrective action where needed Functional tactics are defined as detailed statements of the means or activities that will be used by an organisation to achieve short term objectives and establish competitive advantage. They are necessary to implement competitive business strategies, because they ensure that all department/functional areas (marketing, finance, human resource, etc) in the organisation work towards achieving the same goals in the same way. Functional tactic have three dimensions that shows the link between short term objectives - Time horizon- Functional strategies are based on and generally have to achieve annual objectives in the immediate future through short-term action plans, because they focus the attention of functional managers on what is critical and needs to be accomplished and because they allow functional managers to adjust to changing conditions - Specificity- Functional strategies based on short-term objectives are more specific that longer-term business strategies. The tactics and action plans for each functional are identity how managers in each of the areas can accomplish their tasks and achieve objectives in the short term - Who participates in developing the strategies/tactics-Top management delegates responsibility for the development and implementation of functional strategies to functional managers. Functional and operational manager will then develop short-term action plan Top management will be responsibility for resource allocation such as capital, human, physical and technological in for a successful strategy implementation. 3. Translate long-term objectives into short-term annual objectives and functional strategies and tactics that support the achievement of short-term objectives. 1 Short-term goals are set on the basis of long-term goals to ensure that the mission and strategic intent become a reality. Aligning short-term goals with the organisation’s mission and strategy confirms that the strategic management process is interrelated and that a change in one component will trigger changes in another. An organisation‘s mission statement provides guidelines in terms of the areas on which the long term focuses such as product, market, technology, profitability and corporate governance. Short-term goals should incorporate these focus areas into operational areas. The link between long-term and short-term goals cascades through the organisation from the broad vision and basic goals to specific short-term targets and can provide a clear reference for communication. 4. Explain the importance of aligning organisational culture and leadership with strategy in strategy implementation. Organisational culture is defined as “a pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered as valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems. Note that organisational culture serves important functions in an organisation that include serving - the vision and strategy of the organisation - the means through which to attain strategic objectives - an individual’s role orientation - quality assurance - common language and effective communication Strategic leadership and organisational culture are closely aligned and enhance factors that accommodate change and therefore strategy implementation. Leaders of an organisation play a critical role at ensuring their organisation successfully adapt to dynamic and changing environments. For that success to occur, top-level executives need to demonstrate strategic leadership, which means that they must be able to think strategically; they need to be emotionally intelligent; have a range of behaviours at their disposal and have the wisdom to apply the right combination of behaviours at the right time − in other words they must possess the ability to apply both transactional and transformational leadership. Leaders could also use the cultural web to shape or change organisational culture. 5. Explain the importance of aligning organisational structure with strategy in strategy implementation. Organisational structure is the formal reporting relationships, procedures, controls, and authority and decisionmaking processes. The organisational structure helps the organisation to distribute resources and to deliver its core products and services as effectively and efficiently as possible. It coordinates and integrates the efforts of employees at all levels- corporate, business and functional- and across the organisation for all levels to work together to successfully implement chosen strategies and achieve the long-term goals. More specifically, strategic organisational design involves decisions about - how organisational units are composed - the reporting relationships between internal organisational units - the contractual relationships with external units (e.g. outsourcing relationships) - structural connections between unit s (e.g. key managers or inter- departmental teams) - organisation-wide systems for information flow, measurement and control systems, incentive programmes and recruiting Further, Alfred Chandler suggested that “structure follows strategy, meaning organisations adapt structure to suit strategy. Organisation often start out with simple forms of structure (simple or functional structure), however as more complex capabilities are needed, more complex forms of organisational structures are used (Divisional or matrix structure). 6. Describe the role of policies, systems and procedures in strategy implementation. Policies are specific guidelines, methods, procedures, rules, forms and administrative practices established to support and encourage work towards stated goals. Policies are characterised by setting boundaries, constraints and limits on all kinds of administrative actions. They clarify what can and cannot be done in pursuit of an organisations objectives, simplify decision making and promote delegation of decision- making to appropriate managerial levels. An organisation’s policies can either assist or block good strategy implementation. New policies and procedures with a change in strategy or when a new strategy is being considered, could enhance strategy implementation in the following ways: - Instituting new policies and procedures provides top-down guidance regarding how, by whom and by when certain tasks need to be done. - Policies and procedures provide the necessary consistency in how particular strategy critical activities are performed, thus reducing or eliminating uncertainty. - Well-conceived policies and procedures promote the creation of a work climate that facilitates effective strategy implementation. 2 - Policies ensure quicker decisions by standardising answers based on previous experience. - Policies offer predetermined answers to routine problems. - Policies save managerial time and afford managers a way of avoiding hasty decisions in changing conditions. 7. Explain the strategic importance of core competencies, resources and capabilities in strategy implementation. Resources are the productive assets owned by an organisation. Capabilities refer to an organisation’s resource coordinating skills and productive use. Core competencies distinguish an organisation from others in the industry, they are difficult to imitate – hence their importance as a basis for sustainable competitive advantage. Core competencies – arise from a combination of resources and capabilities. For strategy implementation to be successfully achieved, it will depend on the availability of resources, capability and core competencies in an organisation. An organisation’s strategy will require either to exploit existing capabilities or to explore and develop new capabilities or to do both. A new strategy and even a change in an organisation’s existing strategy, will undoubtedly require additional resources and capabilities for example additional funding, new physical facilities. Etc. 8. Explain the importance of strategy review and control in strategic management. - Strategic control is the third and final phase of the strategic management process, its defined as the management efforts to track strategy as it is being implemented detect problems or changes in its underlying premises and make necessary adjustments. - Strategic control allows management to monitor and evaluate whether their strategy is performing as intended, weather it needs to be improved and if so how it can improved. - Timely and on-going monitoring, evaluation and control are critical importance in alerting management to actual or potential problems and ensuring that stated objectives are achieved. - Strategy control must have both long-term and short-term focus. - An effective strategic control process involves four steps: establishing standards and targets, creating measuring and monitoring systems, comparing actual performance against targets, and evaluation results and taking corrective action where necessary. 9. Critically discuss strategy implementation failure. Implementation failure means that a new strategy was formulated but was not implemented, or was implemented in such a way that the implementation was incomplete, strategic objectives were not attained, or the implementation was unacceptable to key stakeholders. Strategy implementation failure may start with the strategy formulation process. If strategic objectives are too complex or poorly understood, lack consistency and do not provide clear future direction to members of the organisation that have to implement them, it is unlikely that implementation will be successful. Strategy implementation failure may occur when: - There are unexpected occurrences or misreading and misinterpreting the external environment. - There is an ineffective implementation management processes (or the lack of such processes). - There is ineffective leadership. - Organisations dwell on past successes, losing sight of and not adapting to changing market realities and changed requirements for competitive advantage to cope with new realities. - Inability to adapt and learn (The so-called Icarus paradox). - There are deficiencies, poor or misalignment of the various elements of the organisation (leadership, organisational structure, policies and resources). - Poor implementation rather than poor formulation is the main cause of strategies failing. DISCUSSION QUESTIONS 1. Explain the importance of effective leadership in strategy implementation. In your view, what are the consequences of poor leadership in an organisation competing in a rapidly changing business environment? Provide a practical example. Leaders are important because strategies cannot be implemented by itself, someone needs to lead and coordinate this process - It is vital in strategy implementation as it is only through effective leadership that organisations are able to use strategic management successfully. - Develop appropriate strategic direction - Communication of vision and strategic direction - Motivate employees to achieve strategic objectives - Design appropriate reward systems and organisation structure - The development of strategic and operational control systems - Develop and maintain effective organisational structure - Ensure good corporate governance and management 3 2. Explain how organisational culture can support and enhance strategy implementation. Organisational culture is defined as “a pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered as valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems. Note that organisational culture serves important functions in an organisation that include serving - the vision and strategy of the organisation - the means through which to attain strategic objectives - an individual’s role orientation - quality assurance - common language and effective communication Strategic leadership and organisational culture are closely aligned and enhance factors that accommodate change and therefore strategy implementation. Leaders of an organisation play a critical role at ensuring their organisation successfully adapt to dynamic and changing environments. For that success to occur, top-level executives need to demonstrate strategic leadership, which means that they must be able to think strategically; they need to be emotionally intelligent; have a range of behaviours at their disposal and have the wisdom to apply the right combination of behaviours at the right time − in other words they must possess the ability to apply both transactional and transformational leadership. Leaders could also use the cultural web to shape or change organisational culture. 3. Explain the advantages, disadvantages and constraints of policies and procedures for strategy implementation. Policies are specific guidelines, methods, procedures, rules, forms and administrative practices established to support and encourage work towards stated goals. Policies are characterised by setting boundaries, constraints and limits on all kinds of administrative actions. They clarify what can and cannot be done in pursuit of an organisations objectives, simplify decision making and promote delegation of decision- making to appropriate managerial levels. An organisation’s policies can either assist or block good strategy implementation. New policies and procedures with a change in strategy or when a new strategy is being considered, could enhance strategy implementation in the following ways: - Instituting new policies and procedures provides top-down guidance regarding how, by whom and by when certain tasks need to be done. - Policies and procedures provide the necessary consistency in how particular strategy critical activities are performed, thus reducing or eliminating uncertainty. - Well-conceived policies and procedures promote the creation of a work climate that facilitates effective strategy implementation. - Policies ensure quicker decisions by standardising answers based on previous experience. - Policies offer predetermined answers to routine problems. - Policies save managerial time and afford managers a way of avoiding hasty decisions in changing conditions. LEARNING UNIT 2 – STRATEGY IMPLEMENTATION AS CHANGE MANAGEMENT OUTCOMES 1. Describe what strategic change is / Explain what strategic change entails. Strategic change occurs when the organisation decides to change its strategic direction in light of internal or external factors. This then leads to large-scale changes in structure, culture and systems to support the new strategic direction. What makes strategic change complicated is that it often comprises a large number of large and small-scale changes within the larger strategic change programme. Strategic change has a number of characteristics: - It requires moving from a current state to a desired future state – without the need and desire for change; there can be no effective change - It affects the whole organisation. Changes is required across the entire organisation, not only in a few departments - It involves both structural and cultural elements. Structural elements are the tangible or “hard” elements, such as organisation structure and systems. Cultural elements are the intangible elements that have to do with values and beliefs. Often organisations focus on the structural elements, because they are easy to change and implement, but sustainable change also has to incorporate a change in mind-set. 2. Explain what organisational architecture is. - Organizational architecture is an integrated strategic response(blue print) that draws together the key dimensions and strategic planning and implementation components of the organization, such as organizational structure, leadership, organizational culture, policies and strategies to guide strategic planning and 4 implementation - Simply put it is a blue print of the internal and largely invisible workings of the organisation - Organizational architecture is the totality of the internal organisation and its external relationships - Is the blueprint of the organization using architectural disciplines to improve performance. It is a definition of what the organization must produce to satisfy its customers, compete in a market, deal with its suppliers, sustain operations and care for its employees - The value contributed by organizational architecture is to increase the effectiveness of the various functions in the organization, by mapping and modelling the organization to its vision and strategic goals - It gives direction to all organizations aspects such as the organizational structure and other functional departments - Organisational architecture plays an important role in strategy implementation as it helps the organization to “map out” where it currently is and where it wants to be in future - The argument for using an organizational architecture framework (a strategy tool in the strategist toolkit) is that strategy implementation components and organizational subsystems should align with each other , creating a cohesive whole. Failing to do will lead to strategy implementation components and some organization systems to go in different directions, which will reduce successful strategy implementation 3. Identify the components of business architecture. External context-organizations operate in a certain context that brings with it stakeholders with certain claims and influences, as well as certain opportunities and threats Seeing and sense making- mechanisms and abilities for sensing developments and changes in the external environment and making sense of these for the benefit of the organization Internal context- consists of the internal stakeholders (eg shareholders) and their claims and influences, as well as the strategic purpose and direction of the organization in their effort to address the internal and external context - Culture- refers to the shared values and mind-sets of employees, and ability to adapt - Leadership- leadership and management are important for shaping culture - Governance- is the sum total of the mechanism for governing the organization formally and informally-policies, procedures n reward systems - Structure- refers to the definition of departments and their interrelationships with each other. And also refers to the placement of people with the appropriate knowledge, skills and attributes - Technology- refers to the technical elements that facilitate day to day functioning, customer service and manufacturing processes - Capabilities-those things that the organization does really well, and are important to facilitate certain strategic decisions and establish competitive advantage 4. Compare and contrast 3 different types of organisational architecture. There are three different depictions of organisational architecture, namely McKinsey 7-S framework, Lee, Venter and Bates perspective and the prescribed organizational architecture The McKinsey 7–S framework The 7-S framework was created by the famous McKinsey strategy consultancy. At the heart of the McKinsey framework is the idea that there are seven key sub-systems in the organisation that all have to be in balance and consistent with each other. No one sub-system is more important than the other. As with the cultural web, certain subsystems can be regarded as “hard” (strategy, structure, systems), while the rest can be categorised as “soft” (Staff, Style, Skills and Shared values) The Lee, Venter and Bates framework of organisational architecture Whereas the McKinsey 7-S framework depicts organisational architecture as a set of interrelated and interdependent sub-systems, Lee, Venter and Bates depict it as a flow diagram or process. In terms of the framework, which should be read from right to left, the following components make up the organisational architecture: - The architecture is shaped by the needs of internal and external stakeholders. For example, organisations exist to serve customers, so customers play an essential role in shaping the organisational architecture. - The organisation’s capabilities, described as the important outcomes provided by the organisation, are distributed to the stakeholders. - The organisational processes lead to the outcomes (capabilities), and are underpinned by the structures and systems of the organisation, the competencies of individuals (knowledge, skills and abilities) and the technologies employed by the organisation. Organisational culture underscores the organisational architecture. 5. Explain the importance of organisational architecture in building a cohesive strategy. - Organizational architecture is an integrated strategic response(blue print) that draws together the key dimensions and strategic planning and implementation components of the organization, such as organizational structure, leadership, organizational culture, policies and strategies to guide strategic planning and implementation 5 -Simply put it is a blue print of the internal and largely invisible workings of the organisation -Organizational architecture is the totality of the internal organisation and its external relationships. -Is the blueprint of the organization using architectural disciplines to improve performance. It is a definition of what the organization must produce to satisfy its customers, compete in a market, deal with its suppliers, sustain operations and care for its employees -The value contributed by organizational architecture is to increase the effectiveness of the various functions in the organization, by mapping and modelling the organization to its vision and strategic goals -It gives direction to all organizations aspects such as the organizational structure and other functional departments -Organisational architecture plays an important role in strategy implementation as it helps the organization to “map out” where it currently is and where it wants to be in future. - The argument for using an organizational architecture framework (a strategy tool in the strategist toolkit) is that strategy implementation components and organizational subsystems should align with each other , creating a cohesive whole. Failing to do will lead to strategy implementation components and some organization systems to go in different directions, which will reduce successful strategy implementation 6. Explain the planned strategic change process, with specific reference to the change process of Kurt Lewin and John Kotter, and make recommendations with regard to managing change in a specific organisation. The change model of Kurt Lewin Step 1 – Unfreezing Most individuals will naturally resist change and will be inclined to maintain the status quo (the current state). For this reason, actively “unfreezing the status quo and readying the organisation for change is required. Entails 2 critical steps: - Current behaviours have to be examined and employees have to be shown how necessary change is, and how the status quo is hindering organisational growth. -Employees have to be informed of the imminent change, why it is necessary, what it will entail and how it will benefit them Step 2 – Changing It is the most difficult phase of the change process. During this phase, employees need to start learning the new behaviours required of them, and they require a lot of support. This phase is characterised by: - Employees acquiring new knowledge, skills and attitudes (training) - Organisational structures and systems changing - Communication throughout to keep the momentum (reminding employees why it’s needed and how it will benefit) Step 3 – Freezing It has to be solidified and entrenched in the organisation. This is essential to ensure that employees do not simply revert back to their old ways of doing things. The change should be made part of the performance management and reward systems of the organisation The change model of John Kotter Step 1 – Establishing a sense of urgency This phase requires leaders to establish a need for change and create a sense of urgency around the need for change. In terms of strategy implementation, not changing would be a threat to the continued success of the organisation, and employees will have to be convinced of that to create a sense of urgency. Step 2 – Creating the guiding coalition The guiding coalition: group of individuals with the knowledge, skills and attitudes to drive the change in the organisation. A key role is to create and implement a road map for change. It should be a mix of people who complement each other. Step 3 – Developing a change vision The purpose of this is to create a compelling vision for change that employees can buy into and that will mobilise them for change. Ideally a change vision will emphasise the need for change and the aspirations of the organisation. It should: - Provide a clear, compelling view of the future - Appeal to the long-term interests of stakeholders - Be feasible, containing realistic and attainable goals - Be focused and clear enough to provide guidance in decision making - Be easy to communicate and explain Step 4 – Communicating the vision for buy-in The change needs to be communicate consistently and on every platform so employees understand the change, why it’s happening and how it will be beneficial. Leaders “walking and talking” the change is more powerful than any other communication tool. Step 5 – Empowering broad-based action The purpose of this is to ensure that existing and potential barriers to change are removed, and that those 6 responsible for driving change are empowered to do so. Barriers may include structural barriers (systems that are not aligned) and human barriers (resistance to change or lack of skills). Step 6 – Generating short-term wins Large-scale change, such as that needed for strategy implementation, can be a long & hard process. To keep the enthusiasm and momentum going, it is important to show some short-term results (setting performance goals that are aligned with the change, widely acknowledging and celebrating the attainment of such goals.) Step 7 – Never letting up It is vital to ensure that the change process never stops and that the momentum is maintained. If this step is executed correctly and the change process is successful = new projects being initiated, efforts being made to keep urgency levels high, and employees increasingly being empowered. Step 8 – Incorporating changes into the culture In order to instill the change in the culture of the organisation, it must become part of the shared values and beliefs of the organisation. This could be accomplished by: - proving that the new way is better - achieving better success - accepting that some people may not accept the change and moving on - reinforcing new norms and values with incentives, rewards and promotions - reinforcing the culture with every new employee