Mng3702 topic 1 With Correct Solutions

Mng3702 topic 1 1 Comment on the importance of strategy implementation as a component of the strategic management process. (5) - ANS The importance of strategy implementation in strategic management process is more about creating change that is timely and appropriate. Organisations could in the past make incremental changes to keep pace, but change is increasingly revolutionary and disruptive. Organisations have to deal with products being made obsolete in a very short space of time, and products have shorter life cycles. Moreover even if they are the leading competitor the disruption may come not from the competitors in the same industry, but from organisations in other industries that have a business model that is unexpected. Overall strategic change that is not managed well will have little value if plans are not implemented timely. As plans themselves may be obsolete by the time a strategic plan is implemented. Discuss five (5) reasons why strategy implementation in an organisation might fail. (5) - ANS 9/10 organisations fail to implement strategy successfully. Vision Barrier. Only 5% of the workforce understands the vision and strategy. Management Barrier. 85% of top management teams spend less than an hour on strategy. People Barrier. Only 25% of managers have rewards linked to strategy. Resource Barrier. 60% of organisations do not link budgets to strategy. Other reasons why strategy implementation might fail include: Inadequate resources. Poorly communicated strategy. Implementation actions that are not clearly defined. Unclear accountability for implementation actions and initiatives. Inadequate performance targets. Inadequate rewards. Poor leadership Distinguish between strategic planning and strategy implementation. (10) - ANS STRATEGIC PLANNING STRATEGY IMPLEMENTATION Takes place at top management level Responsibility of all managers Requires intuitive and analytical skills Requires motivational and leadership skills Strategic planning is a market driver activity Strategy implementation is an operations driver activity Focuses on effectiveness Focuses on efficiency Strategic planning is a thinking phase Strategy implementation is a action phase Explain the different type of strategic change and the issues involved. (10) - ANS Strategic change includes all the efforts and actions that are taking place to move an organisation from its present state toward the desired future state to increase its competitive position and its profitability. Strategic change is thus the implementation of a new strategy that involves substantive changes to the normal routines of the organisation. Strategic change is the proactive change. Four types of strategic change: 1. Adaptation: the current organisational setting can facilitate the incremental change that must happen in order to achieve the desired goals. 2. Reconstruction: the reconstruction of processes and policies is required to implement the new strategy. 3. Evolution: involves fundamental changes in an organisation to deal with the situation overtime. 4. Revolution: involves fundamental changes as a result of sudden and fast-changing conditions. Six issues of change: 1. Time: How quickly is change needed; does the organisation have the time to change? 2. Scope: What is the scope of change needed: If dramatic revolutionary or a moderate change is needed? 3. Diversity: What is the level of homogeneity or heterogeneous that can hamper in the organisation change? 4. Capacity: Does the organisation have the capacity in terms of the resources needed to change? 5. Readiness: Are the employees ready to change such as resistance? 6. Capability: Do the organisation's employees and managers have the capabilities to implement change? Figure 10.3, in E&L, p.267 shows that the types of change along two dimensions the nature of the change and the scope of the change. Comment on the strategic change process. (7) - ANS Managing strategic change involves a process. Clarity about what changes are necessary is an obvious starting point for such a process. Such a process entails: a) Identify the areas that require change. These areas may include technology, operations, administration and people. b) How to manage the resistance to strategic change. This involves employees with the highest resistance. It entails the effective use of incentives. c) How to use power and influence to persuade people to support change. Liaise with people that have the power to influence. Disguise radical changes as minor changes. d) How to become a learning organization. It entails learning is seen as a continuous process. The organisation's vision of the future is shared. Explain why corporate governance is important in strategy implementation. (5) - ANS In the context of strategy implementation, corporate governance is the responsibility of the Board of Directors to oversee the implementation of strategy. The King reports on corporate governance and the Public Finance Management Act (PFMA) are examples of corporate governance guidelines/frameworks. Some reasons for its importance (there may be additional reasons, but these are some of the main reasons why corporate governance is important in strategy implementation): It focuses on sustainability. It ensures that adequate controls are in place. It promotes high ethical standards. It makes sure that reward systems are reasonable and beneficial to the organisation. It aims at reducing the risk of failure. Good corporate governance and corporate citizenship are equally important in strategic planning and implementation. The board of directors are responsible to ensure that management implements chosen strategies and monitors that implementation. Strategy implementation should take issues such as social responsibility, environmental responsibility, stakeholder engagement and sustainability into account. 7. Discuss the "warm square" in the modified McKinsey 7-S framework. (5) - ANS There are four components in the "warm square": Style. the leadership and management style of the organization. Staff. the people in the organization. Skills. the organization's core competencies and sources of competitive advantage. Shared values. the values that the organization believes in. The "warm square" refers to the people of the organization and to the "soft" issues. It also relates to the drivers of strategy implementation; such as leadership, organizational culture and reward systems; which are people- centered. Whereas the "cold triangle" relates to the structural drivers of strategy implementation; namely organizational culture and reward systems; and the instruments of strategy implementation; namely short-term objectives, functional tactics and policies; which are all not people-centered. 8 Describe the drivers of strategy implementation. (5) - ANS Five drivers are: loror 1. Leadership: a strategic leader must have the ability to anticipate, envision, maintain flexibility and to empower others to create strategic change as necessary, to articulate a strategic vision for the organisation and to motivate others. Strategic leadership involves managing through others and influencing human behaviour in order to achieve certain goals. 2. Organisational culture: refers to the way an organisation do things. It is the set of important, unstated, assumptions, beliefs, behavioural norms and values that the members of an organisation share 3. Reward systems: defined as the umbrella term for the different components considered in performance evaluation and the assignment of monetary and non-monetary rewards. Reward systems play an important role in strategy implementation and should be created in such a way that they are tightly linked to the strategy. 4. Organisational structure: refers to the framework within the strategic process to achieve the organisation's goals. The terms organisational design/structure are often used interchangeably. Organisational design can be a source of competitive advantage if aligned with the chosen strategy, is functional and difficult to copy, and makes it easy for customers to do business with the organisation. 5. Resource allocation: it is essential that resources be allocated in such a way that they support the organisation's long-term goals, chosen strategy, structure and short-term goals. The resource allocation plan or budget must be linked to the strategy. A change in strategy requires a change in the resource allocation plan of an organisation to ensure a continued strategy-resource. 9 Describe the instrument of strategy implementation. (5) - ANS Short-term goals Functional tactics Policies Short-term goals guide action and direct the activities of organisational members in identifying what must be done to achieve long-term goals. It serves as standards of performance and as incentives for managers and employees to perform, and are used to justify activities to the stakeholders. It helps to establish departmental or divisional and organisational priorities, which in turn can be used as a basis for allocating resources. Functional tactics support short-term goals and can be defined as the key routine activities that must be undertaken in each functional area to achieve the organisation's chosen strategies. Functional areas include marketing, finance, operations and human resources management. Policies define the specific guidelines, methods, procedures, rules, forms and administrative practices that direct the thinking, decisions and actions of managers and employees in strategy implementation. A change in strategy requires a change in policies. 10 Provide guidelines for overcoming resistance to change. (5) - ANS 1. Education and communication: communication helps people to understand why it is necessary to change and mutual trust is really important. 2. Explicit and implicit coercion: coercion is not a positive way to manage resistance to change. It may work in the short term, but it is unlikely that it will change result in long-term commitment on the part of employees. 3. Facilitation and support: the building of support networks throughout the organisation is helpful in overcoming resistance to change. 4. Giving clear direction: authority may be used to set the direction and impose the necessary means to implement the change. 5. Manipulation and cooptation: manipulation is an attempt to influence or force people into accepting the necessity for change; cooptation involves the "buying-off" of informal leaders by giving them personal rewards to accept and promote change. 6. Negotiation and agreement: is normally linked to incentives and rewards 7. Participation and involvement: people will be more supportive of the strategic changes when they form part of the strategy formulation process.