8. Strategy Implementation
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"The vision must be followed by the venture. It is not enough to stare up the steps – we must step up the stairs." – Vance Havner
1. Introduction • Strategic Implementation is a process of activating the strategy. It is the sum total of all the activities and choices required for execution of a strategic plan. • It is the process by which strategies & policies are put into action through the development of programs, budgets and procedures. • Strategy implementation may be said to consist of securing resources, organizing these resources and directing the use of these resources within and outside the organization.
1. Introduction • The way in which the strategy is implemented can have a significant impact on whether it will be successful. • In large companies, those who implement the strategy likely will be different people from those who formulated it. Thus, care must be taken to communicate strategy & the reasoning behind it, otherwise implementation might not succeed if the strategy is misunderstood. • In lower level position, managers resist its implementation because they don’t understand why the particular strategy was selected.
2. Strategy Implementation • Strategy implementation is an internal, operations – driven activity involving organizing, budgeting. Motivating, culture – building, supervising and leading to make the strategy work as intended. • Activating a strategy is a process of putting strategy into action. Strategy implementation involves several issues in activating the strategy. Activation of strategy OR steps involved in strategy implementation can be elaborated as follows: -
2. Steps of Strategy Implementation • • • • • • • •
Institutionalization of strategy. Formulation of Action Plans. Project Implementation. Procedural Implementation. Resource Allocation. Structural Implementation. Functional Implementation. Behavioral Implementation.
A) Institutionalization of strategy. • Institutionalization of strategy is the first activity involved in activating the strategy. Institutionalization of strategy involves two aspects: i) Communication of strategy: Once the strategy is formulated it must be communicated to those persons who would implement it. Strategy communication is a process of transferring the strategy information from the formulators to the implementers. Ii) Securing Acceptance of Strategy: It is not enough to communicate the strategy to the members of the organizations, but it is equally important to secure their acceptance of the strategy, so that they implement effectively.
B) Formulation of Action Plans • Once the strategy is Institutionalized through its
communication and acceptance, the management proceeds to formulate action plans. The management has to frame action plans in respect of several activities required to implement a strategy. • The action plans may be in respect of purchasing new machinery, appointing additional personnel, developing a new process, etc… • The type of action plan depends upon nature of strategy. While framing a manager should check out the objectives, activities to perform & resources required to perform the action plans.
C) Project Implementation Project Implementation passes through following phases that are as follows: • Conception Phase – This phase is an extension of strategy formulation phase. In this phase, project ideas are generated during the process of strategic alternatives & strategic choice that may be implemented in future by organization. • Project Analysis Phase – The project ideas have to be arranged according to priority for the purpose of development. Before selecting a project for development, a preliminary project analysis have to be made in respect of marketing, technical, finance, etc…and check out such analysis is required to analyze whether project would appeal to investors, banks & FI’s.
C) Project Implementation • Planning Phase – In this phase, management undertakes detailed planning of project. The detailed planning should cover different areas of project such as production schedules, plant design & layout, technical arrangements, marketing, finance, etc… • Organizing Phase – The management must organize for necessary resources such as manpower, finance, systems and procedures to implement the project. • Implementation Phase – During this phase, the management must undertake engineering, order placement for equipment & material etc… leading to the testing, trial & working of plant.
C) Project Implementation • Operation Phase – The final phase involves handing over the plant to the operating personnel for operation purpose. At this stage the production starts.
D) Procedural Implementation. • In order to implement the strategies, the management must have good knowledge of the procedural framework within which the plans, projects and programmes have to be approved by the government authorities. The government authorities besides the policy guidelines issued by the government authorities from time to time. Some of the important procedural requirements can be elaborated as follows: 1. Formation of a company – The formation of a company is governed by the provision of Indian companies act, 1956 as amended from time to time. All activities for formation should be carried out such as Registration, obtaining certificates, documentation must be forwarded to registrar of companies, etc…
D) Procedural Implementation. 2. Licensing Procedures – Certain industries require licensing procedures. As per the industrial policy, 1991, six industries require licensing manufacturing products such as alcohol, cigarettes, chemical fertilizers, industrial explosives, defense and Drugs & Pharmaceuticals. Therefore company requiring the license must apply for the same. 3. FEMA Requirements – if required, organization must fulfill the necessary requirements of the Foreign Exchange Management Act, 2000. Those organizations willing to deal in foreign exchange transactions must ensure that they collect required information in context to provisions of FEMA.
D) Procedural Implementation. 4. Import and Export Requirements – Similarly, organization willing to deal in Import & Export need to follow certain procedural requirements, such as they have to register with Directorate General of Foreign Trade (DGFT) and obtain Importers Exporters Code (IEC) 5. Competition Act, 2002 – The government has introduced this act that aims at promoting competition by restricting anti competitive practices. Large businesses must have a good understanding of the competitive act.
D) Procedural Implementation. 6. Foreign Collaboration Procedures – For proposals to set up projects with foreign collaborations require prior government approval. The government authorities such as Reserve Bank of India (RBI), Foreign Investment Promotion Board (FIPB) and Project Approval Board are major regulatory bodies for foreign collaborations including joint ventures abroad. 7. SEBI Requirement – Securities and Exchange Board of INDIA (SEBI) became active since 1992 with the passing of SEBI Act, 1992. the act empowered SEBI with necessary powers to regulate the activities connected with marketing of securities & investments of stock exchanges, merchant banking, portfolio management, stock brokers and others connected with securities
D) Procedural Implementation.
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8) Consumer Protection Act, 1986 – Business firms must have good knowledge of consumer protection act, 1986. This act was passed to provide better protection of the interests of consumers.The act seeks to promote & protect rights of consumers such as: The right to be protected against the marketing of goods that are hazardous to life & property. The right to be informed about the quality, quantity, potency, purity standards and price of goods to protect the consumer against unfair trade practices. The right to be heard & be assured that consumers interests will receive due consideration. The right to seek redressal against unfair trade practices or exploitation of consumers, etc…
D) Procedural Implementation. 9. Pollution Control Requirements – the govt. of India has passed several laws relating to the protection of environment. The business organizations should have a good knowledge of such laws. To name few of them are as follows: • The Water (Prevention & Control of Pollution), Act, 1974. • The Air (Prevention & Control of Pollution), Act, 1981. • The Environment Protection Act, 1986, etc…
D) Procedural Implementation.
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10. Labour Legislation Requirements – The govt. of India has passed several laws to protect the interest of the workers. Business Organizations should have a good knowledge of such laws, which include: The factories Act, 1948. The Workmen Compensation Act, 1923. The Bonus Act, 1965. The Minimum Wages Act, 1948. The Industrial Disputes Act, 1947, etc…