Strategic management process and stratergic implementation PPT MBA FINANCE

1. Strategic
management
process

2. Strategic management process
Vision
and
Mission
External
Audit
Internal
Audit
Long-
term
objectives
Generates
evaluates
select
strategy
Implement
strategy
mgt issues
Implement
strategies
marketing,
Finance/A/c
R&D &CIS
Measure&
evaluate
performance

3. Strategy Implementation
So far we have studied strategy formulation, analysis of
alternative strategies, and then making a strategic choice.
What Next ?
The strategy must be translated into concrete action, and
That action must be carefully implemented.
Implementation is initiated in three stages:
1. Identification of annual objectives
2. Development of specific functional strategies
3. Development and communication of concise policies to guide
decisions.

4. Implementing Strategy:
Strategy
Implementer’s
Action
Agenda
Building a
Capable
Organization
Allocating Resources
Establishing Strategy-
Supportive Policies
Instituting Best
Practices for
Continuous
Improvement
Installing Support
Systems to Carry
out Strategic RolesTying Rewards
to Achievement
of Key Strategic Targets
Exercising
Strategic
Leadership
Shaping Corporate
Culture to Fit
Strategy

5. Factors Influencing Managers in Leading Implementation
Process
Experience and knowledge of business
New to job or seasoned
Network of personal relationships
Diagnostic, administrative, interpersonal, and
problem-solving skills
Authority given manager
Leadership style most comfortable with
View of role to get things done
Context of organization’s situation

6. Strategy choice & implementation – the ‘Nestle’ story.
Nestle has a presence in India over a century !!
For a long time it imported condensed milk (milk maid) &
infant food items.
Lately, it woke up to the food- market potentials in India and
set long-term objectives:
 Launch variety of dairy products – Milk, Butter, curd
 Increase food products – instant coffee (nescafe), Maggie,
KitKat, Cerelac, Nestrum, Munch etc.
 Penetrate vast rural, middle-class segments
 Maintain competitive edge (HLL. Cadburry, Heinz & locals)
The Strategy
 Nurture the best selling brand, Price cuts, economy packs at
different price points, strengthen distribution network, expand
product base to include daily consumable items, build volumes
through price cuts, reach out with appealing adds.

7. Nestle Story – the current market scenario:
Milk Products & Baby food: Amul has focussed on Milk
Products and Babyfood- giving tough competition. Local
coops. Entering the market, Britania JV with Fonterra is a big
challenge.
Beverages: HLL’s Bru favoured in South India, the coffee
belt, Barista-Tata coffee poses threat, Bisleri & Kinley price
war
Processed Food: HLL making strong bid, locals like MTR in
the fray.
Chocolate & Confectionery: Cadbury adopting Nestle’s
strategy, ITC, Amul, HLL in the fray using their distribution
network to their advantage.

8. Strategy Implementation
Operationalizing strategy
This phase is the translation of the agreed upon long term
objectives, the strategic plan, into organizational action.
Here the focus shifts from strategy formulation to strategy
implementation.
There are four important things to be done well to make this
transition:
1. Identify short term objectives
They translate long term objectives into annual targets
for action.
They provide clarity and can be very powerful motivator
and facilitator of effective strategy implementation.

9. 2. Initiate specific functional strategies
They translate business strategy into daily activities.
Functional managers are involved in developing these
tactics and their participation helps in clarifying what needs
to be done to implement the strategy.
3. Communicate policies that empower people in the organization
Policies are empowerment tools that simplify decision
making by empowering operational managers and their
subordinates.
They empower the people involved in execution by
reducing the time required to decide and act.
4. Design effective rewards
It is aimed at rewarding the desired actions and results.

10. Annual or short term objectives
 They provide a guidance to the people in the organization as
to what needs to be done currently to make the long term
objectives become reality.
 They provide specific guidelines about the things to be done.
 They "operationalize" long -term objectives. e.g. if the long
term, say five year plan is to gain forty percent market share
from the current twenty percent, then what needs to be done
in this year to increase the current market share by "X"
percent

11. Annual or short term objectives
 Discussion and agreement on short-term strategies help raise
issues and potential conflicts that requires coordination to
avoid serious consequences.
 It identifies measurable outcomes of action plans or
functional activities, which can be used to make feedback,
correction, and evaluation more relevant and acceptable.

13. Short-term objectives are accompanied by action
plans, which help short-term objectives in three
ways:
1. These action plans identify functional tactics and activities
that will be undertaken in the next week, month or quarter to
build competitive advantage. They specify what exactly needs
to be done.
2. They provide a time frame for completion - a schedule with
starting and ending dates.
3. It identifies who is responsible for each action in the plan.

14. Qualities of effective short-term objectives
1. Measurable
Short-term objectives are more consistent when they clearly
state
what is to be accomplished
when it will be accomplished
how its accomplishment will be measured
This helps in effectively monitoring each activity and the
progress across several interrelated activities.
Measurable objectives make misunderstanding less likely
among interdependent managers who must act on the plans.
It is easier to quantify objectives of line units (e.g.
production) than staff areas (e.g. personal).
Difficulties in quantifying objectives often can be overcome
by initially focusing on measurable activity and then
identifying measurable outcomes.

15. 2. Priorities
Some annual objectives would require higher priority either
because of the timing considerations or because of their
effect on a strategy's success. E.g. new product development
may be more important than promotional activities
Not prioritizing will lead to conflicting assumptions which
may inhibit progress towards strategic effectiveness.
The various ways on which priorities can be established are:
1. Ranking method
2. Terms such as primary, top and secondary can be used.
3. Objectives can be given weights (e.g. 0 to 100 percent)
to establish and communicate the relative priority.

16. 3. Linked to long-term objectives
Short-term objectives can add specificity in identifying what
must be accomplished to achieve long-term objective.
e.g. Adobe systems has an long-term objective of achieving
five percent of its total revenue to come from India in the
next 5 years. To achieve this it can have a series of short-
term objectives like focusing on particular products.
The link between the short-term and long-term objectives
should resemble cascades through the firm, from basic long-
term objectives to specific short-term objectives in key
operational areas.
The cascading effect provides a clear reference for
communications and negotiation, which may be necessary to
integrate and coordinate objectives and activities at the
operating level.