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Strategy implementation

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strategy implementation, resource allocation, issues in strategy implementation, procedural issues

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Strategy implementation

  2. 2. Meaning: Strategy implementation is a term used to describe the activities within an organization to manage the execution of a strategic plan. 2
  3. 3. • Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives. • Develop • Utilize • Amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance. • Special value developing tasks and roles to the employees. • Maximize efficiency, quality, and customer satisfaction. 3
  4. 4. Organizational control system • Motivational Incentives • Feedback • Organizational Performance. •Values, •Attitudes, •Norms and Beliefs. Excellently formulated strategies •organizational structure, •reward structure, •resource-allocation process, etc. 4
  5. 5. •Strategy implementation poses a threat to many managers and employees in an organization. •New power relationships are predicted and achieved. •New groups (formal as well as informal) are formed whose values, attitudes, beliefs and concerns may not be known. •With the change in power and status roles, the managers and employees may employ confrontation behaviour. 5
  6. 6. STRATEGIC PLANNING (what to do overall) STRATEGIC IMPLEMENTATION (How to do it Day–to-day operations ) 6
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  8. 8. A B C D Strategy Formulation – Implementation: Interrelationship • Strategy formulation and Strategy Implementation are different and it needs to be sound and excellent. • Strategy fails because of failed implementation and not because of strategy model. • The matrix shows various combination of strategy formulation and implementation. 8
  9. 9. Strategy Formulation – Implementation: Interrelationship 1. Thrive 2. Die Slowly 3. Survive 4. Die Quickly Effective Ineffective Strategic Management EfficientInefficient OperationalManagement In cell 1 organization thrives, since it is achieving what it aspires to achieve with efficient output/input ratio. Where in cell 2 and cell 4 organization is doomed unless it can establish strategic direction. In cell 3 strategic direction is present to ensure effectiveness even if rather too much input is being used to generate outputs. Thus to be effective is to survive whereas efficiency is not sufficient for survival. 9
  10. 10. ISSUES IN STRATERGY IMPLEMENTATION •Implementation task tests strategist ability to allocate resources, design structures, formulate functional policies, identify leadership styles etc. •Strategies leads to plans. Plans result in different kinds of programs which includes goals, policies, procedures, rules and steps to be taken in putting them into action. •Programs leads to formulation of the project which is time scheduled and costs are predetermined. It requires allocation of funds based on capital budgeting of the organization. 10
  11. 11. •Projects creates need for infrastructure for day to day operations in organization. Resource allocation is key to successful projects •Sequence in which strategy implementation issues are to be considered: 1.Project Implementation 2.Procedural Implementation 3.Resource Allocation 4.Structural Implementation 5.Functional Implementation 6.Behavioral Implementation 11
  12. 12. • Transition from strategy formulation to strategy implementation requires shift in responsibility from strategist to divisional and functional managers and their involvement should be maximum during strategy formulation. 12
  13. 13. RESOURCE ALLOCATION •In strategic planning, resource allocation is a plan for using available resources. •It is the process of allocating scarce resources among the various projects or business units. There may be contingency mechanisms • Priority ranking of items excluded from the plan • Which items to fund if more resources should become available • priority ranking of some items • Sacrificed if total funding must be reduced. 13
  14. 14. 14 There are a number of approaches to solving resource allocation problems •Manual Approach •Algorithmic Approach •Combination Of Both.
  15. 15. Procedural Issues In Strategy Implementation Following the procedures laid down for implementation constitutes an important component of strategy implementation in the Indian context : •Licensing Procedure •Foreign Collaboration Procedure •FERA Requirements •MRTP Requirements •Capital Issue Control Requirements •Import and Export Requirements •Incentives and Facilities Benefits 15
  16. 16. Licensing Procedure : •Registration & Licensing of industrial undertaking rules. a License is necessary for establishing • new unit, •manufacturing a ‘new article’, •substantial expansion of capacity in existing business, • changing location. 16
  17. 17. Procedure : •Secretariat for Industrial Approvals (SIA) •Project Appraisal Board Application number of govt. agencies & ministries before a Letter of Intent is issued After conditions are fulfilled , the Letter of Intent is converted into an industrial license 17
  18. 18. Foreign Collaboration Procedure : •Priority areas, •Export oriented or high technology industries, •Permitting existing foreign investment in non-priority areas up to 40% of the equity holding. This limit has been raised to 51% in 34 high-priority industries. •All proposals to set up projects with foreign collaboration require prior government approval. 18
  19. 19. Procedure : •Preliminary evaluation by the promoter, •obtaining industrial license (if necessary), or registration with the Directorate General of Technical Development •Obtaining clearance under the MRTP Act •Applying for foreign collaboration to Foreign Investment Board •Applying for import of capital goods (if required) •Finalisation of agreement and clearance from the Reserve Bank of India (RBI). 19
  20. 20. MRTP Requirements : •To prevent monopolistic & restrictive trade practices, • The concentration of economic power. •The mrtp act requires that any substantial expansion which increases the assets or productive capacity or supply for distribution not less than 25%, requires the approval of the central govt. 20
  21. 21. Contd… : The MRTP Act applies to four types of undertakings: •An undertaking having gross assets of Rs. 100 crore & above •Interconnected Undertakings which together have assets of Rs. 100 crore or above •A dominant undertaking having assets of Rs. 1 crore & above •Interconnected dominant undertakings. 21
  22. 22. Capital Issue Control Requirements : Capital Issue Control Requirements The issue of capital by companies is regulated through the Capital Issues Control Act, 1956 & the Securities Contracts Regulation Act, 1956 for the purpose of ensuring that investments are made in priority areas, & for the promotion of capital markets & protection of shareholders. For the purpose of strategy implementation, these acts are relevant so far as the provision of financial resources is concerned. Apart from this, these acts also affect mergers & amalgamations as they regulate the capital reorganization plans for mergers. 22
  23. 23. Contd… : The Controller of Capital Issues (CCI) under the Dept. of Economic Affairs, Ministry of Finance, is the nodal agency for the administration of the acts. All proposals for fresh issues of equity or preference capital, issue of right shares, bonus shares, debentures, etc. & capitalization of free reserves have to be scrutinized by the CCI. 23
  24. 24. Import & Export Requirements : •The Import Trade Control Policy Book (popularly called the Red Book) is an annual govt. publication which outlines the import licensing policy for individual industries & for different categories of importers (established, actual users & registered). •Through the Import & Export Control Order, the govt. has delegated the power to issue licenses & to administer the act to the Chief Controller of Imports & Exports. 24
  25. 25. Contd… : For capital goods imports, the Capital goods committee exercises the powers. The Secretariat for industrial approvals handles the procedural formalities. The detailed procedure for import licenses for capital goods and raw materials is provided in Import Trade Control Handbook of Rules & Procedures. 25
  26. 26. Benefits from Incentives & Facilities : Benefits from Incentives & Facilities Project Implementation for putting a strategy into action requires a consideration of various incentives, subsidies, & facilities which can benefit an organization. In providing incentives, etc. the govt. does not play a regulatory or controlling role but a promotional role, which is manifested in various forms. 26
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