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Factors Influencing Strategy Implementation

The aim of this module is to produce a 4000 word research proposal that would be capable for supporting the preparation of a Master’s dissertation. The project report would include an introduction including a title, which would highlight the content of this business document providing a background, informing the reader of the problem / issue at hand and the context of the situation that would be discussed. The research issue would be provided highlighting the importance of the issue in today’s ever-changing and competitive, cut-throat business environment. Adequate linkages would be provided to co-relate the research aims, research objectives, research questions and the hypothesis as such generated.

A coherent and critical literature review would follow demonstrating the knowledge of the literature available and linking it to the situation which would be investigated.

A research design and methodology would be adopted to investigate the concerned issue providing a rationale as to how the research objectives are to be accomplished explaining the selection of the research paradigm. The research design would include the methods of data capture, the data access issues, the analysis and the interpretation means that would be used to assess the situation and appropriate reasons would be provided for the choice of research tools used. Relevant ethical issues underpinning the research objectives would also be discussed along-with the resources required to complete the research proposal.

The last part of this management report would include a timetable that would provide the time that it took to complete each part of the research proposal along-with a list of references utilized to complete the report.

INTRODUCTION

TITLE: FACTORS INFLUENCING STRATEGY IMPLEMENTATION

BACKGROUND

The title of this research proposal is “factors influencing strategy implementation”. Before we discuss the issue and highlight the importance of the issue in the context of the report it is of prime importance to understand the concept of strategy implementation itself.

It is the process by which the business strategy formulated is put into action. It includes the design and management of organizational systems to achieve the best integration of people and structure, allocating resources, managing human resources and developing information and decision processes to achieve organizational objectives.

Pierce and Robinson note that "to effectively direct and control the use of the firm's resources, mechanisms such as organizational structure, information systems, leadership styles, assignment of key managers, budgeting, rewards, and control systems are essential strategy implementation ingredients".

After the creative and analytical aspects of the corporate strategy have been formulated the priority of the management is to convert the strategy into operationally effective action. A strategy is never complete, until it gains a commitment of the firm’s resources and becomes embodied in its organizational structure.

Strategy implementation is an iterative process of implementing strategies, policies, programs and action plans that allows a firm to utilize its resources to take advantage of opportunities in the competitive environment (Harrington, 2006).

There is no one definition of strategy implementation as seen from the above citations but for the purpose of this report, taking into consideration the definitions above we can define strategy implementation as an iterative, dynamic and a complex process, which comprises of series of decisions and activities by the management and the administration those affected by many interrelated internal and external factors, to turn strategic plans into reality in order to achieve the objectives of the firm.

RATIONALE FOR THE STUDY

This part of the report would highlight the aim and the objectives of the research, discussing the issue chosen and its importance by proposing a research question and providing an answer to it in the literature review.

Many studies have acknowledged that business strategies often fail not because of inadequate strategy formulation, but because of an inappropriate implementation strategy. This report would study the factors that enable or impede effective strategy implementation. This report would highlight how strategy implementation has been researched so far and how this field may be moved forward so as to help in effective execution of a business strategy. As a result of the literature review undertaken, the report has found nine critical factors for strategy implementation that will be discussed further in the literature.

Formulation of an effective strategy, making the strategy work and implementing it throughout the company is a difficult task (Hrebiniak, 2006). Many factors potentially affect the process by which strategic plans are turned into organizational action. Unlike strategy formulation, strategy implementation is more of a craft, rather than a science. After successful formulation of the business strategy, difficulties usually arise during the subsequent implementation process.

If the business strategy formulated is not applied correctly to all the aspects of the organisational structure the business model would fail, thus harming the organisation in many aspects, the major being the financial capability of the firm, which would take a huge blow. It is of prime importance to get the implementation right otherwise there would be huge losses for the firm. Noble (1999b) notes, the best-formulated strategies may fail to produce superior performance for the firm if they are not successfully implemented. This issue is of utmost importance in today’s day and age because of the cut-throat competition in the ever-changing business world where each firm needs to keep re-modelling their policies and procedures to keep up with the change in the external and internal business environment.

There are combination of issues that influence the success of strategy implementation, ranging from the people who communicate or implement the strategy to the systems or mechanisms in place for co-ordination and control. How can we better understand these issues and their importance for successful strategy implementation? In this report we try to respond to this question by the critical analysis of the existing research on the factors that influence strategy implementation.

An analysis has been conducted of the most widely used literature databases to identify key factors influencing the process of strategy implementation, to surface current areas of agreement and disagreement on the topic.

LITERATURE REVIEW

In the following section, the report would review the study sources and assess their research context, theoretical bases, their main results and the research methods used as well as the analytical techniques which are employed for the study. The examined organizational levels and organizational types are the two elements of the research context. The core of the literature review, would concentrate on the nine factors identified through rigorous analysis of the study sources, that play a role in influencing strategy implementation success, as well as the frameworks or models that aggregate or relate the relevant factors to each other. This is followed by the discussion of the theoretical bases of the reviewed studies. Finally, the research methods and analytical techniques adopted will be reviewed to see which methods are still underutilized in the context of strategy implementation.

By carrying out a literature review of the existing studies, the report found two types of strategy implementation studies: one that highlight the importance of the individual factors for strategy implementation and the second that emphasize the “big picture‟ of how the single factors interrelate and form a strategic implementation environment.

The research would highlight nine recurring, individual factors that influence strategy implementation. They are namely the strategy formulation process, the strategy executors (managers, employees), the organizational structure, the communication activities, the level of commitment for the strategy, the consensus regarding the strategy, the relationships among different units/departments and different strategy levels, the employed implementation tactics, and the administrative system in place.

THE NINE FACTORS THAT INFLUENCE STARTEGY IMPLEMENTATION

1. Strategy Formulation

If the corporate strategy drafted by the business is a poor or a vague strategy, then it can limit the implementation efforts dramatically. Good execution cannot overcome the shortcomings of a bad strategy or a poor strategic planning effort (Hrebiniak, 2006). Several studies mention the fact that the kind of strategy that is developed (Alexander, 1985; Allio, 2005) and the actual process of strategy formulation, namely, how a strategy is developed (Kim&Mauborgne, 1993; Singh, 1998) will influence the effect of implementation. Alexander (1985) believes that the need to start with a formulated strategy that involves a good idea or concept is the most crucial and critical factor which helps promoting its successful implementation. As Allio notes, good implementation naturally starts with good strategic input: the soup is only as good as the ingredients (Allio, 2005).

2. Relationships among different departments and different strategy levels

Many studies in the concerned field have stressed that the institutional relationships among different units/departments and different strategy levels play a major role in the outcome of strategy implementation (Walker & Ruekert, 1987; Gupta, 1987; Slater & Olson, 2001; Chimhanzi, 2004; Chimhanzi & Morgan, 2005). Walker & Ruekert note that marketing policies, inter-functional structures and processes, corporate-business unit relationships and processes are a major influence on business strategy implementation. In addition, allocation of resources, functional competencies, inter-functional conflict, decision-making participation and influence, and coordination also have different effects on the implementation of various kinds of business strategies. Implementation effectiveness is negatively affected by conflict and positively affected by interpersonal communication and not written. Such interdepartmental dynamics are affected by senior management support informal integration and joint reward systems. Other relationships that have received attention to a lesser extent include finance, manufacturing, engineering, quality, marketing, accounting, and sales.

3. Executors

Executors comprise the top management, middle management, lower management and non-management. Effectiveness of strategy implementation is, at least in part, affected by the quality of people involved in the process (Govindarajan, 1989). The quality refers to the capabilities, experience, skills, attitudes, and other characteristics of people required by a specific position (Peng & Litteljohn, 2001). Findings indicate that strategy implementation effectiveness, critically depends on the human or people side of project management, and less on organization and systems related factors.

Top management refers to the senior-level leaders including presidents, owners, and other high ranking executives (CEO, CFO, COO etc.) and senior-level managers. Hrebiniak and Snow (1982) report that the level of interaction and participation among the top management team typically leads to greater commitment to the firm’s goals and strategies. This, in turn ensures the successful implementation of the strategy.

Gupta and Govindarajan (1984) note that greater the marketing and sales experience of middle managers, the greater would be their willingness to take risk and successfully implement the strategy. Heracleous (2000) also finds that if middle management do not agree with the strategy, or do not feel that they have the skill set to implement it, then they would sabotage its implementation. Middle managers expect the direction from the top management but frequently feel that they are in a better position to start and evaluate alternative courses of action.

Also, the lack of shared knowledge with lower-level management and non-management employees would create a barrier to successful strategy implementation.

4. Communication

Many researchers have emphasized the importance of adequate communication channels for the process of strategy implementation. Alexander (1985) notes that communication is mentioned more frequently than any other single item that promotes successful strategy implementation. Communication includes explaining what new responsibilities, tasks, and duties need to be performed by the employees in order to implement the strategy. It answers the why behind the changed job activities, and explains the reasons why the new strategic decision was made. Rapert and Wren (1998) find that organizations where employees have easy access to management through open and supportive communication channels outperform those with more restrictive communication environments.

Effective communication is a fundamental requirement for any effective strategy implementation. Organizational communication plays an important role in training, knowledge acquisition and applied learning during the process of implementation. In fact, communication is vital in every aspect of strategy implementation, as it relates in to the organizational context, organizing processes and the implementation objectives.

5. Implementation Tactics

Nutt (1986) stipulates four types of implementation tactics used by managers in making planned changes: intervention, participation, persuasion, and edict. Intervention refers to strategy adjustments made during the implementation stage by introducing new practices and norms. Participation includes formulating strategic goals and nominating a task force that can develop and propose the corresponding implementation options. Persuasion is the tactic which uses involved parties to convince the employees about the desired course of actions. The issuing of directives is the main focus of the implementation tactic edict. Lehner (2004) considers the implementation tactics as genuine organizational behaviour based on the assumption that implementation in general is dependent on the environment, and various strategic and corporate variables.

6. Consensus

Nielsen (1983) notes that firms must achieve consensus both within and outside their organization in order to successfully implement business strategies. The consensus about a firm’s strategy may differ across the operation channels within the company. If the employees of the company are not on the same information level or if information passes through many layers in the organization, a lower level of consensus would result. This lack of shared understanding may create obstacles to successful strategy implementation.(Noble, 1999b).

Floyd and Wooldridge (1992a) label the gulf between strategies conceived by top management and awareness at lower levels as “implementation gap”. Strategic consensus is the agreement between the top, middle, and lower-level managers on the fundamental policies of the organization. Strategic decisions are initiated by a team of top managers and then mandated to the rest of the organization, overlooking the importance of securing consensus with and commitment to the organizational strategy with the lower level employees, which is a big barrier for effective strategy implementation.

7. Commitment

Strategy implementation process may fail if the strategy does not achieve support and commitment by the majority of employees and the middle management. Shared understanding without commitment would result in ‘counter effort’ and may negatively affect the organisational performance. The understanding between middle management and those at the operational level to that of the top management team’s strategic goals is of prime importance to successful implementation. Noble & Mokwa (1999) have put forward three dimensions of commitment that are central factors which directly influence strategic outcomes: organizational commitment, strategy commitment and role commitment. Organizational commitment is the extent to which a manager identifies with and works toward organization-related goals and values. Strategy commitment is the extent to which a manager comprehends and supports the goals and objectives of an implementation strategy. Role commitment is the extent to which a manager is determined to perform his individual implementation responsibilities, regardless of his personal beliefs about the overall strategy.

8. Organisational Structure

The type of strategy adopted could differ in many ways and have different requirements regarding an adequate organizational structure. Factors relating to the organizational structure are the second most important implementation barrier according to Heide & Grønhaug & Johannessen’s (2002) study. Drazin and Howard (1984) stipulate that a proper alignment of the strategy with the organisational structure is an important pre-requisite for successful implementation of a corporate business strategy (Noble, 1999b). They note that changes in the competitive environment require adjustments to the organizational structure. If an organisation’s realignment strategies are lacking, it may exhibit poor performance and be at a major competitive disadvantage.

9. Administrative Systems

Roth, Schweiger & Morrison (1991) study suggests that organisational business units make use of three administrative mechanisms which are formalization, integrating mechanisms, and centralization, to create operational capabilities of configuration, managerial philosophy and coordination, to support business strategy implementation. Some researchers have also focused on the control systems which are one of important ingredients of administrative systems (Drazin & Howard, 1984; Nilsson & Rapp, 1999). Drazin and Howard (1984) discuss about the role of formal control system in the process of strategy implementation, and suggest that the fluidity of control system contribute to strategy implementation (Noble, 1999b).

RESEARCH DESIGN AND METHODOLOGY

This part of the project report would focus on the research design and methodology adopted to carry out the research of the issue chosen which is “the factors influencing strategy implementation”. The following literature would highlight the components of the research paradigm chosen to accomplish the study. This section of the project report would provide a detailed rationale on how the study would achieve the research objective put forth in the title.

This part would explain the methods of data capture used and the issues which would arise in gathering the required information along with the analysis and the interpretation techniques employed to achieve the research aim.

Limitations would be included in the following report to make the reader aware of the shortcomings of the chosen methodology; the relevant ethical issues would also be discussed in the proposed research design along-with the resources required to complete the proposed research. The choice for the research methodology adopted is in congruence with the strategic issue chosen for the research proposal.

The selection criteria to choose articles for inclusion in the research analysis:

The articles which contain the keywords “strategy implementation” or “strategy execution” have been included in the literature .From this; further articles were identified using the references sections of the previously retrieved articles. In this way, the report also includes the articles which treat strategy implementation as one of the major subjects even if their title or keywords did not include the terms strategy implementation or strategy execution. As a final selection criterion it was checked whether the articles explicitly discuss factors impeding or enabling strategy implementation success.

Data Collection

Secondary Sources

In order to identify the factors that enable or impede effective strategy implementation, the report has analysed relevant academic, peer reviewed journals such as the Strategic Management Journal, the Academy of Management Journal, the Journal of Management Studies, Long Range Planning, Journal of Management, Academy of Management Executive, Human Relations, Sloan Management Review, Journal of Marketing, etc. using the literature databases of EBSCO Host, ProQuest ABI, Science Direct, JSTOR and Wiley Interscience. Information has also been sourced from Google Scholar and books, newspapers, trade journals, industry portals, government agencies, trade associations, monitoring industry news and developments.

The research data would be collected in different organisations or units of an organisation. The organisations were mainly professional service organisations, from both public and private sector. For example, finance, insurance and telecommunications companies, and government departments would be included. The size of the units under study would be 100 to 500 employees. The study would be qualitative in nature, main research method being semi-structured interviews.

Primary Sources and Sampling

In each organisation or unit, representatives would form three groups, namely the top management, middle management, and lower level personnel, would be interviewed using the questionnaire provided below. Altogether twenty-five interviewees per organisation would be randomly chosen: 2-5 persons representing the top management level, 4-13 persons the middle management level, and 8-17 persons from the lower level personnel. The interviewees would be chosen randomly, ensuring however that different tasks, work groups, and departments were represented equitably. The general topic of the interviews would be strategy implementation.

During the interviews, the interviewees would fill out questionnaires, in which they would evaluate the various problem statements. The questionnaire has been given below:

Q1. How do you define the concept of strategy implementation?

Q2. What kind of issues would you associate strategy implementation with?

Q3. How do you participate in the strategy implementation process?

Q4. How are the policies pertaining to strategy implementation communicated within the different levels of the organization?

Q5. Describe your own role in the process of strategy implementation.

Q6. Evaluate the degree of the strategy implementation problems in your organisation.

Data Access Issues

Some data access issues might arise in the research journey, which could be the unwillingness of the employees to participate in the planned interviews hampering the information gathering capabilities of the subsequent research report along-with lack of co-operation from concerned companies which might not give permission to carry out interviews with its employees fearing a possible leak of its corporate strategy to its competitors. Also finances required for the successful completion of the information gathering process might not be adequate.

Data Analysis

The results of the questionnaires would be assessed, as well as the comments of the interviewees for the statements would be analysed. The main data analysis method employed would be content analysis of the interviews. The transcribed interviews would be coded accordingly to the central issues of the research. The analysis method would include historical trend analysis and linear regression analysis using software tools, judgmental forecasting, and conjoint analysis.

Limitations of the Research Design

The approach in conducting the literature review has shortcomings which should be acknowledged. The following are the limitations in the methodology adopted.

Collection of articles has been carried out by relying on the databases of EBSCO Host, Science Direct, JSTOR, Wiley Inter Science and ProQuest ABI and the report thus may have overlooked some critical viewpoints on strategy implementation included in monographs or specialists books. Some selective articles in the review, however, rely heavily on concepts from advanced books on corporate strategy thus making up for the shortcoming to a certain extent.

The articles have been located using the keywords “strategy implementation” and “strategy execution”. This procedure of gathering articles may omit some important articles. The report also excludes some very specific strategy implementation contexts, such as post-merger integration implementation.

The research has discovered that most of the conducted studies in the subject focus on the influence of middle managers on strategy implementation. There is no special research relating to lower management and non-management, even if several authors have stated that it is important to consider their effects on strategy implementation as well.

Another major research challenge incudes, a lack of understanding between the relationships among the nine reviewed factors, for example, there are major disagreements about the relationship between the variables of communication, commitment and consensus which the report fails to highlight.

Also a limiting factor is that there are very few studies that systematically examine how different organizational units and strategy levels can influence strategy implementation, which the report has not included.

Strategy implementation involves many theories including agency theory, social learning theory, expectancy theory, organization theory and social system theory. Because of the limited word count it was not feasible to include such theories in the text presented which is also a shortcoming.

The lists of journal articles selected are not comprehensive enough, as many other issues could potentially affect strategy implementation. Such other factors, however, are less mentioned or not analysed in-depth, as many of them are also hard to control and modify.

Research Ethics

For research to be carried out successfully there are many ethical issues that need to be taken into consideration. It is very important to secure the permission and interests of all the people involved in the study. The people involved would be given assurance that any information obtained during the interview process would not be misused as this is the moral responsibility which would be maintained towards the participants. It is the duty of this research to protect the rights of the participants of the study as well as their privacy and sensitivity. The confidentiality of those involved in the observation would be maintained at all times, keeping their anonymity and privacy secure.

Resources required for effective research

The resources required to carry out the proposed research would require the support and co-operation of the supervisor in charge so as to provide guidance for submitting an effective research analysis report. Also would require permission from the industries chosen for the study of the research issue and the co-operation of its employees for conducting interviews.

Adequate financial support would also be required to assist in the completion of the proposed research analysis report to cover the cost of commuting and resultant transportation fares.

TIMETABLE

TASK

SELECTION OF INDUSTRIES FOR RESEARCH FOCUS

DAYS

1-5

6-10

10-15

16-20

21-25

25-30

LITERATURE REVIEW/ CRITICAL ANALYSIS OF SECONDARY SOURCES OF DATA

INTERVIEWING PROCESS

INDEPTH STUDY OF VARIOUS SOURCES

ASSESSING RESOURCE FOR CONCEPTUAL FRAMEWORK

COLLECTION OF SECONDARY SOURCES OF DATA

DEVELOPMENT OF RATIONALE FOR STUDY

FINALLY FORMULATED RESEAERCH PROPOSAL


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