Business strategy before implemented is only an idea in peoples mind. The strategy implementation stage of strategic management is translation of strategic thought into strategic action. Implementing strategy will affects an organization from top to bottom. Implementing strategies requires action such as strategy control and corporate governance, creating effective organization designs, strategic leadership, and managing innovation. Strategic implementation stage is the action stage of the Strategic management, so it is more important than strategy formulation stage.
When the strategic implementation stage is started, organization needs to transform their strategic formulation into action. In the early stage of strategic implementation, organization has to let managers and employees understand the strategic implementation decision throughout an organization. In order to let the strategic to be implement successfully, powerful motivational force for managers and employees are important. Resistance to change is a threat to strategy implementation. People resist to changes because they do not understand what is happening and why the changes is needed. It is necessary for organization to let the change view as an opportunity rather than threat by managers and employees (Sadler, 1998).
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Business strategy is broken down into several strategic implementation phase, each of the strategic implementation phase have an objective. For example, organization set the long term company objective and follows with the specific annual objective. Annual objective are essential for strategy implementation because it serve as a tools for monitoring progress toward achieving organization long term objective and it represent the basis allocating resources. The annual objective should be more specific, consistent, reasonable, communicated throughout the organization and set with an appropriate time dimension. Annual objective is supported by clearly stated policies. Policies facilitate solving recurring problems and guide the implementation of strategy. Policies is the principle, rules and guidelines that adopted by company to achieve long term objective. Policies help the strategy to implement more successfully by let employees and managers understand what is expected of them and clarify the work task of each person. Resource allocation is a strategic implementation activity that established based on the annual objective. The purpose of organization allocating resources such as financial resource, physical resource, human resource, and technological resource is to achieve a successful strategy implementation.
Changes in strategy at the same time lead to changes in organization structure. For example, to achieve a strategy decision not only need effective communication throughout organization and it also depend on the organization structure and culture. There are seven basic types of organization structure: functional, divisional by geographic area, divisional by product, divisional by customer, divisional process, strategic business unit (SBU), and matrix. Functional structure is the most simplest and common structure in the seven alternatives. It groups task and activities by business function, such as marketing, finance, production, research and development, and management information system. Divisional structure by geographic is appropriate for organization whose need to satisfied the needs and wants of customers in different geographic areas. Divisional structure by product is more effective for implementing strategies when specific product or service need special emphasis. Similarity, divisional structure by customer is focus on the specific customer with the specific product and service. Divisional structure by process is similar with functional structure. The different between this two organization structures is that in divisional of process each process is responsible for generating revenue and profit. The Strategic Business Unit Structure is set by the strategic management process. The SBU structure groups are delegate authority and responsibility for each unit to a senior executive who report directly to the chief executive officers. The Matrix Structure is the most complex of all design. This structure depends on both vertical and horizontal flows of authority and communication. There are a lot of researches shows that the organizationâ€™s structure determines the types of strategies it can support.
In strategic implementation, restructuring and reengineering are common use by organization. Restructuring involves reducing the size of the firm by reducing the number of employees and number of hierarchical levels in the firmâ€™s organization structure. The purpose of restructuring is to improve the efficiency and effectiveness of the organization. In contrast, reengineering is reconfiguring or redesigning work but it does not affect the organization structure. Similarity, the process of the reengineering is to improving cost, quality, service, and speed.
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Marketing, finance/accounting, research and development, and management information system are determines the success of strategy implementation. In implementing strategies, market segmentation is highly used by organization. Market segmentation refers to differentiate customer through market research of customer based on their needs and buying habits. The alternative bases for market segmentation is geographic, demographic, psychographic, and behavior. Organization use market segmentation to matching customer supply with the demand. After market segmentation, organization target particular customer group and matching customer wants and expectation. Organization will focus on the target market and deciding how to meet the needs and wants of particular consumer group. Product positioning is used to differentiate organization product or service with the competitor.
The four important financial/accounting concepts in strategy implementation are acquiring needed capital, developing pro forma financial statement, preparing financial budget, and evaluating the worth of a business. Normally a new strategy implementation requires additional capital. Organization need to determine a suitable mix of debts and equity in companyâ€™s capital structure to help the strategy implementation. Pro Forma Financial Statement allows organization to compute projected financial ratios under strategy implementation scenarios. Organization use Pro Forma Financial Statement to forecast the impact of strategy implementation. Financial budget is use to know how many fund will be spend in the specific period of time. Business evaluates the worth of their business to preparing to be sold or buy other companies and it also affects the strategy implementation.
Research and development affect the strategy implementation by developing new product and improving old product. Research and development department need to discuss with other department when the strategy implementation and come out with the better product. Nowadays, organization required an effective management information system (MIS) when the process of strategic management. A good MIS will help organization reduce their cost because MIS create a value chain for the suppliers, manufactures, marketers, and customer to direct communicate with each other by using internet.