Lesson 1, Topic 1
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5.2 Annual objectives and policies development as part of strategy implementation and planning Copy

Nik Shazana November 1, 2022

Strategy implementation requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed. Strategy implementation includes developing a strategy-supportive culture, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information systems, and linking employee compensation to organizational performance. Strategy implementation often is called the “action stage” of strategic management, means mobilizing employees and managers to put formulated strategies into action. Often considered to be the most difficult stage in strategic management, strategy implementation requires personal discipline, commitment, and sacrifice. Successful strategy implementation hinges upon managers’ ability to motivate employees, which is more an art than a science. Strategies formulated but not implemented serve no useful purpose.

Interpersonal skills are especially critical for successful strategy implementation. Strategy implementation activities affect all employees and managers in an organization. Every division and department must decide on answers to questions, such as “What must we do to implement our part of the organization’s strategy?” and “How best can we get the job done?” The challenge of implementation is to stimulate managers and employees throughout an organization to work with pride and enthusiasm toward achieving stated objectives. Successful strategy formulation does not guarantee successful strategy implementation. It is always more difficult to do strategy implementation than to say you are going to do strategy formulation. Even the most technically perfect strategic plan will serve little purpose if it is not implemented. Many organizations tend to spend an inordinate amount of time, money, and effort on developing the strategic plan, treating the means and circumstances under which it will be implemented as afterthoughts! Change comes through implementation and evaluation, not through the plan. A technically imperfect plan that is implemented well will achieve more than the perfect plan.

Strategy formulation and implementation can be contrasted in the following ways:

Strategy formulationStrategy implementation
♦ Strategy formulation is positioning forces before the action.♦ Strategy implementation is managing forces during the action.
♦ Strategy formulation focuses on effectiveness.♦ Strategy implementation focuses on efficiency.
♦ Strategy formulation is primarily an intellectual process.♦ Strategy implementation is primarily an operational process.
♦ Strategy formulation requires good intuitive and analytical skills.♦ Strategy implementation requires special motivation and leadership skills
♦ Strategy formulation requires coordination among a few individuals♦ Strategy implementation requires combination among many individuals.

Strategy formulation concepts and tools do not differ greatly for small, large, for-profit, or Non-profit organizations. Strategy implementation varies substantially among different types and sizes of organizations. Implementing strategies requires such actions as altering sales territories, adding new departments, closing facilities, hiring new employees, changing an organization’s pricing strategy, developing financial budgets, developing new employee benefits, establishing cost-control procedures, changing advertising strategies, building new facilities, training new employees, transferring managers among divisions, and building a better management information system. These types of activities obviously differ between manufacturing, service, and governmental organizations.