Potential and Limitations of the Strategy Implementation Tools - Coursework Example

CHALLENGES AND OPPORTUNITIES IN STRATEGY IMPLEMENTATION By Location Introduction To strategy implementation has developed quite independently and separately from project management. But, there are various opportunities between the two that are under-exploited in theory and practice. A considerable number of tools used in strategic management, organisational change, and value management can equally be imported into the project management niche to enrich the traditional techniques. Strategy implementation tools are particularly powerful when used in complex and multi-functional projects (Draft & Lane, 2008, p. 406). Apart from being used to turn business strategies into implementation, these tools can be imported and used in the management practice of the mainstream project. The essay highlights a critical analysis of the potential and limitations of the strategy implementation tools. Part 1: Governance and stakeholders Corporate governance is considered as a system that allows companies to be controlled and directed. The objective of corporate governance is traditionally conceptualised by the principal-agency theory. Over-emphasis on share price information and profit maximisation is thought to be one of the major root causes of the governance crises the world over. From a political perspective, corporate governance is often dependent on the consent given by those governed (Fernando, 2009, p. 7). The consent of the governed in turn refers to the democratic principles such as political debate and separation of powers. The political view has been taken up by the stakeholder theory that argues that stakeholders are critical tools for the survival of an organisation. Consequently, the stakeholders need to be considered in the systems they control and direct (Fernando, 2009, p. 50). Stakeholders often include individuals or groups of people that depend on an organisation in order to fulfil their goals and on whom the organisation depends upon. A good example of common stakeholders include the owners/shareholders, the financial community, activist groups, customers, managers, unions, local community, employees, trade associations, competitors, suppliers, government, political groups, and the media. Sources of power for stakeholders within the organisation include hierarchy, influence, control of the strategic resources, control of the human aspects of the environment, and the involvement in the implementation of strategies developed for the organisation. The key proponents of the principal-agency theory also acknowledge the need to consider the interests of the stakeholders in the enlightenment of governance arrangements (Fernando, 2009, p. 49). Some stakeholders limit their analysis to the board governance, but corporate governance should be regarded as a broader aspect that involves corporate decision-making processes. Therefore, a stakeholder is considered as any group of individual who can affect or possibly be affected by the achievement of the objectives of the organisation. From a corporate perspective, some stakeholders like customers and employees are critical to the growth and survival of an organisation. Such stakeholders provide the organisation with essential resources. The principal-agent theory can be viewed in two other perspectives: a normative and descriptive view. The descriptive stakeholder perspective approach identifies and groups the different components of an organisation without assigning value statements that touch on the legitimacy of their power or claims. On the other hand, the normative stakeholder theory provides intrinsic value to the claims made by stakeholders. The perspective takes into account the intrinsic value of the moral rights of the individuals affected by the conduct of the corporates. The central questions surrounding a normative stakeholder approach, consider the duties and rights of the actors of the organisation and how to achieve a just balance of the concerns raised by the different stakeholders. The normative viewpoint also requires that stakeholders be included in the structure of corporate governance as a means of respecting their moral rights (Fernando, 2009, p. 50). The actors within an organisation should embrace stakeholder dialog which implies procedural and discursive understanding of their responsibilities in an organisation. Stakeholder dialog follows a political perspective that visualises participation of the governed as a cornerstone of democracy. Independent from the normative perspective, the participation of stakeholders in the decision-making process has been closely linked to efficiency gains that lead to competitive advantage. Stakeholder governance reduces conflicts by turning distrustful opponents into friends. According to empirical research, most leading firms tend to run more on a stakeholder-oriented structure. Two important dimensions that govern stakeholder governance include power and scope (Fernando, 2009, p. 14). Power often refers to the level of influence that stakeholders are given in the corporate decision-making process. Corporate decision-making power can have two extreme poles: non-participation and stakeholder power. In non-participation, the stakeholders within an organisation do not have much influence in making decisions. On the other hand, stakeholder power allows stakeholders to possess the power to voice their concerns in critical decisions. The scope of stakeholder governance often refers to the breath of power that guides corporate decision-making processes. The scope usually spans the line of making critical decisions on local issues that are isolated, yet they have an impact on the general operation of the organisation. Considering the two dimensions of stakeholder governance together brings in a matrix that serves as a basis for analysing the progress of an organisation. Disadvantages of governance and stakeholder approach Despite the many advantages, stakeholder governance has a few demerits. First, stakeholder governance should be performed regularly or even continuously since their power and associations can change quickly. Remember, the management of each organisation has to assess the position played by each stakeholder. Also, it is the subjective perception held by the management team that will influence the way the organisation acts towards the stakeholders. But, it is normally impossible for the management team to satisfy all the demands of the stakeholders and governance team. Part 2: Culture and Leadership Ideally, most people think that the strategic development of an organisation should drive the behaviour of the stakeholders. However, it is the culture that should perform this duty in reality. Culture often refers to the underlying norms and belief systems that dictate how people stakeholders in an organisation work together to achieve common goals (Schein, 2010, p. 1). Each organisation possesses a particular culture that is uniquely adapted by the stakeholders. The organisational culture can comprise of an omnipresent set of assumptions that are at times difficult to fathom and that direct the activities run within an organisation. Organisational culture can also be defined as the beliefs and values that the stakeholders in an organisation share. In snitch preview, organisational culture can also be described as the personality of an organisation whenever no one is watching their activities. The foundation of a particular culture relies greatly on shared beliefs and values, which dictate the activities within an organisation. Thus, it is possible for two or three organisations within the same industry to feature different organisational cultures. Even if the culture might appear to be similar, their effectiveness is bound to differ to some extent. Organisational culture controls how the employees interact among themselves and with other stakeholders operating from outside the organisation. The culture determines the kind of standards of behaviour that organisational members should adopt in order to achieve the short-term and long-term goals of the organisation. Organisational values stimulate the development of organisational norms, guidelines, and expectations that outline the appropriate behaviour in different situations. Culture influences the development of organisational strategy and stimulates the implementation of the same to achieve maximum corporate performance (Pfister, 2009, p. 34). Through the use of culture, it is possible to achieve tighter control of the strategy of the organisation. It also leads to the reconstruction and development of new strategies as well as abandonment of old paradigms and adoption of new ones. Organisational culture focuses its attention on the human side of life. It clarifies the necessity of developing appropriate systems of shared meaning/learning in order to help people work together in achieving desired outcomes. It also requires leaders to realize the impact that their behaviour has on the overall culture of the organisation. More important to note is that organisational culture not only affects how managers and employees behave, but also dictates how they make critical decisions and their impact on strategy development. In the use of organisational culture, stakeholders have to employ path dependence and lock-in to achieve their economic objectives (Meyer, 2012, p. 20). Path dependence often refers to the dependence of the economic outcomes on the path taken by the previous outcomes, rather than the current conditions. Historical culture matters extensively in the path dependence process and have an enduring influence. Decisions made considering transitory conditions have the capacity to persist even after those cultural conditions change. Therefore, the explanation of the outcomes involved in the path-dependent process requires a critical look at the history rather than at the existing conditions of culture, technology, and other factors that could determine the economic outcomes of an organisation. Basically, path dependency and lock-in are dependent on objects within the organisation, people’s day-to-day behaviour, training and education, institutional standards, systems, rules and language as well as the value systems that govern operation. Culture is a major focus of attention during organisational change. During such situations, some companies merge and experience a clash of cultures, or rather strategic change and growth renders their culture inappropriate. In a static environment within an organisation, cultural issues can be more responsible for absenteeism, low morale and a high number of staff turnovers. All these changes can have adverse effects on the productivity of an organisation. Much research has been done to determine the constituents of an effective corporate culture and how to change a culture that isn’t yielding satisfying results. Several strategies have also been developed to help in formulating strategies and planning change procedures. The cultural web provides one such approach that looks at and stimulates change in the culture of an organisation. The culture web was developed by Kevan Scholes and Gerry Johnson in 1992. Using the approach can help stakeholders within an organisation, expose cultural practices and assumptions as well as set to align the organisational elements with one another. The cultural web outlines six critical elements that operate in an interrelated manner. The six elements include stories, symbols, rituals and routines, power structures, control systems, and organisational structures. The six elements make up what is often referred to as the paradigm of the work environment. Stakeholders within an organisation can analyse each of the factors to determine the bigger picture of their culture. The cultural web also helps in determining what works, what isn’t working and what operational procedures should be changed. Disadvantages of culture and leadership The disadvantage of using the culture and leadership approach is that employees take advantage of the friendly environment and could end up wasting their time more than doing their jobs. Also, if problems occur during operation, then it takes a lot of time to fix. Lastly, there is no supportive environment or innovation within the organisation and organisational culture could be lost if the idea does not work. Part 3: The business model A business model often refers to an abstract representation of an organisation. The representation could be textual, conceptual or graphical (Girotra & Netessine, 2014, p. 2). The primary constructs of business models include value chain/network, licensing, mergers and acquisitions, as well as franchises and alliances. Traditionally, most organisations treat the value chain/network design as a strategic event that should be run on a regular basis especially during the implementation period. The design is a powerful modeling approach that is proven to reduce significantly the supply chain costs as well as considerably improve service delivery within an organisation. The value chain network incorporates end-to-end costs, including production, purchase, inventory, warehousing, and transportation. Value chain networks are considered organisational initiatives that are useful in gaining competitive advantage. Franchising is a useful method organisations should use in the distribution of their goods and services to the public (Sherman, 2011, p. 399). It is an influential method that accounts for over 25 percent of all the retail sales and about 15 percent of the gross domestic product of the United States. A franchise is established whenever a franchisor licenses a different party to use their trade name, commercial symbols, trademarks, copyrights, and patents in the selling and distribution of goods and services. Ideally, the franchisor and the franchisee are often established as different corporations. Franchising allows the franchisor reach new and lucrative markets. Also, the franchisee benefits from the cooperation through access to the franchisor’s resources and knowledge in the operation of their business. Examples of well-known franchise models include UPS, McDonals, H& R Block, and Subway. There are various franchise business opprotunities across many industries in the United States. Licensing involves an arrangement that allows a trademark and other intellectual property owner to permit other parties to use the same intellectual property in the distribution of their goods, services, digital information, and software (Sherman, 2011, p. 401). Parties to a legit licensing agreement include the licensor and the licensee. On the other hand, individuals or organisations from the same industry could decide to ally themselves and accomplish certain designated objectives in what is referred to as a strategic alliance. A strategic alliance allows companies to reduce the risks involved, share costs, extend their market reach and combine technologies to achieve effective results. Alliances have different protection measures as compared to franchising and licensing agreements. But, before agreeing to a strategic alliance, involved parties must understand that one partner could also turn to a potential competitor in the future. Mergers and acquisitions are also tactful options organisations can use to implement their growth strategies. A merger occurs when two organisations syndicate their operations to create a third company. On the other hand, an acquisition involves a situation where one company buys and eventually controls another company. Mergers and acquisitions can either be horizontal, concentric, vertical, conglomerate, friendly or hostile. So many terms are involved in the activities undertaken during these processes. But, there are several factors that need to be avoided too to ensure these processes are a success. The factors include paying too much, straying too far, combining organisations of disparate corporate cultures, counting on the support of key managers, assuming the persistence of a boom market, leaping before looking, and swallowing too large organisations. If well handled, mergers and acquisitions can lead to the sufficient integration of a successful diversification strategy. Disadvantages of the business model The business model typically has a high buy-in price and this a reason for many people not to be involved in the business at first. Finding people ready to pay the higher costs involved during start-up may be more challenging. Also, in the top-tier structure of the business model, the management makes additional residual income depending on the sales of those they recruit and also the sales of those they recruit in turn. Part 4: The business structure to include structures, systems, and configurations While developing a corporate strategy, stakeholders often begin by analysing their niche and the environmental conditions in which they operate. They then consider the strengths and weaknesses of their competitors and draft a competitive strategy to use against them. With such competitive analyzes within the industry, stakeholders need to carve a strategic position that can help them outperform their competitors and develop a superior competitive advantage (Spadaccini, 2007, p. 47). To obtain such advantages, an organisation chooses to differentiate its services from the competition at a price or rather pursue low costs of production. Each organisation has to align its value chain networks accordingly, create manufacturing, marketing, and even human resource strategies useful in shaping their business structure. Budget allocations and financial targets are set based on such strategies. Organisations are established in specific ways to accomplish certain goals. The structure of an organisation can either help or hinder its progress towards accomplishment of the same goals. Both small and large organisations can achieve higher sales and more profits by matching their needs with the operational structures. Ideally, there are three major types of organisational structure: divisional, functional, and matrix structure (Taylor, 2006, p. 180). In functional structure, each portion of the organisation is divided according to the purpose it plays. The structure works well in small organisations where each department relies on the talent and knowledge of its workers to support its activities. One of the drawbacks of the functional structure systems is that communication and communication between different departments is often restricted by the boundaries occasioned by departments working individually. Divisional structure is suitable for larger organisations that offer its products and services in a wide geographical area (Cummings & Worley, 2014, p. 342). Also, it can be used for large organisations with smaller separate organisations that cover different market areas under the same umbrella. The benefit of the structure is that it can be met more rapidly and specifically. But, communication is also inhibited since the employees in different divisions are not working together. The structure is costly due to its scope and size. Small business can also use this structure as well on a smaller scale. On the other hand, the matrix structure is a hybrid of the functional and divisional structures. It is typically used in large and multinational companies and allows for the benefits of the functional and divisional structure to be realized within the organisation. But, this structure can also create more power struggles since most departments of the organisation will potentially have dual forms of management. For instance, a functional manager can work with a divisional manager at the same level, covering the same managerial territory. While an organisation may decide to adopt any of the three major types of organisational structure outlined, most companies do not strictly adhere to these guidelines. The lapse in following the guidelines is more critical with smaller companies. For instance, a start-up company with a few employees could have a secretary handling accounting tasks for all the projects run. However, the same company could have a few staff members who are more dedicated to pursuing individual product lines or projects. Conclusion Excellently formulated strategies are likely to fail if not implemented appropriately. More important to note is that strategy implementation procedures are not possible unless all the organisational dimensions are stable. Such dimensions may include reward structure, organisational structure, and resource – allocation of other factors. Strategy implementation is a threat to most stakeholders in an organisation. It has the power to predict and achieve new power relationships. Strategy implementation can lead to the formation of new groups that are formed with values, attitudes, concerns, and beliefs that stimulate development. If well utilised, it can lead to the proper realization of organisational goals and objectives. Bibliography Cummings, T. & Worley, C., 2014. Organisation Development and Change. 1st ed. New York: Cengage Learning. Draft, R. L. & Lane, P. G., 2008. The leadership experience. 4th ed. Mason, OH: Thomson/South-Western. Fernando, A. C., 2009. Corporate governance : principles, policies and practices. 1st ed. New Delhi: Pearson Education. Girotra, K. & Netessine, S., 2014. The risk-driven business model : four questions that will define your company. 1st ed. Boston, Massachusetts: Harvard Business Review Press. Meyer, T. G., 2012. Path Dependence in Two-sided Markets: A Simulation Study on Technological Path Dependence with an Application to Platform Competition in the Smartphone Industry, New York: s.n. Pfister, J., 2009. Managing organisational culture for effective internal control : from practice to theory. 1st ed. Berlin: Physica; London: Springer. Schein, E. H., 2010. Organisational culture and leadership. 4th ed. San Francisco: Jossey-Bass. Sherman, A. J., 2011. Franchising & licensing : two powerful ways to grow your business in any economy. 4th ed. New York: American Management Association. Spadaccini, M., 2007. Business structures. 1st ed. Irvine, CA: Entrepreneur Press. Taylor, J., 2006. A survival guide for project managers. 2nd ed. New York: American Management Association. Read More