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Levers of Control and Strategy Implementation - Essay Example

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Lock manufacturing is a labor-intensive industry. More than one hundred process are involved for a lock manufacturing. In China the high class lock market are occupied by the foreign product. Most of the Chinese lock manufacturing companies can product the low- and medium class lock.
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Levers of Control and Strategy Implementation
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Download file to see previous pages Secondly, the technology requirement for the low class lock is low and lock can be produced by some small companies in town. They have cost advantage in tax and administration. The product can meet the requirement in low class market. Thirdly, the higher steel price compresses the profit space.
The case company is located in the North of China. It is a medium size company which has three production lines and can produce about hundred kind of lock. Their products are mainly the door lock and padlock. Their locks are used in civil and industrial areas. They can produce the low- and medium class lock. Between 2003 and 2005, they pay attention to low class door lock because of high demand by the construction company. In these two years, the competition in low class market became fierce They decided to go back the medium market. In 2007, The productivity of medium class lock take 30% percent and the profit take more than 50%. The top management realized they must develop in medium-class market because of high profit ratio. However, their vision and strategy can not be implemented successfully by their current performance and control system.
During strategy implementation, the strategic uncertainty must be met. These strategy uncertainties drive the new strategy. The company's current source of strategy uncertainty is stronger competition (Atkinson and Court, 1998). Normally, companies choose one or more performance measurement and control system to monitor the uncertainties interactively. The case companies choose the revenue interactively which is highly responsive to changes in competition. However, the measure of the whole revenue can not meet the requirement of the new strategy as the companies decide to develop their product in the medium product market. The sales and profit of the medium class products are not monitored separately and interactively. Moreover, supplier is an important aspect of strategic uncertainty in competition market. For example, they pay less attention to the raw material previously because the fluctuation in the raw material market is stable. The small fluctuation of profit does not influence their production plan and strategy. One of their strategies is market share. The revenue is a critical performance variable of market share. However, in the last year, the steel price increased by 15%. This change heavily influenced their profit. The company had to change the production plan. The cost of raw material has a big impact on the company's profit. They need to pay more attention on the raw materials market. In order to occupy the market, they can not transfer the cost of raw materials to sale price fully. Therefore, they should monitor the cost of raw material and provide a subjective incentive to the purchaser.
The levers of control (LOA) can not only improve the strategy implementation capacities in the four facets, but also manage the strategic risk which is often ignored. The successful strategy implementation requires controlling the multiple dimensions of strategy reflected in the 4Ps of strategy implementation: perspective, position, plans and goals, patterns of action. Since there are still gray areas in some aspects of strategy implementation like the levers of control, this research will investigate the levers of control of strategy implementation (Bapna et al, 2000). Specifically, the study is set ...Download file to see next pagesRead More
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