Question Tag: Strategy implementation

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  • 10 Marks

CSEG – May 2019 – L2 – Q2b – Organisational mission and objectives

Explain the tests to perform when assessing the appropriateness of an organizational structure.

One of the critical requirements for effective and efficient strategy implementation is a good design of organizational structure which provides means of exercising appropriate controls as well as responding to challenges of rapid change, knowledge management, and globalization. Structural design can deeply influence the sources of an organization’s advantage, particularly with regard to knowledge management, and failure to adjust structures appropriately can fatally undermine strategy implementation.

Required:
Explain FIVE (5) tests you will perform in assessing the appropriateness of the design of an organizational structure.

Tests for Assessing the Appropriateness of Organizational Structure Design

  1. The Market-Advantage Test:
    • This test ensures that the organizational structure aligns with the market strategy. It follows the principle that “structure follows strategy,” ensuring that crucial operations are grouped to enhance market advantage. For instance, if coordination between two steps in a production process is key to market success, these should be placed within the same structural unit.
  2. The Parenting Advantage Test:
    • This test examines whether the structure supports the corporate center’s role effectively. For example, if the corporate center adds value as a synergy manager, the structure should place important integrative functions like marketing or research at the center.
  3. The People Test:
    • This test evaluates whether the structure fits the available human resources. It is risky to switch from a functional structure to a multidivisional structure if the organization lacks managers competent in running decentralized units.
  4. The Feasibility Test:
    • This test ensures that the structure complies with legal, stakeholder, trade union, or other constraints. For instance, financial regulations might require investment banks to separate their research and analysis departments from their deal-making departments.
  5. The Flexibility Test:
    • This test assesses whether the structure allows for adaptability and change in the future. It checks if the divisional domains are broad enough to pursue new opportunities and if the structure has sufficient modularity to allow for easy restructuring as market needs evolve.
  • 10 Marks

CSEG – May 2016 – L2 – Q4a – Strategy evaluation and control

Discuss the importance of effective communication and strategic leadership in successful strategy implementation, focusing on their roles in organizational change.

During strategy implementation, important management issues need to be reviewed for their appropriateness for the new strategy. Many organisations fail to achieve their strategic objectives not because they do not develop the right strategies but because many issues are not resolved during the implementation. They may not have the right organizational structure, a fitting culture, an efficient leadership while communication may be poor.

Required: Discuss the importance of each of the following in successful strategy implementation:
i) Effective communication (5 marks)
ii) Strategic leadership (5 marks)

Effective communication

The role of communication during strategy implementation is very critical to the implementation of strategy. Effective communication is needed for successful strategy implementation.

Communication is effective when it is directed to appropriate people who need to make certain decisions or use it to perform their routine tasks. Furthermore, it must be accurate, complete and timely and must convey meaning in a cost-effective manner. (1 mark)

(i) Strategy has to be communicated to all stakeholders. It is important that proposed strategy is known and understood by all especially managers and employees. Understanding the strategy will enable them to accept their roles and become committed to its implementation. Inadequate information on adaptive changes, insufficient instructions and poor feedback on performance can reduce the success of strategy.

(ii) Communication is required for planning, coordination and control.

  • Management decision-making requires data for planning. Managers are at the center of a communications system, providing or receiving data planning and implementation.
  • Interdepartmental coordination depends on information flows. All the interdependent systems for purchasing, production, marketing and administration can be synchronized to perform the right actions at the right times to cooperate in accomplishing the organisation’s aims.
  • Through effective communication, employees receive instructions, rules and procedures in order to help them perform their tasks. Knowing what to do and why motivates and challenges them to their tasks and makes them more effective.
  • Distributors and customers must be aware of changes in product characteristics and new products being introduced into the market. The organization must communicate the appropriate information on these issues to them in order to encourage the storage and use of the modified or new product.
  • Shareholders must be informed of the introduction of a new strategy particularly as this may affect their dividends. The acceptance of the strategy by shareholders means that management has the authority to use their money in a desired manner and account for it.

Strategic and effective leadership

Leadership involves influencing others to behave in a desired manner. Strategic leaders are needed to drive the organization towards the achievement of its strategies. Among others, strategic leaders must possess social skills, entrepreneurial skills and must be visionary. (1 mark)

Their importance in strategic management evolves in the following functions: i) They clarify the strategic intent of the organization by helping stakeholders to embrace change. They do this by setting forth a clear vision for the organization. ii) Leaders shape and refine the organizational structure and make it function effectively to accomplish strategic intent. iii) Leaders also shape organizational culture. They promote values and beliefs that are useful to the current strategy. iv) They inspire confidence and energize their followers to enthusiastically achieve the organisation’s mission. v) They assign responsibilities, allocate resources and supervise the performance of employees in a manner that helps the organization to achieve its strategic objectives.

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