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Chapter 10
Implementation
Chapter Summary
The first concern in the implementation of business strategy is to translate that strategy into action
throughout the organization. This chapter discusses five considerations for accomplishing this. Short-term
Learning Objectives
1. Understand how short-term objectives are used in strategy implementation.
2. Identify and apply the qualities of good short-term objectives to your own experiences.
3. Illustrate what is meant by functional tactics and understand how they are used in strategy
implementation.
Lecture Outline
I. Short-Term Objectives
A. To makes business strategies, grand strategies, and long-term objectives become a reality, the
people in an organization who actually “do the work” of the business need guidance in exactly
what they need to do.
1. Short-term objectives help do this.
a) Short-term objectives are measurable outcomes achievable or intended to be
achieved in one year or less.
b) They are specific, usually quantitative, results operating managers set out to achieve
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2. Short-term objectives help implement strategy in at least three ways:
a) Short-term objectives “operationalize” long-term objectives.
b) Discussion about and agreement on short-term objectives help raise issues and
3. Short-term objectives are usually accompanied by action plans, which enhance these
objectives in three ways.
a) First, action plans usually identify functional tactics and activities that will be
undertaken in the next week, month, or quarter as part of the business’s effort to
build competitive advantage.
4. Because of the particular importance of short-term objectives in strategy implementation,
B. Qualities of Effective Short-Term Objectives
1. Measurable
a) Short-term objectives are more consistent when they clearly state what is to be
b) Such objectives can be used to monitor both the effectiveness of each activity and
ineffective short-term objectives.
d) Measurable objectives make misunderstanding less likely among interdependent
managers who must implement action plans.
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2. Priorities
a) Although all annual objectives are important, some deserve priority because of a
timing consideration or their particular impact on a strategy’s success.
(1) If such priorities are not established, conflicting assumptions about the relative
importance of annual objectives may inhibit progress toward strategic
effectiveness.
b) Priorities are established in various ways.
(1) A simple ranking may be based on discussion and negotiation during the
planning process.
3. Cascading From Long-Term Objectives to Short-Term Objectives
a) The link between short-term and long-term objectives should resemble cascades
through the firm from basic long-term objectives to specific short-term objectives in
key operation areas.
(1) The cascading effect has the added advantage of providing a clear reference
II. Functional Tactics That Implement Business Strategies
A. Functional tactics are the key, routine activities that must be undertaken in each functional
area to provide the business’s products and services.
1. In a sense, functional tactics translate thought (grand strategy) into action designed to
accomplish specific short-term objectives.
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a) Every value chain activity in a company executes functional tactics that support the
business’s strategy and help accomplish strategic objectives.
2. Exhibit 10.5, The Value-Added Benefit of Short-Term Objectives and Specific
Functional Tactics, summarizes the key benefits of clearly stated functional tactics.
Exhibit 10.6, Global Strategy in Action, illustrates the difference between functional
tactics and business strategy.
a) It also shows that functional tactics are essential to implement business strategy.
b) To increase the likelihood that strategies are successful, specific functional tactics
B. Differences between Business Strategies and Functional Tactics
1. Functional tactics are different from business or corporate strategies in three fundamental
ways:
a) Time horizon.
2. Time Horizon
a) Functional tactics identify activities to be undertaken “now” or in the immediate
future.
b) The shorter time horizon of functional tactics is critical to the successful
implementation of a business strategy for two reasons.
3. Specificity
a) Functional tactics are more specific than business strategies.
(1) Business strategies provide general direction.
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b) Specificity in functional tactics contributes to successful implementation by:
(1) Helping ensure that functional managers know what needs to be done and can
4. Participants
a) Different people participate in strategy development at the functional and business
levels.
(1) Business strategy is the responsibility of the general manager of a business
unit.
(2) That manager typically delegates the development of functional tactics to
subordinates charged with running the operating areas of the business.
b) Involving operating managers in the development of functional tactics improves
(1) It also helps ensure that functional tactics reflect the reality of the day-to-day
III. Outsourcing Functional Activities
A. A generation ago, it was conventional wisdom that a business has a better chance of success if
it controls the doing of everything necessary to produce its products or services.
1. Referring back to Chapter 6’s value chain approach, the “wise” manager would have
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a) Starting for most firms with the outsourcing of producing payroll each week,
companies worldwide are embracing the idea that the best way to implement their
b) Outsourcing, then, is acquiring an activity, service, or product necessary to provide
2. a) Relentless cost cutting is the main force behind the trend.
b) Companies are parceling out everything from mailroom management to customer
c) It’s hardly just rote work that’s being outsourced—even such key functions are
d) The hype over outsourcing’s benefits, however, disguises numerous problems.
e) The important point to recognize at this point is that functional activities long
competencies.
(2) And, increasingly, this decision considers every organizational activity fair
IV. Empowering Operating Personnel: The Role of Policies
A. Specific functional tactics provide guidance and initiate action implementing a business’s
strategy, but more is needed.
1. Supervisors and personnel in the field have been charged in today’s competitive
a) Meeting customer needs, becoming obsessed with quality service, is a buzzword
b) Efforts to do so often failed because employees that were the real contact point
c) One solution has been to empower operating personnel by pushing down decision
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2. Empowerment is the act of allowing an individual or team the right and flexibility to
make decisions and initiate action.
a) It is being expanded and widely advocated in many organizations today.
b) Training, self-managed work groups, eliminating whole levels of management in
c) At the heart of this effort is the need to ensure that decision making is consistent
d) One way operating managers do this is through the use of policies.
3. Policies are directives designed to guide the thinking, decisions, and actions of managers
a) Sometimes called standard operating procedures, policies increase managerial
b) Logically, policies should be derived from functional tactics with the key purpose of
c) Exhibit 10.9, Global Strategy in Action, illustrates selected policies of several
well-known firms.
B. Creating Policies That Empower
1. Policies communicate guidelines to decisions. They are designed to control decisions
a) Policies establish indirect control over independent action by clearly stating how
things are to be done now.
(1) By defining discretion, policies in effect control decisions yet empower
b) Policies promote uniform handling of similar activities.
(1) This facilitates the coordination of work tasks and helps reduce friction arising
c) Policies ensure quicker decisions by standardizing answers to previously answered
d) Policies institutionalize basic aspects of organization behavior.
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(1) This minimizes conflicting practices and establishes consistent patterns of
e) Policies reduce uncertainty in repetitive and day-to-day decision making, thereby
f) Policies counteract resistance to or rejection of chosen strategies by organization
members.
(1) When major strategic change is undertaken, unambiguous operating policies
g) Policies afford managers a mechanism for avoiding hasty and ill-conceived
decisions in changing operations.
(1) Prevailing policy can always be used as a reason for not yielding to emotion-
2. Policies may be written and formal or unwritten and informal.
a) Informal, unwritten policies are usually associated with a strategic need for
competitive secrecy.
(1) Some policies of this kind, such as promotion from within, are widely known
b) Formal, written policies have at least seven advantages:
(1) They require managers to think through the policy’s meaning, content, and
intended use.
(2) They reduce misunderstanding.