Unit VIII Journal

BUS 6320, Global Strategic Management 1

Course Learning Outcomes for Unit VIII Upon completion of this unit, students should be able to:

1. Compare global strategic business models.

2. Analyze the processes for formulating sustainable corporate business strategies.

3. Synthesize the role of leadership in strategic business planning.

4. Summarize the role of innovation and risk management in strategic business planning.

5. Explain implementation, control, and measurement in overall evaluation of business strategies.

6. Assess the ethical parameters of strategic business models.

7. Discuss an effective global business strategy for an organization. Required Unit Resources Chapter 11: Organizational Design: Structure, Culture, and Control Unit Lesson Implementation of the strategic plan through organizational design provides the final topic of this course. Rothaermel (2019) defines organizational design as “the process of creating, implementing, monitoring and modifying the structure, processes, and procedures of an organization” (p. 381). In looking at organizational design, structure, culture, and control will be examined. Throughout this course, we have analyzed and defined the process of strategic plan development. If a leader is unable to execute and implement the strategic plan, there is absolutely no worth to the plan. After significant resources are utilized to develop a strategic plan, why are so many organizations unable to implement? Chief executive officers (CEOs) are regularly fired from their positions due to the inability to execute a strategic plan. One of the most prevalent reasons is a strong organizational culture. Since culture is a unifying dynamic within organizations, change to the style of culture promotes significant resistance among employees. Employees tend to get comfortable with the overall culture and nuances of the company and simply do not want to deviate from it. Organizational structure is another reason for resistance as the structure of an organization tends to be imbedded in the overall operational aspects of an organization. Organizational structure is typically represented as one or a combination of the following aspects.

• Specialization: Tasks are divided into separate jobs ensuring that each employee is focused on their specialty.

• Formalization: The organization is run by strict rules and procedures followed by all employees. • Centralization: This refers to the degree of which decision-making is completed by a central authority. • Hierarchy: Formal reporting structure of an organization determines the span of control within each

area. Another reason for resistance is that of sunk costs. Organizational leadership would prefer to avoid sunk costs (costs already incurred in previous goals). Executive leadership will address this concern from the

UNIT VIII STUDY GUIDE Implementation Through Design and Control

BUS 6320, Global Strategic Management 2

UNIT x STUDY GUIDE Title

standpoint of not only the sunk costs, but also the overall costs associated with the change. A fourth reason for resistance is through specific interest groups within the organization. Sometimes these special interest groups within the organization develop a silo vision whereby they do not see the negative consequences of the status quo. Finally, contractual agreements can hinder changes in the strategic plan. Obviously, legalities need to be reviewed before implementation of new strategic plans. How do organizational leaders overcome this resistance to change? Since resistance to change can manifest itself in a host of employee behaviors ranging from passive aggressive behavior to outright defiance, hostility, and sabotage, the goal is to avoid or, at a minimum, manage this behavior. One of the best methods to overcome this resistance is to examine the potential resistance before even presenting the change. Think about what the specific changes include, who they will impact, and how each employee will be impacted. From there, think about how these employees will react. Employees may have a fear of the unknown or an adversity to surprises. There may be some level of mistrust and/or a feeling that their job will be eliminated or severely downgraded. Being prepared for a myriad of reactions will decrease the overall resistance and increase the level of acceptance of the changes. Additionally, including the advantages and opportunities that the change will provide in the initial presentation is important. Employees will need to understand the benefits, both short-term and long-term. Assuming the resistance to change has been mitigated, the actual implementation of the strategic plan is next. The first step in the process is communication and alignment. It is important for leadership to communicate the plan and its alignment to the company’s mission, vision, and overall objectives. The presentation of the advantages of the new strategic plan to both the company and individual employees is important. This could be supported using internal and external environmental analyses, competitive analysis, and/or financial analysis and projections. The second step in this process is driving accountability. Goals are created, and areas of responsibility are determined. These goals must be focused and clear with the ability to easily track performance. A best practice could be to share goals, creating a team atmosphere where employees work together to achieve all goals through their individual contributions. The third step is to promote an action-oriented culture that rewards employees for taking steps toward achieving their individual goals. Continuously tracking the progress of employees assures that they understand their personal expectations of the new strategic plan.

The use of key performance indicators (KPIs) is an effective organizational measurement tool that is typically tied to the measurement of a new strategic plan. Some examples of KPIs are included below. • Increase overall company profits from x to y by quarter 3. • Increase revenue by customer from a to b by quarter 4. • Acquire three new companies with at least $6 million in revenue by quarter 1. • Reduce expenses from xyz to abc by quarter 2. These type of KPIs are holistic in nature to the organization and can be drilled down to represent specific departmental and individual goals. Communicating these strategic goals can create that team atmosphere discussed earlier, aiding in the successful implementation of the strategic plan. Employee involvement or creation of an environment in which every employee is contributing is key. Empowering the employees toward this continuous improvement of the company creates a sense of ownership and commitment as well as higher levels of motivation. Additionally, it lends itself to higher employee retention rates. Through this process, it is important to note that full and active executive support is paramount. This should come in the form

of not only financial support but also verbal through leadership, follow-up, and actually living the results of the strategic planning and implementation process.

Steps in implementing a strategic plan

BUS 6320, Global Strategic Management 3

UNIT x STUDY GUIDE Title

As innovation is a key contributor to strategic growth and disruptive business models, it is important to include some commentary on how leaders within an organization execute and implement transformative growth through the implementation of business strategy plans. What this means is that in today’s very competitive global business world, it is imperative for businesses to develop new sources of growth in order to remain competitively advantaged. These sources need to have the ability of being incubated and scaled, and overall risk needs to be managed. Companies need to be able to manage their core business while at the same time participate in these innovative growth opportunities. We can include several well-known companies demonstrating these innovative and disruptive business models. One example is that of PayPal, which attempted to enter an industry that traditionally had been known to hold a significant amount of barriers to entry. These barriers included regulatory approvals, the need for customer trust (which usually involves time), and the simple fact that this industry necessitates a significant amount of cash outlay. PayPal was first to market as an internet market tool, which affords certain advantages, and they created significant partnerships that provided a successful business model. What about Toyota? How did they break through the big three automaker’s dominance of the U.S. market? The answer was by executing a higher level of efficiency within their production processes that was developed by studying American production facilities and doing it better. With both of these examples, research was conducted and a strategic plan developed that included disruptive business modeling. Monitoring the implementation of the strategic plan is important to ensure implementation is following the schedule. Several monitoring activities could include reviewing whether the goals and objectives are being achieved according to the timeline specified in the plan. Assess whether employees have the appropriate resources including financial support, equipment, facilities and training. At one point, leaders should reevaluate whether the goals and objectives remain realistic and whether they should be revised. The important point to remember within the scope of monitoring the implementation is that organizational leaders need to remain close to the plan and the employees executing the plan. The strategic plan should be looked at as a continuous work-in-progress with the flexibility of change with market and industry changes. In conclusion, implementation of the business strategy is the final phase of the strategic business planning process. Mitigating the resistance to change toward progressive and innovative thought processes sets the stage for strategic growth. Communication, accountability and, finally, institution of an action-oriented culture will pave the way for the implementation of a successful strategic plan. Through the management of the strategic plan, organizational leaders need to organize for innovation considering the open innovation model. This means employing innovative ideas internally from both the top down as well as the bottom-up process. Additionally, they must employ innovative ideas externally through licensing, strategic alliances, joint ventures, and acquisitions. Maintaining the competitive advantage with a differentiated product/service offering that is of value to the customer is the crux of a profitable business existence. Incorporating this into an efficient strategic business planning process leads to an effective strategic business plan.

Reference Rothaermel, F. T. (2019). Strategic management: Concepts (4th ed.). McGraw-Hill Education.