Strategy Implementation_1st April

8/2/2019 Strategy Implementation_1st April

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Strategy Implementation

Chapter 9


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Strategy Implementation includes

1. Project implementation

2. Procedural implementation

3. Resource allocation

4. Structural implementation (Chapter 10)

5. Behavioural implementation (Chapter 11)

6. Functional and operational implementation(Chapter 12


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PROJECT IMPLEMENTATION

The Project Management Institute of theUS defines a project as "a one-shot, time-

limited, goal-directed, major undertaking,requiring the commitment of varied skillsand resources".

The goals or objectives for a project are

derived from the plans and programmes,which are based on the strategies adopted


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PROJECT IMPLEMENTATION

A project passes through different phases

Conception phase:-This phase is an

extension of the strategy formulation phaseof strategic management. Ideas generatedduring the process of strategic alter nativesand choice consideration form the core of

the future projects that may be undertakenby the organisation.


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2 Definition phase: After a set of projectshave been identified and arranged

according to the priority, they have to besubjected to a preliminary projectanalysis which examines the marketing,

technical, financial, economic andecological aspects


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The Contents of a Typical Feasibility

Report

1.General information, such as, name, formof organisation, location, nature of project(new, expansion, modernisation,diversification), nature of industry andproducts, and so on.

2.Information regarding project promoters

3 Particulars of the industrial concernseeking financial assistance


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Particulars of the project (detailsregarding capacity, process, technical arrangements, management, location andland, buildings, plants and machin ery,raw materials, utilities, effluents, labour,housing for labour, schedule ofimplementation, etc 1.Cost of the project including land and site

development, buildings, plant and machinery,technical know-how fee, and so on


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1.Means of financing (share capital, rupeeloans, foreign currency loans, deben tures,internal cash accruals, etc.)

2.Marketing and selling arrangements

3.Profitability and cash flow

Economic considerations (prices of competingproducts, economic benefits to the countryand region, development of industriallybackward areas, development of ancillaryindustries, etc.)


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Environmental considerations (waterand air pollution, effluent disposal, andenergy conservation)

Government consents including letter ofintent, industrial license, capital goodsclearance, import license, foreignexchange permission, approval oftechnical/ financial collaboration,clearance by regulatory authorities, andso on.


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Planning and organising phase

3.A project structure which would dealwith the organisation and manpower,

systems and procedures, and so on,has also to be created which wouldenable the project manager to

implement the project.


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Implementation phase:

The detailed engineering, orderplacement for equipments and material

awarding contracts, civil and other typesof construction, and so on, have to beundertaken during the implementation

phase leading to the testing, trial, andcommissioning of the plant.


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Clean-up phase:

The final phase in projectimplementation deals with

disbanding the project infrastructureand handing over the plant to theoperating personnel.


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PROCEDURAL

IMPLEMENTATION

Any organisation which is planning to implementstrategies must be aware of the proceduralframework within which the plans, programmes, and

projects have to be approved by the government atthe central, state and local levels

The regulatory mechanisms for trade, commerce,and industry in India span the whole range of legalstructure from the Constitution of India, the

Directives Principles, Central laws, State laws,general laws, sector-specific laws, industry-specific laws and the rules and proceduresimposed by the implementing authorities at thelocal level. The laws lay down elaborate rules and

procedures to be followed


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The regulatory elements to be

reviewed are as below

1.Formation of a company.

2.Licensing procedures

3.Securities and Exchange Board of India(SEBI) requirements

4.Monopolies and Restrictive TradePractices (MRTP) requirements

5.Foreign collaboration procedures6. Foreign Exchange Management Act

(FEMA) requirements


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7.Import and export requirements

8.Patenting and trademarks

requirements9.Labour legislation requirements

10. Environmental protection and

pollution control requirements11.Consumer protection requirements

12.Incentives and facilities benefits


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Licensing Procedures

The system of planning (or planneddevelopment) rests on three policy

documents consisting of Industrial Policy Resolution, 1956,

Industries (Development and

Regulation) Act (IDRA), 1951, and the statements of 1978, 1980,

1982, and 1991


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A license is a written permissionfrom the government to an industrial

undertaking to manufacture specifiedarticles included in the Schedule


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SEBI Requirements

the SEBI has three objectives

to protect the interests of investors in

securities to promote the development of the

securities market,

and to regulate the securities market


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SEBI

It is a quasi-judicial body, under the Securities

Laws Ordinance, 1995, to deal with

issue of capital,

transfer of shares, and other related aspects.

Its jurisdiction covers the

primary market,

secondary market,

mutual funds,

foreign institutional investors,

and foreign brokers.


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Monopolies and Restrictive Trade Practices

(MRTP) Requirements

The Monopolies and Restrictive Trade Practices(MRTP) Act, 1969 sought to prevent monopoliesand restrictive trade practices and the

concentration of economic power. The major implication of the MRTP Act with regard to

strategy implementation arose from its power toprevent the concentration of economic power.However, the present state of the Act is mainly

toward the prevention of monopolistic, restrictive,and unfair trade practices. The control andregulation of monopolies has nearly been doneaway with. The MRTP Act is implemented by anMRTP Commission


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Foreign Collaboration Procedures

The government policy, in general,allows foreign investment and

collaboration on a selective basis in priority areas,

export-oriented or

high technology industries, and permitting existing foreign investment

in non-priority areas.


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Foreign investments are of two types:

foreign direct investment (FDI), and

foreign institutional investment (FII) or portfolioinvestment.

FDI can take place through wholly-ownedsubsidiaries, joint ventures, or acquisition.

Portfolio investment takes place throughinvestment by the foreign institutionalinvestors and investments in instruments

Joint ventures have been considered animportant route for channelising foreigninvestments into and outside India


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The procedural aspects of foreigncollaboration include preliminary

evaluation by the promoter, obtainingindustrial license (if necessary), obtainingclearance under the MRTP Act, applyingfor foreign collaboration to the concerned

agency, applying for import of capitalgoods (if required), finalisation ofagreement, and clearance from the RBI


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Foreign Exchange Management Act

(FEMA) Requirements

The Foreign Exchange Management Act(FEMA) replaced the Foreign ExchangeRegulation Act (FERA), 1973 in June 2000.

The FEMA, 2000 has substantially liberalisedprovisions and rules related to themaintenance of dollar accounts by exporters,remittance of foreign exchange for visitsabroad, agency commission, export claims,reduction in export value, reimbursement ofexpenses incurred on dishonoured exportbills, consular fee, and so on.


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Import and Export Requirements

The Export-Import Policy (Exim Policy) enunciatesthe foreign trade policy of the country. It is generallyannounced for a period of five years corresponding tothe five-year planning period.

The policy implementation and the legal frameworkfor imports and exports in India is largely based onthe Foreign Trade Development and Regulation Act(FTDRA), 1992, that replaced the Import and Export(Control) Act, 1947.

The objective of the Act is to provide for thedevelopment and regulation of foreign trade byfacilitating imports into, and augmenting exports from

India


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Patenting and Trademarks

Requirements

Patents, trademarks, copyrights, designs, and so on,are assuming greater significance in the Indianindustry owing to international environmental

changes. The major impact on these issues is of the WTO

requirements related to the Trade Related Aspects ofIntellectual Property Rights (TRIPs).

The increasing competitiveness means that it isnecessary to know the rights and privileges, and thelegal procedures for protecting products and ideas.Familiarity with the law related to these issues has,therefore, become essential for strategy

implementation


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Labour Legislation Requirements

1. Labour laws related to the weaker sectionssuch as women and children

2. Labour laws related to specific industriessuch as mines and minerals, plantation,transport, construction, contract labour, andothers.

3.Labour laws related to specific matters suchas wages, social security, bonus, and so on.

4 Labour laws related to trade unions, industrialrelations and workers' participation in

management


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Environmental Protection and

Pollution Control Requirements

The issue of physical environment has attainedglobal and national importance owing to a variety ofreasons. Overuse and misuse of the basic lifesupport systems and natural resources like air, land,

water, flora and fauna, and non-renewable sources,such as, oil and natural gas, are cited as majorfactors leading to environmental and ecologicaldegradation. The Indian public's awareness has also

heightened considerably with controversies regardingdisasters, such as, the Bhopal Gas Tragedy of 1984and, more recently, the Sardar Sarovar and NarmadaSagar dam projects


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Consumer Protection Requirements

In India, consumer protection is ensured through aplethora of legislation. Some of these are: EssentialCommodities Act, Trademarks and Merchandise Act,Sale of

Goods Act, Standard Weights and Measures Act,MRTP Act, and the IDR Act. However, the centrallegislation is the Consumer Protection Act, 1986,amended through the Consumer Protection(Amendment) Ordinance, 1993. This Act provides forthe protection of consumer rights and the redressal ofconsumer disputes.

The Consumer Protection Act provides for theestablishment of a Central Consumer ProtectionCouncil and State Consumer Protection Council in

each State


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Procedures for Availing Benefits from

Incentives and Facilities

Project implementation to put a strategy intoaction requires a consideration of various

incentives, subsidies, and facilities. It isbeneficial for entrepreneurs to be aware ofthese so that due advantage can be taken ofthese for providing incentives, and so on, the

government does not play a regulatory but apromotional role. This role is manifested invarious forms


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RESOURCE ALLOCATION

Resource allocation deals with the procurement andcommitment of financial, physical, and humanresources to strategic tasks for the achievement of

organisational objectives Resource allocation is both a one-time and a

continuous process. When a new project isimplemented, it would require the allocation ofresources. An on-going concern would also require a

continual infusion of resources. Strategy implementation should deal with both these

types of resource allocation


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Procurement of Resources

Basically, there are two types offinances: long-term and short-term.

Long-term finance is required for thecreation of capital assets.

Short-term finance is for workingcapital.

Both types of finances can be procuredfrom the internal and external sources


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Having procured financial resources,

the strategists set out to implement thestrategies in right earnest. The first taskis to distribute the resources within the

organisation to different SBUs,divisions, departments, functions, tasksand individuals.


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Approaches to Resource Allocation

Top-down approach :-where resources aredistributed through a process of segregationdown to the operating levels. The corporate

management, consisting of the Board ofDirectors, the CEO or managing director, andexecutive committee could decide therequirements, and distribute resources

accordingly The top-down approach is usually adopted

in an entrepreneurial mode of strategyimplementation.


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Bottom-up approach :-where resourcesare allocated after a process of

aggregation from the operating level Strategic budgeting :-A third type of

approach is a mix of these two and

involves an iterative form of strategicdecision-making between differentlevels of management


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Means of Resource Allocation

Strategic Budgeting:-Budgeting is a commontechnique used as a planning, coordination,and control device in management. Its usage

is widespread in organisations. Based on resource availability and corporate

guidelines, the strategic budget is preparedby the executive-level committee and

presented to the top management forapproval and sanction. The strategic budgetis then communicated down the line andtasks of implementation taken up


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BCG-based budgeting:The BCG matrixcan also be used for resource allocation. In a

BCG matrix, SBUs or products are identifiedas 'stars', 'question marks', 'cash cows' and'dogs'. Investment and cash flow decisionscan be made on the basis of the type of multi-

SBU, multidivision or multi-departmentcompany where resources have to beallocated


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PLC-based budgeting: Resource allocation can belinked to the different stages in a product's (or SBU's)life cycle. A product in the introduction and growthstages may attract more resources and these may be

diverted from the high-profit yielding products thathave reached the maturity stage of their life cycle.

Capital budgeting:Resource allocation for newprojects or products could be done on the basis of

capital budgeting. Existing projects, in cases ofrestructuring and modernisation, could also usecapital budgeting for resource allocation


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Zero-based budgeting:Zero-based budgeting(ZBB) is an operations planning and budgetingprocess that requires each strategist to justify

resource allocation demand, not on the basis of theprevious years' budget, but on"ground zero" which isbased on a fresh calculation of costs each time aplan is to be implemented.

The strategic plan is divided into operational plans,

goals, and activities. Resource requirements arecalculated every time a budget is prepared. ZBB canbe used for effective resource allocation amongcompeting units on the basis of strategic priority sincecosts are related to benefits for each strategic task

undertaken


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Factors Affecting Resource Allocation

the bjectives of the organisation,

preference of dominantstrategists,

internal politics, and

external influences


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Difficulties in Resource Allocation

Scarcity of resources

Overstatement of needs

Documents

Strategy Implementation_1st April