Problems faced by Himalaya bank related to credit card

Himalaya bank was established in 1992 under a joint venture with Habib bank of Pakistan.It has five branches in Kathmandu Valley and eight branches outside Kathmandu valley.It has correspondence relationships with 178 international banks.It has recently installed Globus accounting software to provide better services to its clients.Himalayan bank accepts deposits and provides loans.The other services provided by it are:Tele-banking,all branch banking,Automatic teller machine,24 hour banking ,credit card,foreign exchange and letter of credit of etc.
HBL faces a number of problems in its credit card business.Most Nepalese people lack awareness about card.They feel that having a credit card involves extra costs in subscription and service charges.Moreover,not all the shops accept credit cards.
The use of credit cards is generally limited to city centers.Customers do not report loss of credit cards promptly.Fraudulent activities are increasing,especially in e-commerce transactions.Risks are getting higher.support from other departments of HBL is also lukewarm.
The top management of Himalaya bank fells that its credit card business needs streamlining and strengthening from management point of view.

Management of credit card functions

The credit card department was established in 1994 at "Thamel in the head of Himalayan bank .In 1997,its name was changed to credit card center and was shifted to Maharanjgunj branch.Since 1999,the credit card center has been shifted to Pulchowk branch.There has been frequent transfer of personnel in the center.The functions of the center are :

• Marketing :This function in concerned with issue of card.It communicates through telephone,e-mail and latter to attract and retain qualitative members.It keeps track of the needs of potential and current cardholders.
• Processing :This function processes the transactions related to credit card.
• Control :This function monitors the cardholders and merchant activities.It also deals with collection of dues and control of fraudulent activities.

Himalayan bank had issued HBL regular card in an November 1993,Which has a membership of 1258.The HBL gold card issued in November 1997 has 690 members.But both of these credit cards have been phased out because of problems associated with security and fraud.Visa classic and visa gold have also been phased out.At present Himalayan bank deals with visa international and master card.It has 33 percent share of credit card business in Nepal.The competition is getting together.

How to analyze a strategic case study

A case study is a method for teaching and learning.It describes and organization's situation at a point in time.It describes external and internal environment forces.It raises issues about mission,objectives and strategies.It describes the problems.
The following steps should be followed to analyze the case study:

• Read the case carefully :Determine the main points of the case.It may not provide all the information.Carry out library and internet search.This should be for the decision date of the case.
• Identify the problem :Every case is problem based.Define the main problem clearly.Do not confuse symptoms with the causes.

1.Make reasonable assumptions about unknowns.But state them clearly.

• Analyze the case :Analyze the problem clearly and systematically.Understand all the cause of the problem.

1.Develop a mindset of what,why,when,how,where,who.
2.Use appropriate analytical tools for analysis.They can be ratio analysis for analysis of financial statements.Compare with industry averages.Compared with industry average.

• Examine relevant alternatives:Most problems have a number of alternatives for solution.Present the advantages and disadvantages of relevant alternatives.It can be in terms of productivity,costs,market and others.
• Recommend strategies :Select a course of action in terms of strategy.There is no one best solution to a case.It varies according to situation,time,place and people.Give justification for your recommendation,reason for selecting,and their implications.
  

Concept of strategic choice

Change is making things different.It is departure from status quo.Environment forces change.The effects of change are widespread.Organizations that fail to change,die.Change is a fundamental part of organizational survival.Ability to adapt to change is the essence of organizational effectiveness.
Strategic changes implies change in strategy through diagnosis and management of change needs.It consists of rethinking reviewing,and changing strategy to adapt to environmental changes and the changing resources and competencies.
Types of strategy change

• Adaptation :This change in strategy occurs incrementally.It can be accommodated within the current paradigm.Paradigm refers to rules boundaries,behaviors and the way of doing things.It involves realignment.This is the most common form of change in strategy.
• Reconstruction :This change is strategy occurs rapidly.But it does not lead to fundamental change in paradigm.For example,structural change or cost-cutting program.
• Evaluation :This change in strategy occurs overtime.It requires paradigm change.It is transformational change.Learning organizations continually change their strategies to environmental changes.
• Revaluation :This change in strategy occurs very rapidly with a big bang.It requires fundamental change is paradigm.For example,significant decline in profit may require revolutionary change in strategy.So can of focus from selling to customer satisfaction.
  

Criteria for evaluating strategies

A strategy should be continuously evaluated.The criteria that can be used for evaluating strategy are :

• Consistency :A strategy should not have inconsistent objectives.Inconsistencies are reflected by :

1.Conflicts and interdepartmental bickering.Conflicts are people-based rather than issue based.
2.Suboptimization where one department tries to gain success over others.
3.Top management spending lot of time in solving problems and issues.

• Consonance :If refers to set of treads or individual trends that need examination to evaluate strategy.The strategy should be adaptive capabilities in terms of abilities,competencies,skills and talents to carry out a strategy.
• A strategy must provide strategic advantage.It result from superiority in resources,skills or position.Size can provide positional advantage.The nature of positional advantage in relation to competitors should be examined for evaluation a strategy.
  

Process of evaluation and control

The steps in strategic evaluation and control are:

1. Review assumption :Assumption relate to environmental and organizational factors.Environment is dynamic.There is time lag between strategy formulation and implementation.Assumptions made while formulation lating a strategy may no longer be valid and relevant.Changing assumptions are taken into account.SWOT analysis is revised.
2. Measure performance :Strategic evaluation and control continually evaluates the implementation performance of strategy.Planned results are compared with actual results.It evaluates whether the plans,programms,projects and budget are guiding the organization towards objectives achievement.Implementation gaps are identified.
3. Adjust strategy :Necessary corrective actions are taken to adjust the strategy to new requirements.This is done steer the strategy to the right direction with due consideration to the changing assumptions and implementation gaps.

Strategy valuation can be no better than the information on which it based.Corrective actions are needed when

• External and internal environment factors significantly changes.
• Objectives achievement is not satisfactory.
  

Contemmporary approach of strategic control

Strategic control can be of the following four types in contemporary approach.

1. Premise control :Premises are assumption about anticipated environment.A strategy is expected to be implemented on the basis of these assumption.Premise are forecasting of future expectations about political-legal,economics,socio-cultural and technological forces in the external environment.
2. Implementation control:Implementation control evaluates whether the plan's programmes,projects and budget are guiding the organization towards objective achievement.Resources allocated to then may be withdraw or revised to ensure envisaged benefits to the organization.It involves strategic rethinking.

Tools of implementation control can be :

• Strategic thrusts :The strategic thrusts for implementation are identified and monitored.For example,strategic thrust can be in terms of new product launch or diversification programme.
• Milestone review :Critical milestones is strategy implementation are identified.They can be in terms of events,resource allocation or end-time.They are reviewed to reassess the continued relevant of implementation to objectives achievement.

3.Strategic surveillance :Strategic surveillance monitors a Bord range of events inside and outside the organization which threaten the course of the strategy.It can be :

• Selective surveillance :Monitoring on selected information sources to uncover external events likely to affect the strategy.
• Organizational surveillance:Information generated within the organization is captured for monitoring.

4.Special alert control :Organizations should hopes for the best and prepare for the worst.Sudden and unexpected events create crisis.They threaten the course of strategy.Special alert alert control is trained by detection reassessment of strategy during crisis situations.
Contingency strategy are formulated to handle unforeseen events.The responsibility to handle crisis situation is given to crisis management team.

Traditional approach of strategic control

This approach emphasized operational control to ensure that right things were done at the right time in the right manager.It took corrective actions for variations in performance.This steps are :

1. standards :Standards are set for implementation processes an d results to be measured.Standards are in the form of planners or budgeted performance.They are the performance targets for key performance areas.They are critical to the success of an organization.Performance targets relate to the outputs of an organization.It can be in terms of quality,quality,costs,profits and time.
   
2. Measure actual performance :Actual performance is measured at predetermined times.It provides feedback about performance.
3. Evaluation performance :Actual performance is compared against performance standard.It can to,be higher,or be lower than standard.Deviations,their magnitude,their causes and incidence are analyzed.They can be positive or negative.The responsibility for deviation is located.

• Quantitative criteria :They can be profit,sales,market share,costs,dividends,share value,investment,earning per share,ratios,budget.
  

• Qualitative criteria :They can be product quality,capacity utilization,market attractiveness,motivation,morale,loyalty,efficiency,effectiveness etc.

4.Corrective actions :Corrective actions are taken to bring performance in line with the standards.The actions can be :

• Do nothing :If the deviations are within the allowable tolerance.The deviations is a chance fluctuation.
• Correct deviations :Through design improvements,better materials.Greater employee motivation,more training etc.
• Change standards :To make them appropriate and realistic.Strategies plans and budgets are reformulated.
  

Concept of strategy evaluation and control

Strategic evaluation and control ensure that the right things are done in the right manner and at the right time.It continually assesses the changing environment to uncover events that may significantly affect the course of the strategy.
Strategic evaluation and control is exercise by top management.It is long term oriented.It focuses on external environment.It is proactive and provides early warning about the performance of the strategy.
The characterise of strategy evaluation and control are :

1. Right direction :Strategy evaluation and control ensures that the strategy is moving in the right direction.It is objective oriented.
2. Proactive :Strategy evaluation and control is an early warning system of control.It pro acts by continual questioning the direction of strategy.It is based on timely information.
3. Future oriented:Strategy evaluation and control aims to steer the future direction of strategy.
4. Focus :Strategic evaluation and control focuses on forces and events in the external environment.
5. Time horizon:Strategic evaluation and control has a long term time horizon.
6. Responsibility :Strategic evaluation and control is the responsibility of top management.
7. Techniques :Strategic evaluation and control is based on environment surveillance,premises reexamination,implementation review,information gathering and special alert technique.
8. Corrective actions:They are the essence of strategic evaluation and control.It is action oriented.

• Timely evaluation and control alerts management about problems before they critical.It is essential to face dynamics environments.It ensures environmental relevance.
  

Constraints to leadership

Internal constraints

1. Programmed decisions :If decisions are programmed leaders get little room for exercising leadership.
2. Lack of skill and trains :If leaders lack required skills and traits,effective leadership is constrained.
3. Control over rewards :If leaders lack control over rewards and punishment,leadership is constrained.
4. Work situation :If characteristics of work situation can be changed,leadership is constrained.
5. Decentralization :If the leader wants to do all things by himself,leadership is constrained.This leads to overloading.Teams cannot be built.
6. Organizational changes :If organization is not open to changes in leader behavior,leadership is constrained.

Overcoming leadership constraints

1. Job engineering :Make structure changes in jobs.
2. Control :Give control over reward and punishment to the leader.
3. Reward :Give reward for leader behavior for improving performance.
4. Training :Trains leader to increase his competencies.
5. Situational style :Change leadership style according to situation.
   
6. Decentralization :Devolve decision making authority to lower levels.
7. Transformational leadership :Leaders provide individual consideration and intellectual stimulation to followers.
   

Organizational culture

Organizational culture is a set of values,beliefs,assumptions,and symbols shared in common throughout the organization.It influences opinions and actions of members within the organization.It guides behavior.It has pervasive influence on organizational life through cooperation,control,decision making.Communication and commitment.
Leaders shape organizational culture in the following ways:

1. Emphasizing dominate values:They are key themes or core values.They may be established by the founder of business.They are the source of competitive advantage.They can be :

• Quality :Innovation in product development.Total quality management of product.
• Services :Before,during,or after sales services.Speed in providing services.
• Differentiation :It is relation to competitors.It can be in terms of physical parameters,image,promotion and channels.
• Cost advantage :It can be low cost compared to competitors.
• Disseminating stories and legends :Stories and legends that reinforce desired values and beliefs are disseminated.Organizational members strongly identify with them.
• Institutionalizing practices:Practices that systematically reinforce desired values and beliefs are institutionalized.
• Reward systems and structures:They are used to shape desired organizational cloture.
• Managing strategy culture relationship :They are managed for strategy culture fit.They help strategy implementation.
• Maximizing synergy:Synergistic aspects are maximized.
  

Leadership role in building ethical culture

Ethical involves moral issues and choices.It is a individual's beliefs regarding right and wrong or good and bad.Individual members in organization have ethics.Ethical behavior implies conformity to generally accepted organizational norms.

Leadership role is building ethical can be:

1. Code of ethics :Leaders lay down code of ethics.They shape ethical behavior of the members of the organization.
2. Role model:Leaders provide role models for ethical behavior.This contributes to ethical standards of individual members in the organization.
3. Organizational culture:Leaders shape organizational culture.This promotes ethical culture in the organizational practices.
4. Rewards :Rewards and punishment systems can also promote ethical culture.Leaders decide rewards and punishment.
5. Sets direction by pursuing a road map for future.
6. Designs appropriate organizational structure.
7. Ensures commitment to excellence.
8. Promotes ethics behavior.
   

Leadership

Leadership is an essential of management .It guides and influences employees.It establishes direction,manages changes and builds a team.It is essential to drive strategy implementation forward.Effective leaders carry out the following tasks to effectively implementation strategy.

1. Leading :Guiding,influencing and motivating people for effective implementation.Staying on top of what is happening.Pushing corrective actions.Setting directions.
2. Performance based reward:Tying rewards and incentives to implementation performance.
3. Supportive environment :Creating a strategy supportive work environment.
4. Open communication:Promoting open communication to reduce conflicts and manage change.
5. Environmental adaption:Keep the organization responsive to changing forces that affect implementation.
6. Team building :Achieve synergistic effects through teams building.The organization structure is redesigned.
7. Benchmarking :Instituting best practices and pushing for continuous improvements.Ensuring organizational coomitment to excellence.
8. Shaping organizational culture :Shaping conducive organizational refers to a set of values,beliefs,symbols and assumptions shared in common throughout the organization.It is shaped by:

• Emphasizing dominant values.They reinforce strategic advantage.They can center around quality,cost,speed,differentiation,service,efficiency.
• Institutionalizing practices that reinforce desired values and beliefs.Stories and legends are disseminated.
• Using rewards systems and structures.
• Managing strategy culture relationships for strategy culture fit.
• Promoting ethical behavior.
  

Essentials of effective implementation team based structure

A team is a group whose individual effects result in positive synergy through coordinates efforts.Its characteristics are :

• Collective performance to achieve team objectives.
• Little or no supervision with individual and mutual accountability.
• Shared leadership roles.Decision through discussion.
• Member skills are multiple and complementary.
• Outcomes is positive synergy through coordinated effects.

Cross functional teams are used to implement strategy.They consist of member from different departments and works areas.They are o0f the sane level.They come together to accomplish specific tasks.Member are experts in various specialties.They are carefully selected.
Advantages

1. Member of the team work collectively to achieve team objectives.
2. Team has authority to makes decisions.
3. There is no rigid hierarchy.
4. Employee talents and skills are better utilized.
5. Performance evaluation is by members themselves.
6. Productivity and satisfaction is high.

Disadvantages

1. Teams may duplication the effects of departments.
2. Team effectiveness is situational.
3. Conflicts may arias between team and department.
4. Teams may work as islands.
   

Essentials of effective implementation matrix structure

It is a combination of structures.It superimposes project structure on functional structure.It integrates knowledge and skills by temporarily assigning people from functional departments to work on project.It provides skills and resources where and when they are most needed.
Advantages

1. Environmental adaptation is facilities.
2. Flexibility organization wide.Accommodates wide variety of projects.
3. Efficiency motivation of resources.
4. Effective use of specialization human resource.
5. Increased motivation an commitment.
6. Employees development through involvement in decisions.Training ground for mangers.
7. Quality decisions are possible.Fosters creativity.

Disadvantage

1. Takes longer to make decisions;confusion and contradictory.
2. Two bosses for one employee functional manager and project manager.Dual channels of authority and control.
3. Power struggle for allocation of resources.
4. Duplication of efforts,dilution of priorities.Loss of account-ability.
5. Costly and difficult to implement.
6. Conflicts arise due to unclear roles and responsibility.
   

Essentials of effective implementation divisional structure

It is composed of self-contained divisions based on products,technology or geographical areas.Each strategic business business unit can be regarded a division.It allows customized product market strategic for each division.It is suitable for multi-business organizations.
Advantages

1. Effective management of diversity.It tailors structure to needs of markets,products and ares.
2. High product/market visibility through concentration.
3. Facilities attention to strategy by senior management.
4. Facilities performance measurement of divisions.Focuses accountability for performance.
5. Management development encouraged by specialization within a division.

Disadvantages

1. Conflict between divisions due to poor communication.
2. Poor coordination of activities among divisions.They tend to become independent business.
3. Confusion over locus of responsibility.
4. Costly due to duplication of activities.Layers of management also add to costs.
   

Essentials of effective implementation functional structure

It is based on functional of an organization.Functions are primary activities,such as production,marketing,finance,and human resource.The chief executive has line managers under him.This structure is suitable for smaller companies with narrow product range and single dominate business.
Advantages

1. There is clear definition of authority,responsibility,roles and tasks.Functional exports is developed.
2. Specialists manage senior and middle levels.Efficiency is achieved through specialization.
3. There is direct supervision and control by chief executive.
4. Career development of functional mangers is facilities.

Disadvantage

1. Managers are overburdened with routine matters.They neglect strategic issues.Narrow specialization is promoted.
2. Coordination is poor between functions.
3. It is difficult to cope diversity due functional focus of manager.
4. Failure to adapt with environmental changes.
5. Decision delays are common due to functional rivalry and conflict.
   

Essentials of effective implementation simple structure

In simple structure,the organization is run by the personal control of an individual.The owner takes most of the responsibilities of management.He may be assisted by assistants.The organization configuration centres on individual relationships and informal process.Small business under this structure.
Advantages

1. This owner exercise direct control.
2. Decision marketing is speedy.
3. Motivation of the owner is high.
4. Personal relationships are developed with supplies and customers through direct communication.

Disadvantages

1. This structure operates effectively only up to a certain size.
2. There is no division of work.
3. Authority and responsibility is not clear among subordinates .
4. There poor motivates in subordinates.
   

Methods for resource allocation to SBUs

The methods for allocating resource allocation to SBUs can by :

1. Strategic budgeting :The SBU managers prepare operational plans and targets.They are coordinated with corporate objectives and plane.The strategic budget is prepared and presented to top management for approval.This budget allocated resources to SBU.
2. Capital budgeting based resources allocation:This methods is used to allocated resources to SBUs for new capital project.It use the technology of pay back period,internal rate of return and discounted cash flow.Time value allocated on the basis of approved capital budget.
3. Programme budgeting based resource allocation:The resource allocation is made to various approved future programmes of SBUs.Objectives,costs and likely impact of each programme are carefully specified.It is also known as PPBS (Planing programing budgeting system).
4. Zero based budgeting resource allocation:The SBU budget start from zero base.Each future programme has to be justified in term of benefits and costs to warrant allocation of resources.Low priority activities are eliminated.
5. BCG matrix based resource allocation:This matrix is used for resource allocation to SBUs.Based on relative market share and market growth rate,the SBUs are classified into "stars","question marks","cash cows"and"dogs".

• Stars and question marks SBUs are allocated more resources to build and sustain market share.Cash cows are allocated present level of resources to defined and preserve market share.Dogs to not get any resources.They are liquidated.
  

6. Product life cycle based resource allocation :Resource allocation is liked to different stages in the life cycle of SBUs products.The stages can be introduction ,growth,maturity and decline.

• More resources are allocated at introduction and growth stages less resources are allocated at maturity stage.The product in phased out at decline stage and receive no resources allocation.
  

Resource planing at business level

Resource planing at business level consists of allocating resources to each strategic business unit.The corporate level resources plan serve as the blueprints for resources allocation to SBUs.Various methods are available for resource allocation to SBUs.

Approach to resource allocation :There are approaches for allocating resources to SBUs.

1. Top down approach :The top management at corporate level decides the requirements and allocates resources accordingly to SBUs.
   
2. Bottom up approach :The operating levels at SBU determine their resource requirements.They are aggregated.Resources allocation accordingly.
3. Mixed approach :It is a mix of top down and bottom up approaches.It involves an interactive form of decision making.A series of negotiations take place between corporate managers and SBU managers to make decisions about allocating resources to SBUs.
   

Resource planing at corpoarte level

The resource planing corporate level are :

1. Assess available resources:Available resources are deployed resources into the activities and operations of an organization.They are currently owned by the organizations.The starting point of a resource plan is to assess the available resources of an organization.
2. Forecast future resources needs :Forecasts are made for the resources needs to implementation the selected strategy.Various statical techniques are available for resource forecasting.The judgement and experience of managers can also be useful.Critical success factors are important to forecast future resources needs.Planing priorities also determine resources needs.
3. Identify resource gap:Resource gap is the difference between needed resource and available resources to implementation strategy.It is determine resource.
4. Determine and evaluate alternative sources:Alternative future sources to mobilize resource are determined.Source can be external and internal.Internal sources consist of retained earning,reserves and provision.External sources can be capital market for equity and long term loan,and money market for bank credit and trade credit.The most activities sources are identified.Evaluation is done in terms of risks,credit and trade credit.For financial resources,the mix of equity and loan is considered.Time value of money is considered for capital expenditure projects.
   

Factors affecting resource allocation

The following factors affect resource allocation:

1. Objectives :Resource allocation must be oriented to objectives achievement.Objectives should be clearly laid down with strategic priorities for resource allocation.Critical success factors are considered.
2. Managerial preferences :Top managers who are dominated in strategy formulation tend t affect resources allocation.Their preferences attract more resources for their pet projects.
3. Internal policies :Resources area a symbol of power.Internal policies based on negotiations and bargaining affects resources allocation.
4. External influences :The demands of stakeholders also affect resource allocation.They can be owners,suppliers,customers,employees,bankers and community.Legal requirements may require additional resources allocation.For example pollution control,safety and labour welfare requirement.
   

Challaenges of intergration for strategy implementation

Strategic implementation requires an integrated thrust for unity of action and harmonization of efforts.The resources and competencies of strategic business units their functions need to be linked together to attain synergistic effects.
Challenges in integration can be as follows :

1. Cross SBU challenges of integration :Problems occur horizontally where SBUs are at the same level of hierarchy.Conflicts and misunderstandings among SBUs lead to dysfunctional consequences.Problems of integration can be handles by :

• Forming committees and task forces.
• Developing effective information systems in SBUs.
• Giving a liaison to a designated manager who acts as a facilitator to promote integration.
• Effective communication among SBUs.

2.Cross functional challenges of integration :Problems occur both vertically and horizontally among functions of an SBU.Each function may try to sub optimize.This can lead to conflicts.Such problems can be hand lead by :

• Effective communication among functions.
• Standardized policies,rules integration problems.
• Simplified structure of SBU.
• Decentralization.
• Reward system for compliance of performance standards that promote voluntary coordination.
• Reincarnating.
  

Role of policies in strategy implementation

Policies are empowerment tools.They simplify decision making.The guide the decision and action of mangers their subordinates in strategy implementation.They provide standard operating procedures.They are generally formal and written.The roles of policies in strategy implementation are:

1. Policies promote uniform handing of similar activities.This coordinates tasks.Frictions are reduced.
2. Policies ensure quicker decisions by standardizing answer to routine problems.They empower employees.
3. Policies reduce uncertainty in day-to-day decision making.They provide predetermined answer.
4. Policies establish consistent pattern of managerial actions.
5. policies reduces resistance to organizational strategies.
6. Policies establish indirect control over independent action.Misunderstanding.They improve job performance.
7. Policies help understand the business environment.
   

Tactical aspects of strategy implementation

The tactical of strategy implementation are:

1. Structure :The structure of the organization should be strategy friendly.The basis of structuring should be appropriate for putting strategy into action.The structure making should be decentralised.
2. Resources plans :They serve as framework for mobilising and allocating resources.Actions plans need to be prepared for various operational activities of the organization.Methods of resource allocation to SBUs and functions should be carefully determined.
3. Management system :The management system should be effective for operationalising strategy.

• Human resource management should be pro-strategy.
• Employees should have competency in operational activities.
• Information management should be developed based on informational technology.
• Leadership should have ability to motivate employees towards strategy implementation.
• Rule,regulation and procedures should be changed to facilitate operationlizing of strategy.
• Management should develop strategy supportive organization culture for operationalizing strategy.

4.Re engineering :Jobs and work processes should be radically redesigned to ope rationalize strategy.A start is made with a clean slate.The focus is on processes that create customer value.A top down approach is taken.

Operationalizing strategy

Strategic advantage is achieved at the operational level of the organization.If the operational aspects are not in line with the strategy,the implementation of strategy will not be effective.
The following factors are important for operational strategy.

1. Short term objectives :Long term objectives are translated into short term objective.They set annual targets for action.They provide specifics guidance for what is to be done.They ope rationalise long term objectives.They are measurable and prioritized.They assist strategy implementation by providing.

• Targets for year,month or week.
• Coordination to avoid conflicts.
• Measurable outcomes for functional activities for control purposes.

Action plans are based on short term objectives.Such plans identify:

• Specifics activities to be undertaken.
• Clear time frame for completion of activities.
• Responsibility for carrying out each activity.

Benefits

• They clarify of operating personnel.
• Conflicts can be addressed while developing them.
• They provide basis for control.
• They motivate for higher performance when liked with reward system.
  

Establishing management system

A management system is established for strategy implementation.A strong management team is put together.
Team members can come from within the organization or they can be outsiders.The term should have the right mix of skills with potential to developed.
The management performs the following function.

1. Human resources management :The employees are acquired developed,utilised and rain ted.

• Acquiring competent employees :Talented,experienced and competent employees are acquired for the organization.
• Developed of employees :Training and management development is made a continuous process to develop employees.This is essential to develop knowledge base and build human capital.
• Utilization of employees :Motivation is the key factors for effectively utilizing people.They are given challenging,interesting and creative job assignments.
• Retention of employees:The salary,benefits,service and incentives help retain high-potential ad high performance employees.

2.Information management :It is done through the use of information technology.
3.Leadership :It is exercised through guiding and influencing employees.It shapes organization culture.

Designing structure

Structure is a mean to implement strategy.It defines activities,levels,roles and reporting relationship.It facilitates resource allocation.Dimensions of structure are :

• Job design :Job required to implement strategy are defined.division of work is done.
• Job grouping :Similar jobs are grouped in departments.They can be production,marketing,finance,human resource,research and development.Jobs are assigned to people and position.
• Relationships :Authority responsibility relationships are established.A hierarchy is established which specifics who reports to whom.Span of control is decided.This provides formulation to the structure.

Modern structures reflex external focus.Flexible interaction,interdependency and bottom up approach.Globalisation,Internet and complexity have generally affects structures.Large organizations are getting complex.
Resources are important for strategy implementation.Resource plans are prepared to predetermine future resource needs.They serve as a framework for mobilizing and allocating.

Mckinsey's 7s framework

Effective implementation of strategy should be supported by 7s.They all should work together.They are :

1. Strategy :Set of decisions and actions aimed at gaining a sustainable competitive advantage.They are based on anticipation of changes in external environment.
2. Structure :Who reports to whom and how tasks are differentiated and integrated.It defines the focus of the company product or customer.
3. Systems :The flow of activities in operations including core processes and support systems.It includes information systems.
4. Style :How managers act developed and their basic values shaped.It refers to human resources systems.
5. Shared values:Commonly held beliefs and assumptions that shape corporate culture.It refers to human resources system.This is the core of strategy.
   
6. Skills :Dominate capabilities and competencies of an organization.They provide competitive advantage.
   

Concept of strategy implementation

Strategy is a road map for future direction and scope.Implementation is translating strategy into action.Strategy formulation is followed by implementation .Implementation is a managerial job.a strategy becomes meaningful when it is implemented and working in practice.Objectives can be achieved only when strategic are implemented:

• According to Steiner and Miner:Implementation of strategy is concerned with the design and management of systems to achieve the best integration of people,structure,processes and resources.
• According to Wheelen and Hunger:Strategy implementation is the process by which strategies and policies are put action through the development of programs,budgets and procedure.
• According to Thompson and Strickland:Implementing strategy entails converting the organization's strategic plan into action and then into result.

The characteristics of strategy implementation are :

• Implementation is putting strategy into action.
• Implementation is an operational process.It operational strategies.
• Implementation is a managerial job.It requires managerial skills and leadership.
• Implementation requires coordination among all business units and functions.
• Implementation involves strategic control.
• Implementation involves management of change.
  

Formulate your individual strategic

Each person should plan for the future.Each person faces opportunities and threats and has strengths and weakness.You are about to graduate with a BBA degree.Formulating strategies is important for your future.
Instructions

1. Construct a SWOT matrix for you.List five points for each areas of opportunities,threats,strengths and weakness.External opportunities may be an offer of admission with scholarship by an American University.An internal weakness may be low grade point average.
2. Identify external opportunities of advantage and internal strengths that provide you strategic advantage.
3. Match opportunities with strengths to formulate strategies for road map of your future direction and scope.
4. Present your finding to the classes.Every individual is unique.There is no right answer.
   

BCG matrix

It was developed by Boston consulting group.It uses relationship between market share and market growth.Market share is the share in relation to the largest competitors.Market growth is the annual market growth rate.They both affect cash flow.
BCG matrix is divided into four cells.

• A star is a business unit which has a high market share and high market growth rate.Large amount of spending is needed to protect market share.It achieves cost reduction overtime.
• A question is a business unit with high market growth rate but low market share.Heavy spending is needed to increase market share.But it is not achieving cost reduction.It has uncertain future.
• A cash cow is a business unit with high market share but low market growth rate.Heavy investment is not needed.It generates high cash flow.It has low costs relative to competitors.
• A dog has low market share and low growth rate.It drains cash to survive.Its future prospect is bleak.

Matrix of BCG matrix :

• It is important for a business unit seeking to dominate market.
• It provides a balanced mix in portfolio.
• It focuses on cost reduction and planing of cash flow.

Limitations of BCG matrix :

• The matrix is applicable only to strategic business units.
• Market growth rate and market share may not be the sole determinants of profitability.
• It gives induce focus to cash at the cost of innovation.
• It is not easy to liquidate dogs due to political and market reasons.
  

Feasibility analysis

Feasibility is concerned with availability of resources and competencies to driver a strategic option.It determines an option's implement ability and workability in practice.It assesses the organization's capability to make the strategic option succeed.
The approaches available for feasibility analysis are:

1. Fund flow analysis :It assesses financial feasibility.It forecasts the funds required and the likely sources of those funds for a strategic option.The timing of new funding requirements are also identified.Fund flows are inflows and outflows of cash and cash equivalent.Operating activities are the principal cash inflow activities.Fixed assets,working are,tax and dividends are the principal cash outflow activities.
2. Break even analysis :It studies cost-volume profit relationship to assesses financial feasibility.This identifies break even point where revenue equals cost.Costs are classified into fixed and variable.Variable costs directly very with production levels.Fixed costs remain fixed.Profit is possible when sales exceed the break even point.Break even analysis helps to assess whether the strategic option is feasible in meaning profit target.It also provides as assessment of risk of strategic options having different cost structure.
3. Resources development analysis :It identifies needs for resources and competencies for a specifics strategic option.It is used to judge.

• Sufficiency of current resources and competencies to pursue a strategic option.This is necessary to stay in business.
• Need for unique resources and competencies to sustain strategic advantage.This is necessary to complete successfully.

4.Staying in business :The questions for analysis are :

• Do we lack any necessary resources.
• Are we performance below threshold on any activity.

Stakeholder reactions

Stakeholder are outside organizations,groups or individuals who have a stake in the outcomes of the organization.They depend on the organization to fulfill their objectives.The organization also depends on them to fulfill its objectives.They can shareholders,supplies,customers,competitors,government,labour unions,financial institution and presser groups.They provide political dimension to the organization's acceptability of a strategic option.
The acceptability of a strategic option depends on:

• Understanding the likely reaction of stakeholders.
• Ability to manage stakeholder reactions.

The approaches for analyzing stakeholder reaction can be :

• Stakeholder mapping :The power matrix is used to map stakeholders.Level of interest is the degree of interest in strategic option.Power ability to influence a strategic option.The acceptability of strategic options to key players is important for strategic choice.
• Game theory :It is concerned with anticipating how competitor reaction to various strategic option ti assess acceptability of strategic option.

The organization anticipates the reaction of competitors in game theory.This theory assumes :

• The competitors will behave rationally to win for their own benefit.
• The competitors is in an interdependent relationship with other competitors.
  

Analyzing risk

It involves probability estimates about robustness of a strategic option.The level of risk is important for acceptability of a strategic option.New product development carries high level of risk.
The approaches for analyzing risk are :

• Projection of financial ratios :It project s changes n key financial ratio resulting from a strategic option.Such changes indicate level of risk.The ratios can be related to capital structure and liquidity.
• Sensitivity analysis :It is "what if ?" analysis.It questions and challenges the underlying assumptions of a particular strategic option.It tests sensitivity of performance outcomes to each of these assumptions.For example,key assumption may be 10% growth in market demand.
• Simulation modeling :Simulation is abstraction of reality.It is used to analyze a strategic option when several uncertain variables affect its outcomes.Computers are used to simulated outcomes over time by changing certain variable for a strategic option.
• Heuristic models :Heuristic are rules of thumbs.They are based on managerial memory and judgement.Risk assessment of strategic options is based on past experience,memory,institution,hunch,and abstracter reasoning.These models do not considered logical facts.They are judgemental shortcuts.
• Representativeness :The likelihood of future occurrence is assessed by matching it with a preexisting category.
• Decision matrices :They are rectangular array of numbers arranged in rows and columns.They are to assess the level of risk of different strategic option.Low risk strategic options are identified.
  

Screening options for acceptability

The criteria used are :

1. Analyzing return :It involves profitability analysis.Expected return from specific strategic options are assessed.The approaches used for analyzing returns are :

a.Profitability analysis :It assesses financial return to investments.The tools used for profitability analysis are:

• Return on capital employed :It exmines the relationship between net profit after tax and capital employed.
• Pay back period :It is used for options related to capital project.It indicates how many years will be needed for cash benefits to pay for the original investment.It is the time at which the cumulative net cash follows becomes zero.

• Discounted cash flow:It considers time value of money.Forecasted net cash follows from an option are discounted at a specific rate.The method can be :

1. Internal rate of return :It used trial and error method to find out the rate of discounted.
2. Discounted cash flow :It considers time value of cash flow for total life of project.

b.Cost/benefit analysis :It assesses the overall economic impact of the strategic option.All the costs and benefits of a specifics option are forecasted.Cost/benefit ratio is calculated.

c.Shareholder value analysis :It assesses the impact of strategic option in generating shareholder value.The shareholder value is total shareholder returns.

Suitability

Suitability is concerned with environment fit of the strategic option.An organization is environment specific.The strategic option should address the circumstances in which the organization is operating.It should fit with the future trends and changes in the environment.
Suitability provides the rational to a strategy.It indicates whether the strategic action makes sense in relation to environment circumstances of the organization.The strategic option should be suitable from the following options of view.

• Exploiting opportunities and avoiding threats.
• Capitalizing on straights and avoiding weakness.
• Addressing stakeholder expectations.

Suitability of a specific strategic option is relative to other available options.The methods used to understanding suitability are.

• Ranking
• Decision trees
• Scenarios
  

Process of strategic choice

• Cultural and political factors of the organization influence strategic choice.
• Strategic choice should be consistent with or build on past strategic that have worked well.

Strategic choice results in selection of corporate,business and functional level strategy.

• Mutually exclusive :Strategic option should be mutually exclusive.It must stand on its own.
• Success :The strategic option should have a good probability of success.It should be implementable.It should have sustainable strategic advantage.
• Completeness :The strategic option should take into account all the strategic issues.It should be complete.
• Internal consistency :The strategic option should not contradict vision,mission and objectives of the organization.
• Strategic gap :It is the gap between current and future desired performance.The strategic option should help fulfill this gap.
  

Concept of strategic choice

Strategic choice is selection of the best strategic option that helps achieve organization's objectives.Relevant strategic options are evaluated their suitability,acceptability and feasibility.The evaluated strategic options are ranked in order of their potential to achieve objective.Such options should allow businesses to maintain or create sustainable strategic advantage.The strategic choice is made from among the ranked alternative.

Approaches for strategic choice :Strategic choice involves strategic decision making.The approach that can be used for making strategic choice can be :

• Planned approach :This approach involves formal appraisal of the relevant strategic options for suitability,acceptability and feasibility.The appraised options are ranked in terms of their potential for objective achievement.The choice of the best options is made.
• Enforced choice approach :An organization has various stakeholder.The dominate stakeholders play an important role in strategic choice.Their expectations considered.
• Experience based approach :Managers possess an experience curve.Past experience of managers in strategy implementation serves as a guideline for strategic choice.
• Command approach :The strategic choice is based on the command of top management.It is top down approach.
  

Human resource management

The strategic development are :

• Strategic resources :Human resources are regarded as strategic resources in organizations.HRM is carefully considered in strategic planing.Human resources accounting is getting important.
• Partner role:HRM is an equal partner in formulation and implementation of strategy.
• Potential development :Strategic approach is taken for continuous development of the future potential of human resources.
• Work force diversity :Strategic plans are prepared to manage workforce diversity.
• Learning organizations :Knowledge based learning organizations are increasing.Employees continuously learn and share experiences.
• Quality of work life :QWL is getting a strategic focus in HRM.
• Retention :Strategic planing is done to retain component quality human resources over the long term.Employees stock ownership programmers are getting popular.Welfare of employees inside and outside the work place is getting grater attention.
  
  
  

Research and development

• Technology transfer :Strategic alliances for technology transfer among firms from one country to another are increasing.
• Production development :Strategic planing for new production development is being emphasized.
• Outsourcing :Commissioning R&D activities to firms who can do things better and cheaper is gaining popularity.
• R&D Budget :Allocation of higher amounts of budget for R&D is being done.
• Product developing :Concurrent approach is replacing sequential approach in product development.Products are designed for their total life cycle.

Accounting :strategic development are :

• Computerized accounting system:New and better software are being developed to computerise accounting information system.
• Harmony :International accounting standards are being used to harmonize reporting of accounting information globally.

Purchasing :The strategic development are :

• JIT: Just-in-time purchasing is getting popular.Raw materials and spare parts are delivered just before they are used up.
• Quantitative techniques :Various models are being used to control and mange inventory efficiently.
• Professionalism :Supplies are being regarded as partners to take advantage of each other's expertise for purchasing.Even alliance are formed with competitors for procurement benefits.