ICAI Notes: Strategy Implementation and Evaluation | Financial Management & Strategic Management for CA Intermediate PDF Download

 Page 1


 
LEARNING OUTCOMES 
a    
 
 
CHAPTER 
5 
 
STRATEGY  
IMPLEMENTATION 
AND EVALUATION 
 
 
 
 
 
After studying this chapter, you will be able to: 
? Describe the process of Strategy Management: From Formulation to 
Implementation 
? Evaluate the salience of strategy implementation.  
? Explain Strategic Change through Digital Transformation  
? Differentiate between Organisation Structure (hard) and Culture (soft)  
? Signify the meaning and importance of Strategic Leadership  
? Discuss the role of Strategic Control  
? Identify and Classify Strategic Performance Measures 
“Effective leadership is not about making speeches or being liked; leadership is 
defined by results not attributes”. -  Peter Drucker 
“A leader is one who knows the way, goes the way, and shows the way” 
- John Maxwell 
 
© The Institute of Chartered Accountants of India
Page 2


 
LEARNING OUTCOMES 
a    
 
 
CHAPTER 
5 
 
STRATEGY  
IMPLEMENTATION 
AND EVALUATION 
 
 
 
 
 
After studying this chapter, you will be able to: 
? Describe the process of Strategy Management: From Formulation to 
Implementation 
? Evaluate the salience of strategy implementation.  
? Explain Strategic Change through Digital Transformation  
? Differentiate between Organisation Structure (hard) and Culture (soft)  
? Signify the meaning and importance of Strategic Leadership  
? Discuss the role of Strategic Control  
? Identify and Classify Strategic Performance Measures 
“Effective leadership is not about making speeches or being liked; leadership is 
defined by results not attributes”. -  Peter Drucker 
“A leader is one who knows the way, goes the way, and shows the way” 
- John Maxwell 
 
© The Institute of Chartered Accountants of India
STRATEGIC MANAGEMENT 
a
 5.2 
 
 
5.1 INTRODUCTION 
Strategy implementation and evaluation are critical phases of the process of 
strategic management in an organization. Implementation involves putting the 
plans and initiatives developed as part of the strategy into action, while evaluation 
refers to the process of measuring and assessing the effectiveness of these actions. 
In this chapter, we will explore various implementation and evaluation methods that 
organizations can use to assess the success of their strategy implementation and 
identify areas for improvement. This chapter will provide a comprehensive overview 
of the implementation and evaluation process and equip readers with the 
knowledge and skills needed to effectively execute and assess their organization's 
strategies. To begin with an overview of the process of strategic management is 
provided in the next section. 
CHAPTER OVERVIEW 
 
Strategy 
Implementation 
and Evaluation
Interrelationship 
between 
Strategy 
Formulation and  
Implementation
Strategic 
Change
through Digital 
Transformation 
Organisation 
Structure 
(hard) and 
Culture (soft)
Strategic 
Leadership
Strategic 
Control
Strategic 
Performance 
Measures
© The Institute of Chartered Accountants of India
Page 3


 
LEARNING OUTCOMES 
a    
 
 
CHAPTER 
5 
 
STRATEGY  
IMPLEMENTATION 
AND EVALUATION 
 
 
 
 
 
After studying this chapter, you will be able to: 
? Describe the process of Strategy Management: From Formulation to 
Implementation 
? Evaluate the salience of strategy implementation.  
? Explain Strategic Change through Digital Transformation  
? Differentiate between Organisation Structure (hard) and Culture (soft)  
? Signify the meaning and importance of Strategic Leadership  
? Discuss the role of Strategic Control  
? Identify and Classify Strategic Performance Measures 
“Effective leadership is not about making speeches or being liked; leadership is 
defined by results not attributes”. -  Peter Drucker 
“A leader is one who knows the way, goes the way, and shows the way” 
- John Maxwell 
 
© The Institute of Chartered Accountants of India
STRATEGIC MANAGEMENT 
a
 5.2 
 
 
5.1 INTRODUCTION 
Strategy implementation and evaluation are critical phases of the process of 
strategic management in an organization. Implementation involves putting the 
plans and initiatives developed as part of the strategy into action, while evaluation 
refers to the process of measuring and assessing the effectiveness of these actions. 
In this chapter, we will explore various implementation and evaluation methods that 
organizations can use to assess the success of their strategy implementation and 
identify areas for improvement. This chapter will provide a comprehensive overview 
of the implementation and evaluation process and equip readers with the 
knowledge and skills needed to effectively execute and assess their organization's 
strategies. To begin with an overview of the process of strategic management is 
provided in the next section. 
CHAPTER OVERVIEW 
 
Strategy 
Implementation 
and Evaluation
Interrelationship 
between 
Strategy 
Formulation and  
Implementation
Strategic 
Change
through Digital 
Transformation 
Organisation 
Structure 
(hard) and 
Culture (soft)
Strategic 
Leadership
Strategic 
Control
Strategic 
Performance 
Measures
© The Institute of Chartered Accountants of India
 
 
STRATEGY IMPLEMENTATION AND EVALUATION 
a
    
 5.3 
5.2 STRATEGIC MANAGEMENT PROCESS 
The process of developing an organisation’s strategy is quite methodical. The 
organisation first develops a clear vision, mission, values and goals. They then must 
then discuss and analyse a number of themes to determine which options are most 
promising. All these aspects come together in a strategic plan that details the 
organisation’s vision, mission, values, goals, strategic themes, a high -level 
implementation plan and key performance measures. The key performance 
measures are included in the strategic plan and are used to link the themes back 
to the organisation’s goals and to measure the success of the strategy after it is 
implemented. 
The strategic management process is dynamic and continuous. A change in any 
one of the major components in the model can necessitate a change in any or all 
of the other components. For instance, a shift in the economy could represent a 
major opportunity and require a change in long-term objectives and strategies; a 
failure to accomplish annual objectives could require a change in policy; or a major 
competitor’s change in strategy could require a change in the firm’s mission.  
Therefore, strategy formulation, implementation, and evaluation activities should 
be performed on a continual basis, not just at the end of the year or semi-annually. 
The strategic management process never really ends. 
 
 
 
 
 
 
 
 
 
Figure: Strategic Management Model (Fred R David) 
Environmental 
Analysis 
Develop Vision,  
Mission and  
Objectives 
Generate,  
Analyse and  
Select Strategies 
Implement 
Strategies 
Strategic  
Evaluation and 
Control 
Organisation 
Appraisal 
Formulation 
Implementation Evaluation 
© The Institute of Chartered Accountants of India
Page 4


 
LEARNING OUTCOMES 
a    
 
 
CHAPTER 
5 
 
STRATEGY  
IMPLEMENTATION 
AND EVALUATION 
 
 
 
 
 
After studying this chapter, you will be able to: 
? Describe the process of Strategy Management: From Formulation to 
Implementation 
? Evaluate the salience of strategy implementation.  
? Explain Strategic Change through Digital Transformation  
? Differentiate between Organisation Structure (hard) and Culture (soft)  
? Signify the meaning and importance of Strategic Leadership  
? Discuss the role of Strategic Control  
? Identify and Classify Strategic Performance Measures 
“Effective leadership is not about making speeches or being liked; leadership is 
defined by results not attributes”. -  Peter Drucker 
“A leader is one who knows the way, goes the way, and shows the way” 
- John Maxwell 
 
© The Institute of Chartered Accountants of India
STRATEGIC MANAGEMENT 
a
 5.2 
 
 
5.1 INTRODUCTION 
Strategy implementation and evaluation are critical phases of the process of 
strategic management in an organization. Implementation involves putting the 
plans and initiatives developed as part of the strategy into action, while evaluation 
refers to the process of measuring and assessing the effectiveness of these actions. 
In this chapter, we will explore various implementation and evaluation methods that 
organizations can use to assess the success of their strategy implementation and 
identify areas for improvement. This chapter will provide a comprehensive overview 
of the implementation and evaluation process and equip readers with the 
knowledge and skills needed to effectively execute and assess their organization's 
strategies. To begin with an overview of the process of strategic management is 
provided in the next section. 
CHAPTER OVERVIEW 
 
Strategy 
Implementation 
and Evaluation
Interrelationship 
between 
Strategy 
Formulation and  
Implementation
Strategic 
Change
through Digital 
Transformation 
Organisation 
Structure 
(hard) and 
Culture (soft)
Strategic 
Leadership
Strategic 
Control
Strategic 
Performance 
Measures
© The Institute of Chartered Accountants of India
 
 
STRATEGY IMPLEMENTATION AND EVALUATION 
a
    
 5.3 
5.2 STRATEGIC MANAGEMENT PROCESS 
The process of developing an organisation’s strategy is quite methodical. The 
organisation first develops a clear vision, mission, values and goals. They then must 
then discuss and analyse a number of themes to determine which options are most 
promising. All these aspects come together in a strategic plan that details the 
organisation’s vision, mission, values, goals, strategic themes, a high -level 
implementation plan and key performance measures. The key performance 
measures are included in the strategic plan and are used to link the themes back 
to the organisation’s goals and to measure the success of the strategy after it is 
implemented. 
The strategic management process is dynamic and continuous. A change in any 
one of the major components in the model can necessitate a change in any or all 
of the other components. For instance, a shift in the economy could represent a 
major opportunity and require a change in long-term objectives and strategies; a 
failure to accomplish annual objectives could require a change in policy; or a major 
competitor’s change in strategy could require a change in the firm’s mission.  
Therefore, strategy formulation, implementation, and evaluation activities should 
be performed on a continual basis, not just at the end of the year or semi-annually. 
The strategic management process never really ends. 
 
 
 
 
 
 
 
 
 
Figure: Strategic Management Model (Fred R David) 
Environmental 
Analysis 
Develop Vision,  
Mission and  
Objectives 
Generate,  
Analyse and  
Select Strategies 
Implement 
Strategies 
Strategic  
Evaluation and 
Control 
Organisation 
Appraisal 
Formulation 
Implementation Evaluation 
© The Institute of Chartered Accountants of India
STRATEGIC MANAGEMENT 
a
 5.4 
The strategic management process can best be studied and applied using a model. 
Every model represents some kind of process. The model illustrated in the Figure: 
Strategic Management Model (Fred R David) is a widely accepted, comprehensive. 
This model like any other model of management does not guarantee sure-shot 
success, but it does represent a clear and practical approach for formulating, 
implementing, and evaluating strategies. Relationships among major components 
of the strategic management process are shown in the model. 
In practice, strategists do not go through the process in lockstep fashion. Generally, 
there is give-and-take among hierarchical levels of an organisation. The process 
essentially is iterative and involves a lot of back-and-forth considerations across 
different stages in the strategic management process. Many organisations conduct 
formal meetings semi-annually to discuss and update the firm’s vision/mission, 
opportunities/threats, strengths/weaknesses, strategies, objectives, policies, and 
performance. Creativity from participants is encouraged in meeting. Good 
communication and feedback are needed throughout the strategic management 
process. 
5.2.1 Stages in Strategic Management 
Crafting and executing strategy are the heart and soul of managing a business 
enterprise. But exactly what is involved in developing a strategy and executing it 
proficiently? And who besides top management has strategy – formulation – 
executing responsibility? 
Strategic management involves the following stages: 
1. Developing a strategic vision and formulation of statement of mission, goals 
and objectives. 
2. Environmental and organisational analysis. 
3. Formulation of strategy. 
4. Implementation of strategy. 
5. Strategic evaluation and control 
 
© The Institute of Chartered Accountants of India
Page 5


 
LEARNING OUTCOMES 
a    
 
 
CHAPTER 
5 
 
STRATEGY  
IMPLEMENTATION 
AND EVALUATION 
 
 
 
 
 
After studying this chapter, you will be able to: 
? Describe the process of Strategy Management: From Formulation to 
Implementation 
? Evaluate the salience of strategy implementation.  
? Explain Strategic Change through Digital Transformation  
? Differentiate between Organisation Structure (hard) and Culture (soft)  
? Signify the meaning and importance of Strategic Leadership  
? Discuss the role of Strategic Control  
? Identify and Classify Strategic Performance Measures 
“Effective leadership is not about making speeches or being liked; leadership is 
defined by results not attributes”. -  Peter Drucker 
“A leader is one who knows the way, goes the way, and shows the way” 
- John Maxwell 
 
© The Institute of Chartered Accountants of India
STRATEGIC MANAGEMENT 
a
 5.2 
 
 
5.1 INTRODUCTION 
Strategy implementation and evaluation are critical phases of the process of 
strategic management in an organization. Implementation involves putting the 
plans and initiatives developed as part of the strategy into action, while evaluation 
refers to the process of measuring and assessing the effectiveness of these actions. 
In this chapter, we will explore various implementation and evaluation methods that 
organizations can use to assess the success of their strategy implementation and 
identify areas for improvement. This chapter will provide a comprehensive overview 
of the implementation and evaluation process and equip readers with the 
knowledge and skills needed to effectively execute and assess their organization's 
strategies. To begin with an overview of the process of strategic management is 
provided in the next section. 
CHAPTER OVERVIEW 
 
Strategy 
Implementation 
and Evaluation
Interrelationship 
between 
Strategy 
Formulation and  
Implementation
Strategic 
Change
through Digital 
Transformation 
Organisation 
Structure 
(hard) and 
Culture (soft)
Strategic 
Leadership
Strategic 
Control
Strategic 
Performance 
Measures
© The Institute of Chartered Accountants of India
 
 
STRATEGY IMPLEMENTATION AND EVALUATION 
a
    
 5.3 
5.2 STRATEGIC MANAGEMENT PROCESS 
The process of developing an organisation’s strategy is quite methodical. The 
organisation first develops a clear vision, mission, values and goals. They then must 
then discuss and analyse a number of themes to determine which options are most 
promising. All these aspects come together in a strategic plan that details the 
organisation’s vision, mission, values, goals, strategic themes, a high -level 
implementation plan and key performance measures. The key performance 
measures are included in the strategic plan and are used to link the themes back 
to the organisation’s goals and to measure the success of the strategy after it is 
implemented. 
The strategic management process is dynamic and continuous. A change in any 
one of the major components in the model can necessitate a change in any or all 
of the other components. For instance, a shift in the economy could represent a 
major opportunity and require a change in long-term objectives and strategies; a 
failure to accomplish annual objectives could require a change in policy; or a major 
competitor’s change in strategy could require a change in the firm’s mission.  
Therefore, strategy formulation, implementation, and evaluation activities should 
be performed on a continual basis, not just at the end of the year or semi-annually. 
The strategic management process never really ends. 
 
 
 
 
 
 
 
 
 
Figure: Strategic Management Model (Fred R David) 
Environmental 
Analysis 
Develop Vision,  
Mission and  
Objectives 
Generate,  
Analyse and  
Select Strategies 
Implement 
Strategies 
Strategic  
Evaluation and 
Control 
Organisation 
Appraisal 
Formulation 
Implementation Evaluation 
© The Institute of Chartered Accountants of India
STRATEGIC MANAGEMENT 
a
 5.4 
The strategic management process can best be studied and applied using a model. 
Every model represents some kind of process. The model illustrated in the Figure: 
Strategic Management Model (Fred R David) is a widely accepted, comprehensive. 
This model like any other model of management does not guarantee sure-shot 
success, but it does represent a clear and practical approach for formulating, 
implementing, and evaluating strategies. Relationships among major components 
of the strategic management process are shown in the model. 
In practice, strategists do not go through the process in lockstep fashion. Generally, 
there is give-and-take among hierarchical levels of an organisation. The process 
essentially is iterative and involves a lot of back-and-forth considerations across 
different stages in the strategic management process. Many organisations conduct 
formal meetings semi-annually to discuss and update the firm’s vision/mission, 
opportunities/threats, strengths/weaknesses, strategies, objectives, policies, and 
performance. Creativity from participants is encouraged in meeting. Good 
communication and feedback are needed throughout the strategic management 
process. 
5.2.1 Stages in Strategic Management 
Crafting and executing strategy are the heart and soul of managing a business 
enterprise. But exactly what is involved in developing a strategy and executing it 
proficiently? And who besides top management has strategy – formulation – 
executing responsibility? 
Strategic management involves the following stages: 
1. Developing a strategic vision and formulation of statement of mission, goals 
and objectives. 
2. Environmental and organisational analysis. 
3. Formulation of strategy. 
4. Implementation of strategy. 
5. Strategic evaluation and control 
 
© The Institute of Chartered Accountants of India
 
 
STRATEGY IMPLEMENTATION AND EVALUATION 
a
    
 5.5 
Stage 1: Strategic Vision, Mission and Objectives
First a company must determine what directional path the company should take 
and what changes in the company’s product – market – customer – technology – 
focus would improve its current market position and its future prospect. Deciding 
to commit the company to one path versus other pushes managers to draw some 
carefully reasoned conclusions about how to try to modify the company’s business 
makeup and the market position it should carve out. Top management’s views and 
conclusions about the company’s direction and the product-customer-market-
technology focus constitute a strategic vision for the company. A strategic vision 
delineates management’s aspirations for the organisation and highlights a 
particular direction, or strategic path for it to follow in preparing for the future and 
molds its identity. A clearly articulated strategic vision communicates 
management’s aspirations to stakeholders and helps steer the energies of company 
personnel in a common direction.  
Mission and Strategic Intent: Managers need to be clear about what they see as the 
role of their organisation, and this is often expressed in terms of a statement of 
mission. This is important because both external stakeholders and other managers 
in the organisation need to be clear about what the organisation is seeking to 
achieve and, in broad terms, how it expects to do so. At this level, strategy is not 
concerned with the details of SBU competitive strategy or the directions and 
methods the businesses might take to achieve competitive advantage Rather, the 
concern here is overall strategic direction. 
Corporate goals and objectives flow from the mission and growth ambition of the 
corporation. Basically, they represent the quantum of growth the firm seeks to 
achieve in the given time frame. They also endow the firm with characteristics that 
ensure the projected growth. Through the objective setting process, the firm is 
tackling the environment and deciding the focus it should have in the environment. 
The objective provides the basis for major decisions of the firm and also help the 
organisational performance to be realized at each level. The managerial purpose of 
setting objectives is to convert the strategic vision into specific performance targets 
– basically the results and outcomes the management wants to achieve - and then 
use these objectives as yardsticks for tracking the company’s progress and 
performance.  
© The Institute of Chartered Accountants of India