Page 245 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 13: Functional and Operational Implementation

product (shape, size, model etc.), quality requirements, introduction/withdrawal of products, Notes
nature of customers etc. Specific policies are also required regarding distribution channels i.e.
through retailers or direct selling? What would be the spread of distribution network? Whether
new dealers will be established or old ones developed? The promotion strategies will relate to
mode of promotion, coverage and nature (corporate, product or brand promotion). Again, very
clear and specific strategies will have to be made about pricing, etc., full cost or standard cost
based pricing. Offensive vs. defensive postures also influence pricing policies.

HR Strategy

HR strategy deals with matters like HR planning, recruitment and selection, training and
development, compensation management, performance management, rewards and incentives
etc. What compensation/reward system will be able to attract people of the desired type to join
the organisation so as to meet the task requirements demanded by the strategy? What strategies
are necessary to groom internal people for new positions? The problem becomes acute in the
context of turnaround strategies. On the one hand, the most competent people leave and the firm
finds it difficult to attract suitable replacements. On the other hand, it faces the problem of
surplus staff. HR strategies for retrenchment, though painful, are quite necessary but difficult to
develop.

Production Strategy

The functions relating to production need strategies relating to quality assurance, machine
utilisation, location of facilities, balancing the line, scheduling of production, and materials
management. The strategy for entering into export market will dictate a different policy regarding
quality of products and maintenance. Location of facilities may be determined by closeness to
market or input supply points. Decisions must be made to determine whether and how much to
make or buy, on the basis of cost differential, availability, criticality of the item, capacity if
expansion becomes necessary. In case of bought out items, policies regarding number of suppliers
and the criteria for selecting them are necessary.

R&D Strategy

In the area of research and development, functional strategies regarding the nature of research
are necessary. In case of expansion through new product development, heavy emphasis has to
be laid on basic and applied research.

!
Caution On the contrary, for expansion in the same line, research emphasis has to be on
product/process improvement to cut cost and to add value. It may be noted that in case of
basic research the firm should be prepared to commit resources and wait for outcome for
several years. It cannot have basic research unless it is prepared to commit resources on
long-term basis.

Task Consider two Indian firms from the same industry and compare their functional
strategies.

LOVELY PROFESSIONAL UNIVERSITY 239