Financial and Strategic Management

What is an Activating Strategy?

Activation is the process of stimulating an activity so that it can be performed successfully. Activation of strategy is required because only a small number of people are involved in the strategy formulation while its implementation involves a good number of people within the organization. Activation of strategies requires the performance of the following activities:

(i) Institutionalization of strategy
Strategists’ role in the implementation of the strategy is its institutionalization. Successful implementation of strategy requires that the manager should act as its promoter or defender. Institutionalization of the strategy involves the following two elements:

   (a) Strategy Communication: The role of the strategists is to make fundamental, analytical, and entrepreneurial decisions and present these to the members of the organization to bring their support. Therefore, order to get the strategy accepted and consequently effectively implemented requires proper communication. The form of communication may be oral through interaction among strategists and other persons. However, in large organizations, oral communication may not be adequate. Hence, a well documented written form of communication is followed.

  (b) Strategy Acceptance: Strategy acceptance makes organizational members develop a positive attitude towards the strategy. This facilitates them to make a commitment to strategy by treating it as their own strategy than imposed by others. The creation of such a feeling is essential for the effective implementation of the strategy.

(ii) Formulation of Action Plans and Programs
Once the strategy is institutionalized, the organization may proceed to formulate action plans and programs. Action plans are the targets for the effective utilization of resources in an organization so as to achieve the set objectives. It may be a plan for procuring a new plant, developing a new product, etc. The action plans to be formulated in the organization depend upon the nature of the strategy under implementation. Against action plans, a program is a single-use plan which covers relatively a large set of activities and specifies major steps, in their order and timing, and responsibility for each step. Programs are generally supported by necessary capital and operating budgets. Since there may be various programs involved in the implementation of strategy, these should be coordinated so that each of them contributes positively to others.

(iii) Translating General Objectives into Specific Objectives
Sometimes objectives are too general and intangible to be transformed into action. In order to make these objectives operational, managers determine specific objective within the framework of general objectives which the organization and its various departments will seek to achieve within a particular period. A specific objective provides a focus on the activities that may be undertaken to achieve the overall growth of the organization.

Translation of general objectives in the specific and operative objectives must fulfill the following criteria:
• It should be tangible, meaningful, and easily measurable as organizational     performance; and
• It should contribute to the achievement of the general objectives.

(iv) Resource Mobilization and Allocation
In order to implement a strategy, an organization should have resources i.e., financial or human and these resources should be committed and allocated to various units to have maximum utilization. Financial resources are the means by which an organization produces goods and services. These resources are used to procure various physical resources such as land, building, machinery, raw material, etc. An organization should concentrate on the mobilization of the required resources and their allocation among various units and departments.

The resource mobilization process involves the procurement of resources that may be required to implement a strategy. The number of resources is determined on the basis of nature and type of strategy. An organization’s capacity to mobilize resources has an inverse relationship with strategy. A strategy determines what type of resources will be required while resource mobilization capacity determines what type of strategy will be selected. Resources can be owned, leased, or rented. Once the resources are mobilized, the resource allocation of activity is undertaken. It involves the allocation of different resources, financial and human among various organizational units and departments. Resource allocation implies that when resources are committed to a unit or a project, the organization takes a risk that depends upon the time taken to recover the cost of resources.

About the author

Shreya Kushwaha

Leave a Comment