Functional Implementation

Functional Implementation of a strategy deals with formulating various functional strategies. In

other words, functional strategies are carried out through functional implementation and
functional implementation is done through functional plans and policies in different areas. There
are major four functional areas where the places and policies are implemented. These are:

1. Marketing
2. Finance
3. Operation
4. Human Resource Management

Functional Strategies
A functional strategy deals with a plan designed to achieve objectives in a specific functional
area. The functional strategies are primarily concerned with the following aspects:

1. Effective utilisation of resources allocated to various business

functions(production/operations, marketing, finance, and human resource).
2. Integrating various activities in each functional area (like sales, promotion, market
research, distribution, etc. in marketing area).
3. Assuring that functional strategies match with business strategies and overall corporate
strategies.

Functional strategies are derived from higher-level strategies – business or corporate strategies.

Vertical Fit: There should be fit between these strategies, so that functional strategies
contribute positively to achieve objectives specified by higher-level strategies. This is known as
vertical fit. When a lower

Further, there should be fit among various functional strategies so that each functional strategy
contributes positively to other functional strategies. This is known as horizontal fit.
Functional strategies are implemented through functional policies and plans. When these policies
and plans are put into operation, they bring results.

Functional Plans and Policies

In an organisation, policies and plans are prepared in each functional area. The number of such
functional area depends on the type of business carried on by the organisation.

A functional policy is a kind of statement that provides a functional manager guidelines about
what criteria he should use in making functional decisions.

A functional plan which is of short-term nature consists of various activities that should be
performed during the planning period.

Functional policies and plans play the following roles in strategy implementation:

1. Through the functional policies and plans, top management can ensure that strategy is
implemented by all parts of the organization as policies cover almost entire activities of
the organisation.
2. Functional policies and plans specify the manner in which things can be done and limit
discretion for managerial action. Thus, the top management of the organisation can rest
assured that all personnel of the organisation will direct their efforts in a way relevant for
strategy implementation.
3. Functional policies and plans provide basis for control in respective areas as policies lead
to consistent pattern of behaviour. This, in turn, acts as basis for controlling.
4. Functional policies and plans provide coordination across different functions.
Coordination among different functions is very important for strategy implementation.
 All functions of an organisation are interdependent and interrelated. Therefore, what is
happening in one function has its relevance for other functions. All functions can
contribute positively when they are performed in a coordinated way.

Need for Functional Plans and Policies

Glueck suggests five reasons why functional plans and policies are needed. Functional plans and
policies are developed to ensure that:

1. The strategic decisions are implemented by all the parts of an organisation;

2. There is a basis available for controlling activities in the different functional areas of
business;
3. The time spent by functional managers in decision – making is reduced as plans lay down
clearly what is to be done and policies provide the discretionary framework within which
decisions need to be taken;
4. Similar situations occurring in different functional areas are handled in a consistent
manner by the functional managers; and
5. Coordination across the different functions takes place where necessary.

A) Financial Plans and Policies

Financial plans and policies deals primarily with raising, administering, and distribution of funds
by the organisation for the purpose of business operations. Thus, financial policies and plans
have three major dimensions;

i. Determination of total amount of funds to be used by the organisation;

ii. Determination of what specific assets the organisation should acquire, that is, allocation
of funds among various assets in an efficient manner, and
iii. Determination of how the “needed funds would be financed, that is obtaining the best
mix of financing with relation to the overall valuation of the organisation.

Sources of Funds

Long-term Sources Short-term Sources

Share capital Short-term loans Banks

Equity shares Public Deposits
Preference shares Trade credits
Borrowings Customers’ advances
Debentures Leased assets
Long-term loans
Retained earnings

B) Marketing Plans and Policies

Marketing plans and policies have to formulated and implemented on the basis of the four P’s of
the marketing mix i.e., product, pricing, place(distribution) and promotion. There have been
addition of position, packaging, and people. Further came 4 C’s: customer, cost, convenience,
and communication. After 4 C’s 4 R’s came: relevance, resources, relationships, and return.

Product: A product is a commodity, produced or built to satisfy the need of an individual or a

group. The product can be intangible or tangible as it can be in the form of services or goods. It
is important to do extensive research before developing a product as it has a fluctuating life
cycle, from the growth phase to the maturity phase to the sales decline phase.

Pricing: Price is a very important component of the marketing mix definition. The price of the
product is basically the amount that a customer pays for to enjoy it. Price is the most critical
element of a marketing plan because it dictates a company’s survival and profit. Adjusting the
price of the product, even a little bit has a big impact on the entire marketing strategy as well as
greatly affecting the sales and demand of the product in the market. Things to keep on mind
while determining the cost of the product are, the competitor’s price, list price, customer
location, discount, terms of sale, etc..

Place: Placement or distribution is a very important part of the marketing mix strategy. We
should position and distribute our product in a place that is easily accessible to potential
buyers/customers.

Promotion: It is a marketing communication process that helps the company to publicize the
product and its features to the public. It is the most expensive and essential components of the
marketing mix, that helps to grab the attention of the customers and influence them to buy the
product. Most of the marketers use promotion tactics to promote their product and reach out to
the public or the target audience. The promotion might include direct marketing, advertising,
personal branding, sales promotion, etc.

C) Personnel Plans and Policies (Human Resources Development)

Personnel policies and plans deals with the most precious resources of an organization - human
resources. It is the people who formulate the organisational strategies; it is the people who carry
out various functions in productions/operations, marketing, and finance. In pre – liberalised era,
companies did not pay proper attention to these resources. Time has changed the situation
completely, which has resulted in making human resources as a source for developing
competitive advantage. Personnel policies and plans are required in recruitment of right
personnel, development system, appraisal system, motivation system and industrial relations.

Personnel policies refer to principles and rules of conduct which “formulate, redefine, break into
details and decide a number of actions” that govern the relationship with employees in the
attainment of the organisation objectives.

Objectives of Personnel Policies

1. To enable an organisation to fulfil or carry out the main objectives which have been laid
down as the desirable minima of general employment policy;
2. To ensure that its employees are informed of these items of policy and to secure their
co-operation for their attainment;
3. To provide such conditions of employment and procedures as will enable all the
employees to develop a sincere sense of unity with the enterprise and to carry out their
duties in the most willing and effective manner;
4. To provide an adequate, competent and trained personnel for all levels and types of
management; and motivate them;
5. To protect the common interests of all the parties and recognise the role of trade unions in
the organisations;
6. To provide for a consultative participation by employees in the management of an
organisation and the framing of conditions for this participation, this, however, shall not
take place in technical, financial or trading policy;
7. To provide an efficient consultative service – this aims at creating mutual faith among
those who work in the enterprise-
i) By developing management leadership which is bold and
imaginative and guided by moral values;
ii) By effectively delegating the human relations aspects of
personnel functions to line managers;
iii) By enforcing discipline on the basis of co-operative
understanding and a humane application of rules and
regulations; and
iv) By providing for a happy relationship at all levels;
8. To establish the conditions for mutual confidence and avoid confusion and
misunderstanding between the management and the workers, by developing suggestion
plans, joint management councils, work committees, etc., and by performance appraisal
discussions;
 9. To provide security of employment to workers so that they may not be distracted by the
uncertainties of their future;
10. To provide an opportunity for growth within the organisation to persons who are willing
to learn and undergo training to improve their future prospects;
11. To provide for the payment of fair and adequate wages and salary to workers so that their
healthy co-operation may be ensured for an efficient working of the undertaking;
12. To recognise the work and accomplishments of the employees, by offering non-monetary
incentives rewards;
13. To create a sense of responsibility, on the part of those in authority, for the claims of
employees as human beings, who should be guaranteed protection of their fundamental
rights and offered enough scope for developing their potential.

Need of Personnel Policies

(i) The basic needs and requirements of both an organisation and its employees
require deep thought. The management is required to examine its basic
convictions as well as give full consideration to practices in other
organisations.
(ii) Established policies ensure consistent treatment of all personnel throughout an
organisation. Favouritism and discrimination are thereby minimised.
(iii) A certainty of action is assured even though the top management personnel
may change. The tenure of the office of any manager is finite and limited; but
the organisation continues, and along with it continues the policies; and this
continuity of policies promotes stability in an organisation.
(iv) Because they specify routes towards selected goals, policies serve as standards
or measuring yards for evaluating performance. The actual results can be
compared with the policies To determine how well the members of an
organisation have lived up to their professed intentions.
(v) Sound policies help to build employee enthusiasm and loyalty. This is
especially true when they reflect established principles of fair play and justice,
and when they help people to grow within an organisation.
(vi) They set patterns of behaviour and permit participants of plan with a greater
degree of confidence.
(vii) Policies are “control guides for delegated decision-making.” They seek to
ensure consistency and uniformity in decisions on problems “that recur
frequently and under similar, but not identical, circumstances.”