Strategic Choice and Implementation
Strategy
Strategic Choice and Implementation
Syllabus tag: KASNEB CPA | Advanced Level | CA31 Leadership and Management | Topic 2 Strategic Choice and Implementation
Lesson objectives
By the end of this topic, you will be able to:
- Apply the generic competitive strategies
- Evaluate options against suitability, acceptability and feasibility
- Compare methods of pursuing a strategy
- Explain why implementation fails more often than formulation
- Apply the McKinsey 7S framework
Why this matters
Most strategies fail in execution rather than in conception. A candidate who can evaluate an option and then say what would have to be true to deliver it is answering the harder half of the question.
Generic competitive strategies
| Strategy | Basis | Requires |
|---|---|---|
| Cost leadership | Lowest cost in the industry | Scale, efficiency, tight cost control |
| Differentiation | Something customers value and will pay for | Innovation, brand, quality, service |
| Focus | A narrow segment, on either basis | Deep understanding of that segment |
Stuck in the middle — neither the lowest cost nor genuinely different — is the position to avoid, because the company competes on price without the cost base to sustain it.
Two qualifications worth stating. Cost leadership is not the same as low price: a cost leader may charge the market price and earn a better margin. And the positions are not always exclusive — some firms achieve both through process innovation — though pursuing both without a clear basis usually produces the stuck-in-the-middle outcome.
Evaluating options
Suitability — does it address the circumstances identified in the analysis? Does it exploit a strength, fit the environment, and match the organisation's purpose?
Acceptability — the three Rs:
- Return — payback, NPV, ROCE, effect on earnings
- Risk — gearing, liquidity, sensitivity of the outcome
- Reactions of stakeholders — shareholders, staff, lenders, regulators, community
Feasibility — can it actually be done? Funding, skills, capacity, technology, time.
The three often conflict. An option may be highly suitable and unaffordable, or feasible and unacceptable to a key stakeholder. Naming the conflict is a better answer than declaring an option "recommended" without qualification.
Stakeholder mapping by power and interest supports the acceptability test:
| Low interest | High interest | |
|---|---|---|
| High power | Keep satisfied | Key players |
| Low power | Minimal effort | Keep informed |
The practical use is identifying who can block the strategy, and whose support must be secured before announcement rather than after.
Methods of pursuing strategy
| Method | Advantages | Risks |
|---|---|---|
| Organic growth | Control, cultural fit, incremental cost | Slow; may miss the window |
| Acquisition | Speed, immediate market access and capability | Cost, integration failure, culture clash |
| Joint venture or alliance | Shared cost and risk, access to partner capability | Divided control, disputes, leakage of knowledge |
| Franchising or licensing | Rapid reach with limited capital | Quality control, reputational exposure |
Acquisition fails most often on integration and culture rather than on the commercial logic. The valuation in CA22 and CA33 assumed synergies; this topic supplies the reason they frequently do not appear.
Implementation
Formulation is analytical and can be done by a few people. Implementation requires the whole organisation, which is why it fails more often.
The McKinsey 7S framework identifies what must align:
Hard elements: Strategy, Structure, Systems. Soft elements: Shared values, Style, Staff, Skills.
The framework's claim is that the elements are interdependent — changing one without the others produces failure. A new strategy with the old structure, the old reward systems and the same skills will not be delivered.
Shared values sit at the centre, and the soft elements are the ones organisations neglect because they are harder to change and harder to measure.
Why implementation fails
- Strategy not communicated in terms staff can act on
- Structure unchanged, so responsibility for the new priorities sits nowhere
- Reward systems still paying for the old behaviour — the single most reliable predictor
- Resources not reallocated from declining activities
- No milestones, so drift is not detected
- Middle management neither convinced nor consulted
The reward point deserves emphasis. An organisation that announces a strategy of customer service while continuing to pay bonuses on volume has told its staff which one it means, whatever the strategy document says.
:::checkpoint A company announces a strategy of premium quality and simultaneously introduces a bonus based on units produced per shift. Using 7S, identify the misalignment and predict what staff will do. :::
Strategic control
Implementation requires monitoring against milestones, with the capacity to revise. The measures should include leading indicators — customer satisfaction, staff turnover, pipeline — and not only financial results, which report the consequences too late to act on.
This is where the balanced scorecard from CA34S3 belongs: translating a strategy into measures across the four perspectives is precisely the implementation problem this topic describes.
:::checkpoint A strategy is monitored solely through quarterly financial results. Explain what this misses and name two leading indicators you would add for a company competing on service. :::