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CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Meridian Pharma's CEO notices that although the new strategy is sound, middle managers resist it because the incentive scheme still rewards old behaviours, the reporting system hides new performance data and the culture avoids risk. In which combination does the CEO most appropriately address the root problem, according to strategy implementation principles?

The CEO should align structure, rewards, information systems and culture with the strategy. The strategy is sound, but old incentives, hidden data and a risk-averse culture block it. Changing the strategy, advertising more or cutting managers would not remove these internal barriers.

  1. AAlign structure, reward systems, information systems and culture with the strategyCorrect
  2. BReplace the strategy with a different one and keep the existing systems
  3. CIncrease the advertising budget and defer changes to systems
  4. DReduce the number of managers and leave incentives untouched

Explanation

The strategy is sound, so the problem lies in the supporting elements. Implementation requires incentives, information systems, structure and culture to support the strategy. Changing the strategy ignores the cause, advertising addresses the market not internal barriers, and cutting managers leaves the misaligned incentives in place.

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