vol. 1 (1), no. 1, april 2021, pp1-15 key success factors

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Vol. 1 (1), No. 1, April 2021, pp1-15 1 Key Success Factors Affecting Strategic Plan Implementation: A Case Study of Bogawantalawa Tea Estate PLC in Plantation Industry Sri Lanka Karthikeyan Shanika Dilini School of Management and Business, Manipal International University, 71800 Putera Nilai, Negeri Sembilan, Malaysia. E-mail [email protected] ABSTRACT Strategic planning and implementation are important elements in achieving goals of the organization. Strategic plan implementation is affected by various factors. Those factors will determine the success of the implementation of the strategic plan. The main objective of this study was to identify the key success factors influencing the strategic plan implementation in organizations. For that purpose, a company in Sri Lankan plantation industry was selected and the case company is Bogawantalawa Tea Estate PLC (BTE). The study’s objectives include determining to what extent the Corporate Leadership, Competitive strategy, Strategic Human Resource Management Process and Corporate culture influence the strategic plan implementation in BTE. Incorporated in the year 1992, BTE has reported a net loss for the period 2018-2019 and the drop was associated with drop in tea auction sales , rubber sales and market related challenges. (BTE Annual Report, 2018- 2019) The company failed in several times in implementing strategies due to the factors ; its culture, lack of competitive strategy, lack of strategic HR and poor corporate leadership. Hence it is required to address these issues by way of a study. For the study secondary data have been used due the limitations of collecting primary data. The comprehensive literature review has been conducted and the researcher developed a conceptual framework for the key success factors affecting to the strategic plan implementation. Those factors are Corporate leadership, Strategic HRM, competitive strategy and corporate culture. The researcher proposed the value addition strategy in achieving competitive strategy. Finally, the researcher has given the recommendations based on the conceptual framework which will lead to the successful strategy plan implementation. Keywords: Strategic planning, Strategy implementation, factors, Conceptual framework, corporate leadership, Competitive strategy, corporate culture, Strategic Human Resource management 1. Background and problem of the study Strategic planning is not a single task and it is a combination of concepts, tools and precedures that required to cater to the situations the organizations meet. Bryson (2003) defines strategic planning as a disciplined effort to make fundamental decisions. It helps the organization to understand about the what the organization , what it does and the reason for what it does. The strategy formation is the preliminary task in the strategy planning process.

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Vol. 1 (1), No. 1, April 2021, pp1-15

1

Key Success Factors Affecting Strategic Plan

Implementation: A Case Study of

Bogawantalawa Tea Estate PLC in Plantation

Industry Sri Lanka

Karthikeyan Shanika Dilini School of Management and Business,

Manipal International University, 71800 Putera Nilai, Negeri Sembilan, Malaysia.

E-mail – [email protected]

ABSTRACT

Strategic planning and implementation are important elements in achieving goals of the

organization. Strategic plan implementation is affected by various factors. Those factors will

determine the success of the implementation of the strategic plan. The main objective of this

study was to identify the key success factors influencing the strategic plan implementation in

organizations. For that purpose, a company in Sri Lankan plantation industry was selected

and the case company is Bogawantalawa Tea Estate PLC (BTE). The study’s objectives

include determining to what extent the Corporate Leadership, Competitive strategy, Strategic

Human Resource Management Process and Corporate culture influence the strategic plan

implementation in BTE. Incorporated in the year 1992, BTE has reported a net loss for the

period 2018-2019 and the drop was associated with drop in tea auction sales , rubber sales

and market related challenges. (BTE Annual Report, 2018- 2019) The company failed in

several times in implementing strategies due to the factors ; its culture, lack of competitive

strategy, lack of strategic HR and poor corporate leadership. Hence it is required to address

these issues by way of a study. For the study secondary data have been used due the limitations

of collecting primary data. The comprehensive literature review has been conducted and the

researcher developed a conceptual framework for the key success factors affecting to the

strategic plan implementation. Those factors are Corporate leadership, Strategic HRM,

competitive strategy and corporate culture. The researcher proposed the value addition

strategy in achieving competitive strategy. Finally, the researcher has given the

recommendations based on the conceptual framework which will lead to the successful strategy

plan implementation.

Keywords: Strategic planning, Strategy implementation, factors, Conceptual framework,

corporate leadership, Competitive strategy, corporate culture, Strategic Human Resource

management

1. Background and problem of the study

Strategic planning is not a single task and it is a combination of concepts, tools and precedures

that required to cater to the situations the organizations meet. Bryson (2003) defines strategic

planning as a disciplined effort to make fundamental decisions. It helps the organization to

understand about the what the organization , what it does and the reason for what it does. The

strategy formation is the preliminary task in the strategy planning process.

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Strategies are formulated in different levels in the organizational hierarchy. The strategy

formulation in the top level are done by the board of directors of the company. Middle level

managers such as Human resource managers, marketing managers formulate strategies at the

business level. (Yabs, 2010). The third level is operational level and the supervisors formute

the strategies at this level. (Sababu, 2007). Defining strategy and the allocation of resources in

order to implement the strategy are the main tasks in strategic planning. The strategic plan

gives a proper guidance in achieving the organizational mission. The strategic planning helps

the organization to ensure its working towards achieving goals and responding to the changes

in the environment. .(Bryson ,2012). It shows the proper direction for the organization.

Presently more organizations have understood the value and importance of strategic planning

and implementation as they need to remain competitive in the industry.

1.1 Strategic Plan

According to Steiner (2009) a strategy plan is an outcome or end result of the decision making

process. Aldehyyat, Alkattab and Anchor (2011) argues that a strategy plan is required to be

simple and realistic. It cannot be ambitious, and the strategy plan is not demanding

insufficiently. Furthermore, a strategic plan needs to be flexible for the changes in the

environment. As the strategy can be defined as the means or ways of achieving organizational

desired results/ goals, the organization needs to assess both external and internal environment

in the implementation of strategy plan. Therefore, the strategic plan are required to develop in

such a way to be flexible with all the dynamics. This requires the organizations need to put in

action a detailed and well-designed strategic plan.

1.2 Implementing Strategic plan

Strategy plan implementation may include the activities for example; adding new department,

changes in advertising campaigns, new cost control procedures, building new facilities, new

employee compensation systems and changes in pricing strategies. The process of strategy plan

implementation is different from one organization to another. ( David , 2011) But the strategy

formation is remain unchanged based on the size and the type of organization. Most of the

organizations can formulate strategies easily but the implementation is more difficult task

compared to strategy formulation. The successfull strategy formulation never lead to the

successfull strategy plan implementation. As mentioned earlier, a strategic plan describes the

organization’s future direction, a well designed strategy helps to increase the profitability and

the productivity of an organization. As strategy implementation is more difficult than strategy

formulation, most organizations have identified it as a major challenge. The main goal of

Bogawantalawa Tea Estate PLC ( BTE) is to increase the profitability for the Group. This goal

can be achieved by proper strategy formulation and implementation and it is vital important for

BTE to identify the key success factors affecting the strategy plan implementation.

1.2.1 Background information of Bogawantalawa Tea Estate PLC

Bogawantalawa Tea Estates PLC (BTE) formerly known as Bogawantalawa Plantations

Limited is a Sri Lankan plantation company. It was incorporated in 1992. The primary business

activities are the cultivation, manufacture and sale of tea, rubber, palm oil and forestry. The

Company market segments are Tea, Rubber, Export Market and Local Market and it is also

engaged in processing of tea and rubber. The Company markets single estate black and green

teas including organic teas. ( Bogawantalawa Tea Estate PLC, 2019) BTE has a range of

flavours, infusions, and herbals. There are products for private labels, store brands or cobrands.

Bogawantalawa Tea Marketing (Pvt) Ltd which is engaged in exporting value-added tea is the

company’s subsidiary. The parent company of the group is Metropolitan Resource Holdings

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PLC. Bogawantalawa Tea Estates Ltd manages the majority of tea estates in the area. The

name “Bogawantalawa” is the area where the tea estates are located. The company's products

portfolio includes black, green, white, herbal, organic, and flavoured teas. It offers the tea

products as string and tea bags, in tins and wooden boxes. ( Figure 1)

Figure 1 - Product Portfolio of Bogawantalawa Tea Estate PLC

The last 2018-2019 financial statement has shown a net loss and it continued to even 2020

quarter 3 ( Figure 2). The company has shut down its rubber division and the tea auction sales

have been considerably decreased compared to last couple of years. The company is a public

listed company in the colombo Stock exchange and the market price of shares also gradually

decreased over the years. ( Bogawantalawa Tea Estates Plc Company Profile - Sri Lanka |

Financials & Key Executives | EMIS, 2020)

Figure 2 – Bogawantalawa Tea Estate PLC performance

1.2.2 Problem Statement

Tea can be considered as one of the main foreign exchange incomes in Sri Lanka. Ancient

times, Sri Lanka has become number one tea manufacturer in the world, but it ranks fourth

largest tea manufacturer in the world as a result of entering large manufacturers like Kenya

and India. Therefore, it is required to develop the strategies for the plantation industry as it is

important for the Sri Lankan economy. Tea Production and export revenues were declined last

year. Even the tea auction sales were affected heavily. Unfortunately, three of Sri Lanka’s 17

public tea estate companies reported a loss in the financial statements for the year ended in

December 2019. ( Bolton, 2020) BTE is also one of those plantation company who has made

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loss for the last period. BTE’s main aim to increase the group profitability by increasing the

revenue mainly by tea auctions and exports. Even though BTE has developed the Strategic

Plan 2018-2019, the company was unable to meet its targets and goals. The problem was

identified by the loss incurred for the first time in history (BTE Annual Report, 2019). This

situation shows an indication of issues of strategic plan implementation. As the industry and

the plantation companies have the traditional corporate culture which was formed in British

time, the leadership issues , less focus on the competitiveness and the lack of experienced

strategic HR personnel in the industry, most of the plantation companies have failed several

times in implementing strategic plans. (Mujahid , 2019) BTE has not implemented the

strategic plan successfully as if it has done so, it would not be ended up with loss making

company. It is a new perspective for managers to get clear understanding about the forces

besides the strategy implementation. In this scenario BTE management needs to understand

present and past factors that disrupted their previous strategic plan implementation.

1.2.3 Objectives

The study’s main objective was to determine the key success factors affecting the strategic plan

implementation in Bogawantalawa Tea Estate PLC. In order to achieve the main objective of

the study, four (4) specific objectives have been identified.

1. To determine to what extent the corporate leadership can influence the strategic

plan implementation in Bogawantalawa Tea Estate PLC.

2. To determine to what extent the competitive strategy can influence strategic

plan implementation in Bogawantalawa Tea Estate PLC.

3. To determine to what extent the corporate culture can influence on strategic plan

implementation in Bogawantalawa Tea Estate PLC.

4. To determine to what extent Strategic Human Resource Management Process

can impact on strategic plan implementation in Bogawantalawa Tea Estate PLC.

1.2.4 Justification of the study

The tea plantation industry can be considered as one of the most important industry on Sri

Lanka bringing 14% of total export revenue to the country. Not only that, it has been created

numerous employment opportunities for citizens in Sri Lanka. According to Hrebiniak (2005)

the strategy plan implementation is very critical and essential than the strategy formulation as

the success of the strategy formulation is based on the successful strategy plan implementation.

It is required to implement the strategy plan successfully in order to achieve the best

performance from the formulated strategies at the beginning. ( Li, Guhui and Eppler 2010)

Therefore this study will facilitate and guide the organizations in the tea plantation industry in

implementation the straetgy plan. Not only for them, even the scholars and other researchers

can benefit by undertading the key successs factors affecting the strategy plan implementation.

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2. Literature Review

2.1. Transformational Theory

Transformational leadership conecpt was firstly introduced by James MacGregor Burns.

According to Burn, there are two leadership styles. ( Burkus, 2019)

1. Transactional Leadership

2. Transformational Leadership

Transactional leadership refers to gaining compliance by rewards . But on the other hand

transformational leadership refers to transform the followers to support each other and finally

the whole organization can be transformed .It focuses on creating positive change in the people

in the organization. Hence the followers respond to the tranformational leader by trusting,

respecting and being loyalty. Bernard M. Bass explained that the transformational leadership

has four factors. ( Figure 3)

1. Inspirational motivation

2. Individual consideration

3. Intellectual stimulation

4.Idealized influence.

Figure 3 – Transformational Leadership

The strategic plan implementation refers to the organizational change and it requires the

organization to transform. Therefore without commited and innovative leadership , it will be a

difficult task for strategic implementation successfully.

2.2 Contingency Theory

Fred Fiedler's model of contingency theory describes that the leadership approaches are often

adjusting to the positive situations. The models explains the relationship between the group

performance and the leadership psychology. According to Subramaniam (2015), three

psychological factors affect to a good leadership. ( Figure 4)

1. Level of power in the organization

2. The group environment and the interpersonal dynamics

3. The structure and design of the tasks

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Figure 4 – Contingency Theory of Leadership by Fielder

It is essential that there must be a good relationship between the leaders and the employees in

the organization. In contigency theory, prioritizing the task for a given situation can be

considered as a key element. The theory have also been applied for using the technology in the

organizations. The organizations face contingencies such as changing customer preferences,

government regulations, changes in supply and demand, technological changes and even

employee union demands.Strategy plan implementation can be considered as a long-term

process which will last even more than one year. Therefore, it is required to evaluate and

monitor the implementation process expecting the contingencies will occur. This will require

the organization to implement proper internal control procedures. Hence application of

contingency theory is vital important for the study as it affects to the implementation of

strategic plans.

2.3 Porter competitive advantage model

According to the Porter Diamond model there are four factors which represent the determinant

factors of comparative economic advantage between nations. These four factors can be

mentioned as follows. (Figure 5)

1. Firm strategy , Structure and rivalry

2. Related supporting industries

3. Demand conditions

4. Factor conditions

Firm strategy, structure and rivalry means that the businesses need to find ways to increase the

production and technological developments as a result of competition. Related supporting

industries exchange the ideas through innovation to facilitate innovation. Demand conditions

means to the nature and size of the customer base for products which drives for product

improvement and innovation. The factor conditions which is the most important factor in the

model are the elements that a country can create itself such as infrastructure, technology,

skilled labour and capital . ( Chappelow , 2019)

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Figure 5 – Porter’s Diamond Model

Hence the organization can achieve a better competitive advantage by proper blending of the

above mentioned four factors. It is vital important in applying this theory to strategic plan

implementation as it helps the organizations to achieve the competitiveness. The organization

with skilled human resource, technology, infrastructure , value addition will be able to

implement the strategic plan successfully. Therefore understanding these four factors is

essential for every organization.

2.4 Resource Allocation Theory

If any organization has no resources, it is very difficult to implement the strategy plan. It is

required to identify the resouces in the organization. Resources includes physical , human and

financial resources. Hence these resources are vital important in implemeting the strategic plan.

Zakaria, Hashim & Ahmad (2015 ) revealed in their study “Strategy Implementation Problems:

Evidence From Construction Companies In Malaysia” about the barriers to the proper strategy

implementation as human resource, environmental factors and informataion systems.

Therefore application of resource allocation theory is essential in determining factors affecting

to the implemetation of strategic plan.

2.5 Resource-Based Theory

Resource-based theory focuses on how organisations achieve sustainable competitive

advantages. ( Figure 6) The theory describes that an organization can achieve competitive

advantage if it has attributes which hard to be copied by its competitors. ( Caldeira & Ward,

2003) An organization refers to a set of resources comprised with physical , human capital

resources and organisational. Organizational resources that cannot be easily copied require an

extensive learning process , even change in the corporate culture as they are more likely to be

unique to the organization. Hence it is more difficult to be copied by the competitors. Some

scholars argued that performance differentials between organizations depend on having a set

of unique input and capabilities.

Competitive advantage only exists where there is a resource heterogeneity situation where dif

ferent resources exist across companies and resource immobility where competing firms are u

nable to acquire resources from other firms according to Resource based Theory.

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Organizational performance primarily depends on internal resources that can be grouped into

three categories namely physical resources, human resources, and organizational resources.

(David, 2011)

Figure 6 – Resource based theory

Physical resources involve tangible resources such as all property, plant, and equipment, ,

technology, raw materials, and machines. Human resources involve all employees, training,

experience, intelligence, knowledge, skills, and abilities. And the organizational resources

involve firm structure, planning processes, information systems, patents, trademarks,

copyrights, and databases etc. Resource Based View theory describes that resources help an

organization to exploit opportunities and neutralize or minimize its threats from its external

assessment. It is required to identify key resources in the organization such as strong and

positive culture, a good corporate leadership, skills and competencies of human resources and

the competitive advantage by the strategic plan implementors.

3. Methodology

To ascertain the objectives, the conceptual paper used both qualitative and quantitative data

findings. The approach addressed not only the data within the field but also the views and

opinion of other researchers. Therefore, the report utilized various online articles, online

reviews, reports, journals and books to help address. The key success factors identified by the

comprehensive literature review have been studied in order to achieve the key objectives of the

study.

4. Proposed Conceptual Framework

A conceptual framework was built based on the comprehensive literature review as stated in

section 2 of this paper to analyse the key success factors affecting the strategy plan

implementation process.Figure 7 depicts the proposed conceptual framework of the study. This

is hypothesized about four independent variables as mentioned below. ( Figure 7)

1. Corporate leadership

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2. Competitive Strategy

3. Corporate culture

4. Strategic Human Resource Management Process

According to the proposed conceptual framework, the dependent variable is strategic plan

implementation. Hence strategic plan implementation depends on the above-mentioned four

independent variables.

Figure 7 – Proposed Conceptual Framework

4.1 Key Sucess Factors affecting Strategic Plan Implementation in Organizations

4.1.1 Corporate Leadership

Corporate leadership can be considred as the top position of an organizational structure.

Corporate leadership helps to create an organization-wide direction to be carried out by the

managers, supervisors, and its employees. ( Figure 8)

Figure 8 – Corporate Leadership

The leadership can be treated as a resource of the organization. A good leadership needs to be

transformational , effective , responsive to the contingencies and competitive in allocating the

resources in the organization. A good corporate leadership behaviour has a creative vision,

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good commitment and motivation of employess. Most of the strategic plan implemetation fail

due the absense of the above characteristics in corporate leadership eventhough with well

designed strategies. (Jooste and Fourie ,2009) Those well-designed strategies may even fail

due to the lack of efficiency and willingness to implement those strategies by the corporate

leadership. Good communication can be considered as an important leadership skill for the top

management. (Kumar, Markeset and Kumar,2006) Therefore it is essential to communicate the

strategic plan decisions to all the stakeholders in the organization which will result in successful

strategy implementation. According to Heide, Gronhaug and Johannessen (2002) , there will

be communication challenges due to the organization structure in the organization. Rapert,

Velliquette and Garretson ( 2002) argued that the good corporate leadership helps to overcome

these challenges in communication specially through vertical communication. Hence it is vital

important to establish the relationship between the strategy plan implementation and the

communication process in the organization .(Forman and Argenti ,2005) According to

Clampitt, Berk, and Williams ( 2002 ), the top-level leaders usually tend to delegate the

communication function to the tactical level even though they like to communicate with the

employees. They are clever and trained for only planning and not for implementing them.

Herath and DeSilva (2011) explains that the success of any organizations depends on the

corporate leader’s vision, commitment, and their innovative nature.

4.1.2 Competitive Strategy

Michael Porter argued that an organization’s starenghs fall into two categories . ( David, 2011)

1. Cost Advantage

2. Differenciation

According to him the primary determinant of an organization’s profitability is the attractiveness

of its industry and the secondary determinant is the position in that industry. By applying these

determinants to the strengths of the organization , he developed generic strategies namely, cost

leadership strategy, differentiation strategy, Low cost focus strategy and differenciation focus

strategy. ( Figure 9)

Figure 9 – Porter’s Generic Strategies

An organization’s mission and value statements are developed through its competitive strategy.

Competitiveness can be treated as an important factor in the strategic plan implementation. The

competitiveness influences on the resource allocation and contingencies in the organization.

The resources like technology helps to enhance and maintain the competitiveness and even

helps to monitor the implementation process and goals achievement. ( Juma and Wachira

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,2013). As the resource-based theory helps to identify the organization’s resources such as

technology, human resource skills, capabilities as a competitive advantage, competitive

strategy is vital important in implementing strategic plans. According to Schuler, Jackson, and

Storey (2001) , even strategic Human resource Management can be developed using these

generic strategies. There are 8 tea brokerage firms in Sri Lanka and these firms has contributed

to the loss incurred by the tea estate companies in Sri Lanka. Tea brokers usually earn more

than the farmers as they involve in sale of tea. (Herath and De Silva, 2011). Theuri, Mugambi

and Namusonge, 2014 mentioned in their study value addition as a key competitive strategy in

most industries.

4.1.3 Corporate culture

Corporate culture refers to the shared beliefs, values and assumptions held by members of an

organization and the assumptions are maintained in both individual and group behaviour in the

organization. (Figure 10).

Figure 10 – Corporate or Organizational Culture

It helps to solve the issues in internal integration and external adaptation. (Schein, 2010)

Internal integration refers to the socialization in the organization which helps to identify the

people and their commitment to the organization. (Martins and Terblanche, 2003). External

adaptation refers to adapt to the external environment. ( Zhang ,2010). Twati and Gammack

(2006) mentioned that corporate culture helps to the success of an organization. Corporate

culture differences between organizations determine the success or failure of the performance.

A positive and strong culture helps in motivating individual performance and a negative and

weak culture demotivates the individual. (Kandula ,2006) It is also considered as a resource

and a competitive advantage for an organization. Hence it has a direct influence on the strategic

plan implementation. As mentioned earlier the corporate culture affects to the individual

performance and it results in the organizational performance and productivity. ( Brookes ,2006)

Therefore, corporate culture is vital important in strategic plan implementation as it is

considered as a part of organizational performance.

4.1.4 Strategic Human Resource Management Process

Strategic Human Resource Management ( HRM) refers to a new Human Resource

Management approach in the modern organizations. ( Figure 11 )

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Figure 11– Strategic Human Resources Process

Its main objective is achieving strategic fit in the organization. Strategic Human resource

Management helps to create Human resource strategies to support to the business strategy in

the organization. This refer to the vertical integration. According to Armstrong (2009),

Strategic HRM even helps in horizontal integration as the HR strategy mutually supportive to

the other functions of the organizations. As it is considered as a most important resource in the

organization, Human resource coordinates the factors of the organizations to achieve the

desired organizational performance. According to Werber and DeMarie (2005) , HRM

practices established by Strategic HRM helps to develop the skills and capabilities which will

lead to gain a competitive advantage for the organization. It creates a motivated, skilled, and

committed workforce for the organizations which helps in the strategic plan implementation.

Strategic Human Resource Management even helps to manage the environmental changes. (

Cooke, Shen, and McBride , 2005) Marchington (2008) argued that strategic HRM influences

positively to the organizational performance. Hence strategic Human resource management

helps to increase the productivity of an organization.

5. Recommendations

Based on the proposed conceptual framerwork developed by the researcher, the following

recommendations can be proposed.

✓ Corporate Leadership – The organizations needs to develop a good corporate leadership

in support for the implementaion of strategic plans

✓ A positive and strong corporate culture – The organizations needs to create a positive

culture in order to implement strategic plans. Because the weak culture will collapse

even succeful strategy implementation. The culture needs to be derived from the good

corporate leadership.

✓ Enhancing competitiveness – The organizations can identify value addition strategy as

a way of gaining competitive strategy. (Herath and De Silva , 2011).

✓ Strategic Human Resource management Process – The organizations needs to attract

qualified strategic human resource people by offering competitive remuneration

packages which will help to implemet the strategic plans successfully as a result of the

expertise people.

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These recommendations will help not only for Bogawantalawa Tea Estate PLC but also for all

the organizations who face difficulties in implementing strategic plan.

6. Conclusion

In conclusion, the key success factors leading to strategic plan implementation are strategic

Human Resource Management, competitive strategy, strong and unique corporate culture, and

a good corporate leadership at Bogawantalawa Tea Estate PLC. The independent variables

discussed under the conceptual frameworks would enable scholars to investigate thoroughly

Strategic plan implementation. This framework could researchers to conduct thorough

investigations, and provide empirical evidence regarding the strategic plan implementaion.

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