ch 7-1 chapter 7 implementing strategies: management & operations issues strategic management:...

Ch 7-1

Chapter 7Implementing Strategies: Management & Operations Issues

Strategic Management: Concepts & Cases

Fred David

Ch 7-2

Chapter Outline

The Nature of Strategy Implementation

Annual Objectives

Policies

Ch 7-3

Chapter Outline (cont’d)

Resource Allocation

Managing Conflict

Matching Structure with Strategy

Ch 7-4

Chapter Outline (cont’d)

Restructuring, Reengineering & E-Engineering

Linking Performance & Pay to Strategies

Managing Resistance to Change

Ch 7-5

Chapter Outline (cont’d)

Managing the Natural Environment

Creating a Strategy-Supportive Culture

Production/Operations Concerns When Implementing Strategies

Ch 7-6

Chapter Outline (cont’d)

Human Resource Concerns When Implementing Strategies

Ch 7-7

The Nature of Strategy Implementation The strategic management process does not

end when the firm decides what strategy or strategies to pursue.

There must be a translation of strategic thought into strategic action

Even the most technically perfect strategic plan will serve little purpose if it is not implemented

Implementing strategy affects an organization from top to bottom

Ch 7-8

Formulation positions forces before the action

Implementation manages forces during the action

Nature of Strategy Implementation

Formulation vs. Implementation

Ch 7-9

Formulation focuses on effectiveness

Implementation focuses on efficiency

Nature of Strategy Implementation

Formulation vs. Implementation

Ch 7-10

Formulation primarily an intellectual process

Implementation primarily an operational process

Nature of Strategy Implementation

Formulation vs. Implementation

Ch 7-11

Formulation requires good intuitive & analytical skills

Implementation requires special motivational & leadership skills

Nature of Strategy Implementation

Formulation vs. Implementation

Ch 7-12

Formulation requires coordination among a few individuals

Implementation requires coordination among many individuals

Nature of Strategy Implementation

Formulation vs. Implementation

Ch 7-14

Shift in responsibility

Nature of Strategy Implementation

Management Perspectives

Division or FunctionalManagers

Strategists

Ch 7-15

Management Issues

ManagementIssues

ResourcesResources

Organizational structureOrganizational structure

RestructuringRestructuring

Rewards/IncentivesRewards/Incentives

Annual ObjectivesAnnual Objectives

Policies

Ch 7-16

Management Issues (cont’d)

ManagementIssues

Supportive CultureSupportive Culture

Production/OperationsProduction/Operations

Human ResourcesHuman Resources

Resistance to ChangeResistance to Change

Natural EnvironmentNatural Environment

Ch 7-17

Management Issues

Annual Objectives --

-- Decentralized activity

-- Directly involve all managers in the organization

Ch 7-18

Management Issues

Purpose of Annual Objectives --

Basis for resource allocation

Mechanism for management evaluation

Metric for gauging progress on long-term objectives

Establish priorities (organizational, division, & departmental)

Ch 7-20

Management Issues

Annual Objectives Should State

Quantity

Quality

Cost

Time

Be Verifiable

Ch 7-23

Management Issues

Resource Allocation

-- Central management activity that allows for the execution of strategy

Ch 7-24

Management Issues

Managing Conflict

-- Disagreement between two more parties on one or more issues

Ch 7-25

Management Issues

Conflict not always “bad”

No conflict may signal apathy

Can energize opposing groups to action

May help managers identify problems

Managing Conflict

Ch 7-26

Management Issues

Avoidance

Defusion

Confrontation

Conflict Management & Resolution

Ch 7-27

Management Issues

Matching Structure / Strategy

Classical view:

-- Changes in strategy Changes in structure

Ch 7-28

New administrativeproblems emerge

New strategyIs formulated

Organizationalperformance

declines

Organizational performance

improves

New organizationalstructure is established

Chandler’s Strategy-Structure Relationship

Ch 7-29

Management Issues

Structure dictates how objectives & policies will be established

Structure dictates how resources will be allocated

Structure & Strategy

Our view:

Ch 7-30

Management Issues

Structure can shape the choice of strategies

More importantly, to determine what types of structural changes are needed to implement new strategies

Structure & Strategy

Ch 7-31

Management Issues

Functional Structure

Divisional Structure

Strategic Business Unit Structure (SBU)

Matrix Structure

Basic Forms of Structure

Ch 7-32

Management Issues

Restructuring (downsizing)

-- Reducing the size of the firm –of employees, divisions, and/or units, of hierarchical levels to improve both efficiency and effectiveness

Ch 7-33

Management Issues

Restructuring

Downsizing

Rightsizing

Delayering

Ch 7-34

Management Issues

Reengineering

-- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed.

Ch 7-35

Management Issues

Reengineering

Process management

Process innovation

Process redesign

Ch 7-36

Management Issues

Reengineering is characterized by many tactical (short- term, business-function-specific ) decisions

Restructuring is characterized by strategic (long-term, affecting all business functions) decisions

Ch 7-37

Management Issues

Linking Pay/Performance to Strategies

-- Pay for performance systems

Ch 7-38

Management Issues

Linking Pay/Performance to Strategies

Dual bonus systems

Profit sharing systems

Gain Sharing systems

Ch 7-39

Management Issues

Resistance to Change

-- Single greatest threat to successful strategy implementation

Ch 7-40

Management Issues

Resistance to Change

-- Raises anxiety; fear concerning

Economic loss

Inconvenience

Uncertainty

Break in status-quo

Ch 7-41

Management Issues

Change Strategies

Force Change Strategy

Educative Change Strategy

Rational or Self-Interest Change Strategy

Ch 7-42

Management Issues

Natural Environment

-- Wide appreciation for firms that “mend” rather than “harm” the environment

Ch 7-43

Management Issues

Natural Environment – Environmental Strategies

Develop/acquire “green” businesses

Divesting environmental-damaging business

Low-cost producer through waste minimization & energy conservation

Ch 7-44

Management Issues

Strategy-Supportive Culture

-- Preserve, emphasize, & build upon aspects of existing culture that support new strategies

-- changing a firm’s culture to fit a new strategy is usually more effective than changing a strategy to fit an existing culture

Ch 7-45

Management Issues

Production/Operations Decisions

Plant size

Inventory/Inventory control

Quality control

Cost control

Technological innovation

Ch 7-46

Management Issues

Human Resource Concerns

-- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.

Ch 7-47

Management Issues

Human Resource Strategic Responsibilities

Assessing staffing needs/costs

Developing performance incentives

ESOP’s Employee Stock Ownership Plan

Child-care policies

Work-life balance issues