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Ch 7-1
Chapter 7Implementing Strategies: Management & Operations Issues
Strategic Management: Concepts & Cases
Fred David
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Ch 7-2
Chapter Outline
The Nature of Strategy Implementation
Annual Objectives
Policies
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Ch 7-3
Chapter Outline (cont’d)
Resource Allocation
Managing Conflict
Matching Structure with Strategy
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Ch 7-4
Chapter Outline (cont’d)
Restructuring, Reengineering & E-Engineering
Linking Performance & Pay to Strategies
Managing Resistance to Change
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Ch 7-5
Chapter Outline (cont’d)
Managing the Natural Environment
Creating a Strategy-Supportive Culture
Production/Operations Concerns When Implementing Strategies
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Ch 7-6
Chapter Outline (cont’d)
Human Resource Concerns When Implementing Strategies
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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
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Ch 7-8
Formulation positions forces before the action
Implementation manages forces during the action
Nature of Strategy Implementation
Formulation vs. Implementation
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Ch 7-9
Formulation focuses on effectiveness
Implementation focuses on efficiency
Nature of Strategy Implementation
Formulation vs. Implementation
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Ch 7-10
Formulation primarily an intellectual process
Implementation primarily an operational process
Nature of Strategy Implementation
Formulation vs. Implementation
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Ch 7-11
Formulation requires good intuitive & analytical skills
Implementation requires special motivational & leadership skills
Nature of Strategy Implementation
Formulation vs. Implementation
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Ch 7-12
Formulation requires coordination among a few individuals
Implementation requires coordination among many individuals
Nature of Strategy Implementation
Formulation vs. Implementation
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Ch 7-14
Shift in responsibility
Nature of Strategy Implementation
Management Perspectives
Division or FunctionalManagers
Strategists
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Ch 7-15
Management Issues
ManagementIssues
ResourcesResources
Organizational structureOrganizational structure
RestructuringRestructuring
Rewards/IncentivesRewards/Incentives
Annual ObjectivesAnnual Objectives
Policies
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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
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Ch 7-17
Management Issues
Annual Objectives --
-- Decentralized activity
-- Directly involve all managers in the organization
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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)
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Ch 7-20
Management Issues
Annual Objectives Should State
Quantity
Quality
Cost
Time
Be Verifiable
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Ch 7-23
Management Issues
Resource Allocation
-- Central management activity that allows for the execution of strategy
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Ch 7-24
Management Issues
Managing Conflict
-- Disagreement between two more parties on one or more issues
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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
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Ch 7-26
Management Issues
Avoidance
Defusion
Confrontation
Conflict Management & Resolution
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Ch 7-27
Management Issues
Matching Structure / Strategy
Classical view:
-- Changes in strategy Changes in structure
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Ch 7-28
New administrativeproblems emerge
New strategyIs formulated
Organizationalperformance
declines
Organizational performance
improves
New organizationalstructure is established
Chandler’s Strategy-Structure Relationship
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Ch 7-29
Management Issues
Structure dictates how objectives & policies will be established
Structure dictates how resources will be allocated
Structure & Strategy
Our view:
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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
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Ch 7-31
Management Issues
Functional Structure
Divisional Structure
Strategic Business Unit Structure (SBU)
Matrix Structure
Basic Forms of Structure
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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
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Ch 7-33
Management Issues
Restructuring
Downsizing
Rightsizing
Delayering
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Ch 7-34
Management Issues
Reengineering
-- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed.
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Ch 7-35
Management Issues
Reengineering
Process management
Process innovation
Process redesign
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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
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Ch 7-37
Management Issues
Linking Pay/Performance to Strategies
-- Pay for performance systems
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Ch 7-38
Management Issues
Linking Pay/Performance to Strategies
Dual bonus systems
Profit sharing systems
Gain Sharing systems
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Ch 7-39
Management Issues
Resistance to Change
-- Single greatest threat to successful strategy implementation
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Ch 7-40
Management Issues
Resistance to Change
-- Raises anxiety; fear concerning
Economic loss
Inconvenience
Uncertainty
Break in status-quo
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Ch 7-41
Management Issues
Change Strategies
Force Change Strategy
Educative Change Strategy
Rational or Self-Interest Change Strategy
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Ch 7-42
Management Issues
Natural Environment
-- Wide appreciation for firms that “mend” rather than “harm” the environment
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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
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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
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Ch 7-45
Management Issues
Production/Operations Decisions
Plant size
Inventory/Inventory control
Quality control
Cost control
Technological innovation
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Ch 7-46
Management Issues
Human Resource Concerns
-- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.
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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