Ch 7 -1

Module 7Implementing Strategies: Management & Operations Issues

Ch 7 -2

Ch 7 -3

Strategy Formulation vs. Implementation

Strategy Formulation Positioning forces

before the action Focus on effectiveness Primarily intellectual Requires good intuitive

and analytical skills

Requires coordination among a few people

Strategy Implementation Managing forces during

the action Focus on efficiency Primarily operational Requires special

motivation and leadership skills

Requires coordination among many people

Ch 7 -4

Shift in responsibility

Nature of Strategy Implementation

Management Perspectives

Divisional or FunctionalManagers

Strategists

Ch 7 -5

Management Issues Central to Strategy Implementation

Establish annual objectives Devise policies Allocate resources Alter existing

organizational structure Restructure & reengineer Revise reward & incentive

plans Minimize resistance to

change

Match managers to strategy Develop a strategy-

supportive culture Adapt production/operations

processes Develop an effective human

resources function Downsize & furlough as

needed Link performance & pay to

strategies

Ch 7 -6

Purpose of Annual Objectives

Basis for resource allocationMechanism for management evaluationMajor instrument for monitoring progress toward achieving long-term objectivesEstablish priorities (organizational, divisional, and departmental)

Ch 7 -7

Annual Objectives

Horizontal consistency of objectives

Vertical consistency of objectives

Ch 7 -8

Policies

Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior

Ch 7 -9

Resource Allocation

1. Financial resources

2. Physical resources

3. Human resources

4. Technological resources

Four Types of Resources

Ch 7 -10

Managing Conflict

Conflict not always “bad” Lack of conflict may signal apathy Can energize opposing groups to action May help managers identify problems

Ch 7 -11

Managing Conflict

Approaches for managing and resolving conflict Avoidance Defusion Confrontation

Ch 7 -12

Matching Structure with Strategy

Structure dictates how objectives and policies will be established

Structure dictates how resources will be allocated

Changes in strategy often lead to changes in organizational structure

Ch 7 -13

Ch 7 -14

Basic Forms of Structure

Functional Structure Divisional Structure Strategic Business Unit Structure

(SBU) Matrix Structure

Ch 7 -15

Functional Structure

Group tasks and activities by business function

Ch 7 -16

Functional Structure

Ch 7 -17

Divisional Structure

Can be organized in one of four ways: By geographic area By product or service By customer By process

Ch 7 -18

Divisional Structure

Ch 7 -19

Strategic Business Unit Structure (SBU) Group similar divisions into

strategic business units and delegate authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer

Ch 7 -20

Matrix Structure

The most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication

Ch 7 -21

Matrix Structure

Ch 7 -22

Restructuring, Reengineering, and E-engineering

Restructuring is calledDownsizingRightsizingDelayering

Ch 7 -23

Restructuring, Reengineering, and E-engineering

Cornerstones of ReengineeringDecentralizationReciprocal interdependenceInformation sharing

Ch 7 -24

Tests for Performance-Pay Plans

Does the plan capture attention?

Do employees understand the plan?

Is the plan improving communication?

Does the plan pay out when it should?

Is the company or unit performing better?

Ch 7 -25

Managing Resistance to Change

Force change strategy Educative change strategy Rational or self-interest change

strategy

Ch 7 -26

Creating a Strategy-Supportive Culture

1. Formal statements of organizational philosophy

2. Design of physical spaces3. Deliberate role modeling, teaching,

and coaching4. Explicit reward and status system5. Stories, legends, myths, and parables

Ch 7 -27

Creating a Strategy-Supportive Culture

6. What leaders pay attention to7. Leader reactions to critical incidents and

crises8. Organizational design and structure9. Organizational systems and procedures10. Criteria for recruitment, selection,

promotion, leveling off, retirement, and “excommunication” of people

Ch 7 -28

Production/Operations Concerns

Production processes typically constitute more than 70% of a firm’s total assets

Ch 7 -29

Production/Operations Decision ExamplesPlant sizeInventory / Inventory controlQuality controlCost controlTechnological innovation

Ch 7 -30

Human Resource ConcernsAssessing staffing needs/costsFurloughsDeveloping performance incentivesESOPsWork–life balance issuesMatching managers with strategy

Ch 7 -31

Corporate Wellness Programs

Wellness of employees has become a strategic issue for many firms