implementing strategies:management issues

© 2001 Prentice HallCh.7-1

Strategic ManagementConcepts & Cases

8th edition

Fred R. David

Chapter 7:Implementing

Strategies: Management Issues

PowerPoint Slides By:

Anthony F. Chelte

Western New England College


Comprehensive Strategic Management ModelComprehensive Strategic Management Model

Vision &

Mission Statements

Chapter 2

ExternalAudit

Chapter 3

InternalAudit

Chapter 4

Strategies In

Action

Chapter 5

Strategy Analysis

&Choice

Chapter 6

ImplementStrategies:Marketing,Fin/Acct,R&D, CISChapter 8

Measure &Evaluate

Performance

Chapter 9

Strategy Implementation:

Management Issues

Chapter 7


Management IssuesManagement Issues

“You want your people to run the business as if it were their own.”

—William Fulmer —



“A management truism says structure follows strategy. However, this truism is often ignored. Too many organizations attempt to carry out a new strategy with an old structure.”

—Dale McConkey—



“In most organizations, the top performers are paid too little and the worst performers too much.”

—Cass Bettinger—



Successful strategy formulation does NOT guarantee

successful strategy implementation!



Strategy Implementation—more difficult to “do” something

Strategy Formulation—easier to say “going to do it”



Strategy Implementation

Strategy Formulation

Requires coordination among many persons

Requires coordination among a few individuals

Requires motivation and leadership skills

Requires good intuitive and analytical skills

Primarily an operational process

Primarily an intellectual process

Focuses on efficiencyFocuses on effectiveness

Managing forces during the action

Positioning forces before the action



Transition to Strategy Implementation

Shift in responsibility from strategists to divisional and functional managers

Implementation problems may arise



Important Implementation Concerns

• Managers & employees motivated more by self-interests than organizational interests

• Need to involve divisional and functional managers in strategy formulation


Management Issues & Strategy Implementation

EstablishingAnnual

Objectives

DevisingPolicies

AllocatingResources

AlteringExisting

OrganizationalStructure

Restructuring&

Reengineering



RevisingReward &IncentivePrograms

MinimizingResistance

toChange

Managing the

NaturalEnvironment

Developing aStrategy

SupportiveCulture

Adapting Production/OperationsProcesses

DevelopingHR

Function

If NecessaryDownsizing



• Basis for allocating resources

• Mechanism for evaluating managers

• Monitor progress toward long-term objectives

• Establish organizational, divisional, and departmental priorities

EstablishingAnnual

Objectives



• Basis for solving recurring problems

• Sets boundaries, constraints, and limits on administrative actions

• Sets expectations for managers and employees

• Basis for management control and coordination

DevisingPolicies



• Allows for strategy execution

• Sets allocation plan based on annual objectives

• Allocation based on four types of resources: financial, physical, human, and technological

AllocatingResources



• Function• Divisional• SBU Structure• Matrix Structure

AlteringExisting

OrganizationalStructure



• Reducing size of firm Employees Divisions or units Hierarchical levels

• Benchmarking against competitors Ratios out of line

• Primary benefit = cost reduction

Restructuring



• Employee/customer well-being Redesign work Redesign jobs Redesign processes

• Improvement in: Costs Quality Service Speed

Reengineering



• Pay-for-performance plans

• Flexibility in compensation systems is necessary

• Dual bonus system Annual objectives Long-term objectives

• Profit Sharing

RevisingReward &IncentivePrograms



• Raises anxiety/fear• Force change strategy• Educative change

strategy• Rational or self-interest

change strategy Most desirable

ManagingResistance

ToChange



• Customer & employee sensitivity to environment

• Legal requirements• Earth has become a

stakeholder for all firms• Preserve and conserve

natural resources• Emphasis on developing

environmental perspective

Managingthe

NaturalEnvironment



• Triangulation as method to determine changes in a firm’s culture that could benefit strategy

• Weak linkages between strategic management and organizational culture can jeopardize performance and success

Creating aStrategy-

SupportiveCulture



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

• Decisions on: Plant size Inventory/inventory

control Quality control Cost control Technological innovation

Production/OperationsConcerns



• Assessing staffing needs and costs

• Develop performance incentives

• ESOPs• Child-care policies• Work-life balance

Human ResourcesConcerns



Important Implementation Concerns

• Strategy implementation means change

• Successful implementation requires:SupportDisciplineMotivationHard work


Key Terms & ConceptsKey Terms & Concepts

• Annual objectives• Avoidance• Benchmarking• Bonus system• Conflict• Confrontation• Culture• Defusion• Delayering

• Decentralized structure

• Divisional structure

• Downsizing• Educative change

strategy• Employee Stock

Ownership Plan (ESOP)


Key Terms & ConceptsKey Terms & Concepts

• Establishing annual objectives

• Force change strategy

• Functional structure• Gain sharing• Horizontal

consistency of objectives

• Just in time• Matrix structure• Policy• Profit sharing

• Rational change strategy

• Reengineering• Resistance to change• Resource allocation• Restructuring• Rightsizing• Self-interest change• Triangulation• Vertical consistency

of objectives

implementing strategies:management issues

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