Chapter 7 Implementing Strategies: Management & Operations Issues Strategic Management: Concepts & Cases 13th Edition Fred David Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Strategy Formulation vs. Implementation 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 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Divisional or Functional Managers Nature of Strategy Implementation Management Perspectives Shift in responsibility Strategists Divisional or Functional Managers Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Purpose of Annual Objectives Basis for resource allocation Mechanism for management evaluation Major instrument for monitoring progress toward achieving long-term objectives Establish priorities (organizational, divisional, and departmental) Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Annual Objectives Horizontal consistency of objectives Vertical consistency of objectives Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Policies Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Resource Allocation Four Types of Resources Financial resources Physical resources Human resources Technological resources Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Managing Conflict Conflict not always “bad” Lack of conflict may signal apathy Can energize opposing groups to action May help managers identify problems Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Managing Conflict Approaches for managing and resolving conflict Avoidance Defusion Confrontation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Basic Forms of Structure Functional Structure Divisional Structure Strategic Business Unit Structure (SBU) Matrix Structure Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Functional Structure Group tasks and activities by business function Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Functional Structure Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Can be organized in one of four ways: Divisional Structure Can be organized in one of four ways: By geographic area By product or service By customer By process Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Divisional Structure Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Matrix Structure The most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Matrix Structure Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Restructuring is called Downsizing Rightsizing Delayering Restructuring, Reengineering, and E-engineering Restructuring is called Downsizing Rightsizing Delayering Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Cornerstones of Reengineering Decentralization Restructuring, Reengineering, and E-engineering Cornerstones of Reengineering Decentralization Reciprocal interdependence Information sharing Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Managing Resistance to Change Force change strategy Educative change strategy Rational or self-interest change strategy Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Creating a Strategy-Supportive Culture Formal statements of organizational philosophy Design of physical spaces Deliberate role modeling, teaching, and coaching Explicit reward and status system Stories, legends, myths, and parables Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Creating a Strategy-Supportive Culture What leaders pay attention to Leader reactions to critical incidents and crises Organizational design and structure Organizational systems and procedures Criteria for recruitment, selection, promotion, leveling off, retirement, and “excommunication” of people Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Production/Operations Concerns Production processes typically constitute more than 70% of a firm’s total assets Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Production/Operations Decision Examples Plant size Inventory / Inventory control Quality control Cost control Technological innovation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Human Resource Concerns Assessing staffing needs/costs Furloughs Developing performance incentives ESOPs Work–life balance issues Matching managers with strategy Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Corporate Wellness Programs Wellness of employees has become a strategic issue for many firms Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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