Copyright 2005 Prentice Hall1 Bus 411 DAY11

Copyright 2005 Prentice Hall Ch 7-2 Agenda Assignment #3 Corrected  3 A’s, 3 B’s and 2 non-submit  PUT your names on the assignments! Assignment #4 was mailed to in WebCT  Due Feb 28 Templates available in WebCT Mid-term after Spring Break  Handed out Mar. 14 Due Mar 17  Chapters 1-9  Intense Discussion on Implementing Strategies

Copyright 2005 Prentice Hall Ch 7-3 AFUM Scholarship Last year AFUM awarded 3 $500 scholarships Criteria  UMFK student that will have completed 24 Credits by this spring and is returning to UMFK next fall  Complete a Letter of Commitment to scholarship and service  One Letter of recommendation from a faculty member  A resume  Copy of your transcript (get from registrar) Turn in all materials to Prof. Stephen Hansen by March 3, 2006  Room 232 Nadeau Hall

Copyright 2005 Prentice Hall Ch 7-4 Strategic Management Process Model

Copyright 2005 Prentice Hall Ch 7-5 Chapter 7 Implementing Strategies: Management & Operations Issues Strategic Management: Concepts & Cases 10 th Edition Fred David PowerPoint Slides by Anthony F. Chelte Western New England College

Copyright 2005 Prentice Hall Ch 7-6 Chapter Outline The Nature of Strategy Implementation Annual Objectives Policies

Copyright 2005 Prentice Hall Ch 7-7 Chapter Outline ( cont’d ) Resource Allocation Managing Conflict Matching Structure with Strategy

Copyright 2005 Prentice Hall Ch 7-8 Chapter Outline ( cont’d ) Restructuring, Reengineering & E-Engineering Linking Performance & Pay to Strategies Managing Resistance to Change

Copyright 2005 Prentice Hall Ch 7-9 Chapter Outline ( cont’d ) Managing the Natural Environment Creating a Strategy-Supportive Culture Production/Operations Concerns When Implementing Strategies

Copyright 2005 Prentice Hall Ch 7-10 Chapter Outline ( cont’d ) Human Resource Concerns When Implementing Strategies

Copyright 2005 Prentice Hall Ch 7-11 Pretend that every single person you meet has a sign around his or her neck that says, “Make me feel important” – Mary Kay Ash, CEO of Mary Kay, Inc. Implementing Strategies

Copyright 2005 Prentice Hall Ch Successful strategy formulation does not guarantee successful strategy implementation The Nature of Strategy Implementation

Copyright 2005 Prentice Hall Ch 7-13 Formulation positions forces before the action Implementation manages forces during the action Nature of Strategy Implementation Formulation vs. Implementation

Copyright 2005 Prentice Hall Ch 7-14 Formulation focuses on effectiveness Implementation focuses on efficiency Nature of Strategy Implementation Formulation vs. Implementation

Copyright 2005 Prentice Hall Ch 7-15 Formulation primarily an intellectual process Implementation primarily an operational process Nature of Strategy Implementation Formulation vs. Implementation

Copyright 2005 Prentice Hall Ch 7-16 Formulation requires good intuitive & analytical skills Implementation requires special motivational & leadership skills Nature of Strategy Implementation Formulation vs. Implementation

Copyright 2005 Prentice Hall Ch 7-17 Formulation requires coordination among a few individuals Implementation requires coordination among many individuals Nature of Strategy Implementation Formulation vs. Implementation

Copyright 2005 Prentice Hall Ch 7-18 Varies among different types & sizes of organizations Nature of Strategy Implementation Strategy Implementation

Copyright 2005 Prentice Hall Ch 7-19 Altering sales territories Adding new departments Closing facilities Hiring new employees Cost-control procedures Modifying advertising strategies Building new facilities Nature of Strategy Implementation Implementation Activities

Copyright 2005 Prentice Hall Ch 7-20 Shift in responsibility Nature of Strategy Implementation Management Perspectives Division or Functional Managers Strategists

Copyright 2005 Prentice Hall Ch 7-21 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

Copyright 2005 Prentice Hall Ch 7-22 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

Copyright 2005 Prentice Hall Ch 7-23 Management Issues Annual Objectives (Goals)-- -- Decentralized activity -- Directly involve all managers in the organization

Copyright 2005 Prentice Hall Ch 7-24 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)

Copyright 2005 Prentice Hall Ch 7-25 Management Issues Consistency of Annual Objectives --  Across hierarchical levels  Horizontally consistent  Vertically consistent

Copyright 2005 Prentice Hall Ch 7-26 Management Issues Requirements of Annual Objectives  Measurable  Consistent  Reasonable  Challenging  Clear  Understood  Timely

Copyright 2005 Prentice Hall Ch 7-27 Management Issues Annual Objectives Should State  Quantity  Quality  Cost  Time  Be Verifiable

Copyright 2005 Prentice Hall Ch 7-28 SMART objectives S pecific - Be precise about what you are going to achieve M easurable - Quantify you objectives A chievable - Are you attempting too much? R ealistic - Do you have the resource to make the objective happen (men, money, machines, materials, minutes)? T imed - State when you will achieve the objective (within a month? By February 2010?)

Copyright 2005 Prentice Hall Ch 7-29 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

Copyright 2005 Prentice Hall Ch 7-30 Management Issues Policies Facilitate the solving of recurring problems & guide implementation of strategy

Copyright 2005 Prentice Hall Ch 7-31 Management Issues Policies Establish --  Boundaries  Constraints  Limits

Copyright 2005 Prentice Hall Ch 7-32 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

Copyright 2005 Prentice Hall Ch 7-33 Management Issues Resource Allocation -- Central management activity that allows for the execution of strategy

Copyright 2005 Prentice Hall Ch 7-34 Management Issues 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources 4 Types of Resources

Copyright 2005 Prentice Hall Ch 7-35 Management Issues Managing Conflict -- Disagreement between two more parties on one or more issues

Copyright 2005 Prentice Hall Ch 7-36 Management Issues  Conflict not always “bad”  No conflict may signal apathy  Can energize opposing groups to action  May help managers identify problems Managing Conflict

Copyright 2005 Prentice Hall Ch 7-37 Management Issues  Avoidance  Diffusion  Confrontation Conflict Management & Resolution

Copyright 2005 Prentice Hall Ch 7-38 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

Copyright 2005 Prentice Hall Ch 7-39 Management Issues Matching Structure w/ Strategy -- Changes in strategy = Changes in structure

Copyright 2005 Prentice Hall Ch 7-40 Management Issues  Structure dictates how objectives & policies will be established  Structure dictates how resources will be allocated Structure & Strategy

Copyright 2005 Prentice Hall Ch 7-41 New administrative problems emerge New strategy Is formulated Organizational performance declines Organizational performance improves New organizational structure is established Chandler’s Strategy-Structure Relationship

Copyright 2005 Prentice Hall Ch 7-42 Management Issues  Functional Structure  Organized by business function  Divisional Structure  Organized by area or product or market or process  Strategic Business Unit Structure (SBU)  Grouping of similar division  Matrix Structure  Two or more flows of authority  Better for R&D Basic Forms of Structure

Copyright 2005 Prentice Hall Ch 7-43 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

Copyright 2005 Prentice Hall Ch 7-44 Management Issues Restructuring -- Reducing the size of the firm – # of employees, divisions, and/or units, # of hierarchical levels

Copyright 2005 Prentice Hall Ch 7-45 Management Issues Restructuring  Downsizing  Rightsizing  Delayering

Copyright 2005 Prentice Hall Ch 7-46 Management Issues Reengineering -- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed.

Copyright 2005 Prentice Hall Ch 7-47 Management Issues Reengineering  Process management  Process innovation  Process redesign

Copyright 2005 Prentice Hall Ch 7-48 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

Copyright 2005 Prentice Hall Ch 7-49 Management Issues Linking Pay/Performance to Strategies -- Pay for performance systems

Copyright 2005 Prentice Hall Ch 7-50 Management Issues Linking Pay/Performance to Strategies  Dual bonus systems  Objective and goals  Profit sharing systems  Chunk of the profits  Gain Sharing systems  Meeting performance targets

Ch 7-51 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 2005 Prentice Hall Ch 7-52 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

Copyright 2005 Prentice Hall Ch 7-53 Management Issues Resistance to Change -- Single greatest threat to successful strategy implementation

Copyright 2005 Prentice Hall Ch 7-54 Management Issues Resistance to Change -- Raises anxiety; fear concerning  Economic loss  Inconvenience  Uncertainty  Break in status-quo

Copyright 2005 Prentice Hall Ch 7-55 Management Issues Change Strategies  Force Change Strategy  Educative Change Strategy  Rational or Self-Interest Change Strategy

Copyright 2005 Prentice Hall Ch 7-56 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

Copyright 2005 Prentice Hall Ch 7-57 Management Issues Natural Environment -- Wide appreciation for firms that “mend” rather than “harm” the environment

Copyright 2005 Prentice Hall Ch 7-58 Management Issues Natural Environment – Environmental Strategies  Develop/acquire “green” businesses  Divesting environmental-damaging business  Low-cost producer through waste minimization & energy conservation

Copyright 2005 Prentice Hall Ch 7-59 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

Copyright 2005 Prentice Hall Ch 7-60 Management Issues Strategy-Supportive Culture -- Preserve, emphasize, & build upon aspects of existing culture that support new strategies

Ch 7-61 Formal statements of philosophy, charters, etc. used for recruitment and selection, and socialization Designing of physical spaces, facades, buildings Deliberate role modeling, teaching and coaching Explicit reward and status system, promotion criteria Stories, legends, myths about key people and events Management Issues Elements linking culture to strategy:

Ch 7-62 What leaders pay attention to, measure and control Leader reactions to critical incidents and crises How the organization is designed and structured Organizational systems and procedures Criteria used for recruitment, selection, promotion, retirement Management Issues Elements linking culture to strategy:

Copyright 2005 Prentice Hall Ch 7-63 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

Copyright 2005 Prentice Hall Ch 7-64 Management Issues Production/Operations Concerns -- Production processes typically constitute more than 70% of firm’s total assets

Copyright 2005 Prentice Hall Ch 7-65 Management Issues Production/Operations Decisions  Plant size  Inventory/Inventory control  Quality control  Cost control  Technological innovation

Copyright 2005 Prentice Hall Ch 7-66 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

Copyright 2005 Prentice Hall Ch 7-67 Management Issues Human Resource Concerns -- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.

Copyright 2005 Prentice Hall Ch 7-68 Management Issues Human Resource Strategic Responsibilities  Assessing staffing needs/costs  Developing performance incentives  ESOP’s    Child-care policies  Work-life balance issues

Copyright 2005 Prentice Hall Ch 7-69 Diversity Issues Carly FiorinaHewlett-Packard49 yrs old Meg WhitmaneBay47 yrs old Andrea JungAvon Products45 yrs old Anne MulcahyXerox50 yrs old Marjorie MagnerCitigroup54 yrs old Betsy HoldenKraft Foods47 yrs old Mary SammonsRite Aid57 yrs old Women CEO’s in U.S (examples)