Copyright © 2005 Pearson Education Canada Inc. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-1 Chapter 8 Strategy Implementation: Organizing for Action

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-2 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Strategy Implementation:  Sum total of the activities and choices required for the execution of a strategic plan.  Process by which strategies and policies are put into action through programs, budgets, and procedures.

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-3 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Problems in Implementing Strategic plans More time than planned Unanticipated problems Activities ineffectively coordinated Crises deferred attention away Employees w/o capabilities Inadequate employee training Uncontrollable external factors Inadequate leadership Poorly defined tasks Inadequate information systems

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-4 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Budgets:  Planning a budget is the last real check a firm has on the feasibility of the selected strategy.  A financial projection of the financial needs of a department or division.

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-5 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Procedures:  Standard Operating Procedures (SOP’s): Detail the various activities that must be carried out to complete a corporation’s programs.  Procedures are a type of coordinating mechanism that are essential to organizing the firm.  Procedures prescribe how work is to be done and what behaviours are expected without the need for direct supervision

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-6 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Six Forms of Synergy: 1. Shared know-how 2. Coordinated strategies 3. Shared tangible resources 4. Economies of scale or scope 5. Pooled negotiating power 6. New business creation

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-7 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Stages of organizational development I. Simple Structure II. Functional Structure III. Divisional Structure IV. Beyond SBU’s

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-8 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Simple Structure:  Stage I: Entrepreneur  Decision making tightly controlled  Little formal structure  Planning short range/reactive  Flexible and dynamic  Crisis of Leadership

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-9 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Functional Structure:  Stage II: Management team Functional specialization Delegation decision making Concentration/specialization in industry Crisis of Autonomy

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-10 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Divisional Structure:  Stage III: Diverse product lines Decentralized decision making SBU’s Almost unlimited resources Crisis of Control

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-11 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Beyond SBU’s:  Stage IV: Increasing environmental uncertainty Technological advances Size & scope of worldwide businesses Multi-industry competitive strategy Better educated personnel Pressure-cooker crisis

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-12 Copyright © 2005 Pearson Education Canada Inc. Stage IStage IIStage III 1 Stage IVStage V Dominant IssueBirthGrowthMaturityDeclineDeath PopularConcentrationHorizontalConcentric andProfit strategyLiquidation or Strategiesin a nicheand verticalconglomeratefollowed bybankruptcy growthdiversificationretrenchment LikelyEntrepreneur-FunctionalDecentralizationStructuralDismemberment Structuredominatedmanagementinto profit orsurgeryof structure emphasizedinvestment centers Note: 1. An organisation may enter a Revival Phase either during the Maturity or Decline Stages and thus extend the organisation’s life. Organizational Life Cycle

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-13 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Network Structure:  “Non structure” – elimination of in-house business functions  Termed “virtual organisation” Useful in unstable environments Need for innovation and quick response

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-14 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Reengineering Principles:  Organize around outcomes, not tasks  Have those who use the output perform the process  Subsume information-processing work into the real work that produces the information  Treat geographically dispersed resources as though they were centralized

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-15 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Reengineering Principles cont.  Link parallel activities instead of integrating their results  Put decision point where work is performed and build control into the process  Capture information once at the source

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-16 Copyright © 2005 Pearson Education Canada Inc. Strategy Implementation Job design  Study of individual tasks to increase relevance  Source of competitive advantage Job enlargement  Combining tasks Job rotation  Increase variety of tasks Job enrichment  More autonomy and control to workers

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 8-17 Copyright © 2005 Pearson Education Canada Inc. Managing Organizational Change Organizations can rarely withstand competition or grow without undergoing some type of organizational change A large part of the problem with many change efforts is human resistance Four most common reasons people resist change are:  Self-interest  Misunderstanding and lack of trust  Different assessments  Low tolerances for change