Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 1 BUS 411 DAY 11

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Agenda  Questions?  Assignment 3 Corrected  3 A’s, 3 B’s, 3 C’s, 2 D’s and 1 non submit  Problems with ratios!  Assignment 4 Posted  Due March 12  assignment 4 SP13.pdf assignment 4 SP13.pdf  Finish discussion on Strategy Analysis and Choice  Begin Discussion on Implementing Strategies: Management and Operations Issues

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Strategy Analysis and Choice Chapter Six

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Politics of Strategy Choice  Political maneuvering consumes valuable time, subverts organizational objectives, diverts human energy, and results in the loss of some valuable employees  Political biases and personal preferences get unduly embedded in strategy choice decisions 6-4

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Politics of Strategy Choice  The hierarchy of command in an organization, combined with the career aspirations of different people and the need to allocate scarce resources, guarantees the formation of coalitions of individuals who strive to take care of themselves first and the organization second, third, or fourth 6-5

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Tactics to Aid Strategists Equifinality Satisfying Generalization Focus on Higher-Order Issues Provide Political Access on Important Issues 6-6

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Governance Issues  Board of directors  a group of individuals who are elected by the ownership of a corporation to have oversight and guidance over management and who look out for shareholders’ interests 6-7

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Board of Director Duties and Responsibilities 6-8

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Principles of Good Governance 1. No more than two directors are current or former company executives 2. The audit, compensation, and nominating committees are made up solely of outside directors 3. Each director owns a large equity stake in the company, excluding stock options 4. Each director attends at least 75 percent of all meetings 6-9

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Principles of Good Governance 5. The board meets regularly without management present and evaluates its own performance annually 6. The CEO is not also the chairperson of the board 7. Stock options are considered a corporate expense 8. There are no interlocking directorships (where a director or CEO sits on another director’s board) 6-10

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Implementing Strategies: Management and Operations Issues Chapter Seven

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 2-12

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Chapter Objectives 1. Explain why strategy implementation is more difficult than strategy formulation. 2. Discuss the importance of annual objectives and policies in achieving organizational commitment for strategies to be implemented. 3. Explain why organizational structure is so important in strategy implementation. 4. Compare and contrast restructuring and reengineering. 7-13

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Chapter Objectives (cont.) 5. Describe the relationships between production/operations and strategy implementation. 6. Explain how a firm can effectively link performance and pay to strategies. 7. Discuss employee stock ownership plans (ESOPs) as strategic management concept. 8. Describe how to modify an organizational culture to support new strategies. 7-14

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Comprehensive Strategic- Management Model 7-15

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Nature of Strategy Implementation  Strategy formulation is positioning forces before the action.  Strategy implementation is managing forces during the action.  Strategy formulation focuses on effectiveness.  Strategy implementation focuses on efficiency. 7-16

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Nature of Strategy Implementation  Strategy formulation is primarily an intellectual process.  Strategy implementation is primarily an operational process.  Strategy formulation requires good intuitive and analytical skills.  Strategy implementation requires special motivation and leadership skills. 7-17

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Some Management Issues Central to Strategy Implementation 7-18

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Annual Objectives Annual objectives: 1. represent the basis for allocating resources 2. are a primary mechanism for evaluating managers 3. are the major instrument for monitoring progress toward achieving long-term objectives 4. establish organizational, divisional, and departmental priorities 7-19

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Stamus Company’s Hierarchy of Aims 7-20

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Policies  Policy  specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals  instruments for strategy implementation 7-21

Copyright ©2013 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  clarify what can and cannot be done in pursuit of an organization’s objectives 7-22

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall A Hierarchy of Policies 7-23

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Some Issues That May Require a Management Policy 7-24

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Resource Allocation  Resource allocation  central management activity that allows for strategy execution  often based on political or personal factors  Strategic management enables resources to be allocated according to priorities established by annual objectives 7-25

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Types of ResourcesFinancialPhysical HumanTechnological 7-26

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Managing Conflict  Conflict  disagreement between two or more parties on one or more issues  Establishing annual objectives can lead to conflict because individuals have different expectations and perceptions, schedules create pressure, personalities are incompatible, and misunderstandings occur between line managers and staff managers 7-27

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Managing Conflict  Avoidance  includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals  Defusion  includes playing down differences between conflicting parties while accentuating similarities and common interests 7-28

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Managing Conflict  Confrontation  exemplified by exchanging members of conflicting parties so that each can gain an appreciation of the other’s point of view or holding a meeting at which conflicting parties present their views and work through their differences 7-29

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Some Management Trade-Off Decisions Required in Strategy Implementation 7-30

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Matching Structure With Strategy  Structure largely dictates how objectives and policies will be established  Structure dictates how resources will be allocated 7-31

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

Symptoms of an Ineffective Organizational Structure 7-33

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Functional Structure  Functional structure  groups tasks and activities by business function, such as production/operations, marketing, finance/accounting, research and development, and management information systems 7-34

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Advantages and Disadvantages of a Functional Organizational Structure 7-35

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Divisional Structure  Divisional structure  functional activities are performed both centrally and in each separate division  Geographic area, product or service, customer, process 7-36

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Advantages and Disadvantages of a Divisional Organizational Structure 7-37

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Strategic Business Unit (SBU) Structure  SBU structure  groups similar divisions into strategic business units and delegates authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer  can facilitate strategy implementation by improving coordination between similar divisions and channeling accountability to distinct business units 7-38

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Sonoco Products’ SBU Organizational Chart 7-39 Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

The Matrix Structure  Matrix structure  most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication 7-40

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 2-41

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Matrix Structure  For a matrix structure to be effective, organizations need participative planning, training, clear mutual understanding of roles and responsibilities, excellent internal communication, and mutual trust and confidence 7-42

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Advantages and Disadvantages of a Matrix Structure 7-43

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Typical Top Managers of a Large Firm 7-44

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Restructuring  Restructuring  involves reducing the size of the firm in terms of number of employees, number of divisions or units, and number of hierarchical levels in the firm’s organizational structure  also called downsizing, rightsizing, or delayering 7-45

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Reengineering  Reengineering  involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed  also called process management, process innovation, or process redesign 7-46

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Linking Performance and Pay to Strategies 1. Provide full transparency to all stakeholders 2. Reward long-term performance with long- term pay, rather than annual incentives 3. Base executive compensation on actual company performance, rather than on stock price 7-47

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Linking Performance and Pay to Strategies 4. Extend the time-horizon for bonuses. Replace short-term with long-term incentives 5. Increase equity between workers and executives. Delete many special perks and benefits for executives 7-48

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Linking Performance and Pay to Strategies 1. Does the plan capture attention? 2. Do employees understand the plan? 3. Is the plan improving communication? 4. Does the plan pay out when it should? 5. Is the company or unit performing better? 7-49

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Managing Resistance to Change  Force change strategy  involves giving orders and enforcing those orders  Educative change strategy  one that presents information to convince people of the need for change  Self-interest change strategy  one that attempts to convince individuals that the change is to their personal advantage 7-50

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Creating a Strategy-Supportive Culture 1. Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection, and socialization 2. Designing of physical spaces, facades, buildings 3. Deliberate role modeling, teaching, and coaching by leaders 4. Explicit reward and status system, promotion criteria 5. Stories, legends, myths, and parables about key people and events 7-51

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Creating a Strategy-Supportive Culture 6. What leaders pay attention to, measure, and control 7. Leader reactions to critical incidents and organizational crises 8. How the organization is designed and structured 9. Organizational systems and procedures 10. Criteria used for recruitment, selection, promotion, leveling off, retirement, and “excommunication” of people 7-52

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Ways and Means for Altering an Organization’s Culture 7-53

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Production Management and Strategy Implementation 7-54

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall Labor Cost-Saving Tactics 7-55

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall The Key to Staying Healthy, Living to 100, and Being a “Well” Employee 7-56

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 7-57