Dr. Sayed Elsayed Implementing Strategies: Management Issues Strategic Management

Dr. Sayed Elsayed Implementing Strategies: Management Issues 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.

Dr. Sayed Elsayed Strategy Analysis & Choice Contrasting strategy formulation and strategy implementation –Formulation is positioning forces before the action –Implementation is managing forces during the action Implementing Strategies: Management Issues

Dr. Sayed Elsayed Strategy Analysis & Choice Contrasting strategy formulation and strategy implementation –Formulation focuses on effectiveness –Implementation focuses on efficiency Implementing Strategies: Management Issues

Dr. Sayed Elsayed Strategy Analysis & Choice Contrasting strategy formulation and strategy implementation –Formulation is primarily an intellectual process –Implementation is primarily an operational process Implementing Strategies: Management Issues

Dr. Sayed Elsayed Strategy Analysis & Choice Contrasting strategy formulation and strategy implementation –Formulation requires good intuitive and analytical skills –Implementation requires special motivation and leadership skills Implementing Strategies: Management Issues

Dr. Sayed Elsayed Strategy Analysis & Choice Contrasting strategy formulation and strategy implementation –Formulation requires coordination among a few individuals –Implementation requires coordination among many persons Implementing Strategies: Management Issues

Dr. Sayed Elsayed Strategy Analysis & Choice Strategy implementation – –Varies among different types and sizes of organizations Implementing Strategies: Management Issues

Dr. Sayed Elsayed Strategy Analysis & Choice Strategy implementation Actions – –Altering sales territories –Adding new departments –Closing facilities –Hiring new employees –Cost-control procedures –Changing advertising strategies –Building new facilities Implementing Strategies: Management Issues

Dr. Sayed Elsayed Formulation to Implementation transition – –Shift in responsibility From strategists to division and functional managersFrom strategists to division and functional managers Management Perspectives

Dr. Sayed Elsayed Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

Dr. Sayed Elsayed Management Issues (continued) Management Issues Supportive culture Production/operations Human resources Downsizing Resistance to Change Managers & strategy

Dr. Sayed Elsayed Annual Objectives Decentralized activityDecentralized activity Involves all managers in the firmInvolves all managers in the firm

Dr. Sayed Elsayed Annual Objectives 1.Basis for allocating resources 2.Primary mechanism for evaluating managers 3.Major instrument for monitoring progress toward long-term objectives 4.Establish organizational, divisional, and departmental priorities

Dr. Sayed Elsayed Annual Objectives Horizontal consistency of objectivesHorizontal consistency of objectives Vertical consistency of objectivesVertical consistency of objectives

Dr. Sayed Elsayed Annual Objectives Objectives should state – –Quantity –Quality –Cost –Time

Dr. Sayed Elsayed Policies Policies facilitate solving recurring problems and guide the implementation of strategy

Dr. Sayed Elsayed Policies Policies set – –Boundaries –Constraints –limits

Dr. Sayed Elsayed Policies Example Issues requiring management policy -- –To offer extensive or limited management development workshops and seminars –To centralize or decentralize employee-training activities –To recruit through employment agencies, college campuses, and/or newspapers –To promote from within or hire from the outside –To establish a high- or low-safety stock of inventory –To buy lease, or rent new production equipment

Dr. Sayed Elsayed Resource Allocation Resource Allocation – A central management activity that allows for strategy execution

Dr. Sayed Elsayed Resource Allocation Four types of resources – 1.Financial resources 2.Physical resources 3.Human resources 4.Technological resources

Dr. Sayed Elsayed Managing Conflict Conflict – Disagreement between two or more parties on one or more issues

Dr. Sayed Elsayed Managing Conflict Conflict is not always “bad”Conflict is not always “bad” Absence of conflictAbsence of conflict –Signal indifference or apathy Can energize opposing groups to actionCan energize opposing groups to action May help managers identify problemsMay help managers identify problems

Dr. Sayed Elsayed Managing Conflict Conflict Management and Resolution –Avoidance –Defusion –Confrontation

Dr. Sayed Elsayed Matching Structure with Strategy Changes in Strategy Changes in Structure 1.Structure largely dictates how objectives and policies will be established. 2.Structure dictates how resources will be allocated

Dr. Sayed Elsayed Chandler’s Strategy-Structure Relationship New administrative problems emerge New strategy Is formulated Organizational performance declines Organizational performance improves New organizational structure is established

Dr. Sayed Elsayed Basic Forms of Structure Basic Forms of Structure 1.Functional Structure Groups tasks and activities by business function 2.Divisional Structure Decentralized and organized by geography, product, customer, or process

Dr. Sayed Elsayed Basic Forms of Structure Basic Forms of Structure 3.Strategic Business Unit Structure (SBU) Groups similar divisions; delegates authority and responsibility to SBU executive 4.Matrix Structure Most complex of all designs. Depends upon both vertical and horizontal flows of authority and communication

Dr. Sayed Elsayed Restructuring Restructuring Restructuring – Reducing the size of the firm in terms of number of employees, divisions, or units, and the number of hierarchical levels in the firm’s organizational structure

Dr. Sayed Elsayed Restructuring Restructuring Also called – –Downsizing –Rightsizing –Delayering

Dr. Sayed Elsayed Restructuring Restructuring Employed when ratios out of line with benchmarked competitors Primary benefit sought is cost reduction

Dr. Sayed Elsayed Reengineering Reengineering Reengineering – Involves reconfiguring or redesigning work, jobs, and processes to improve cost, quality, service and speed.

Dr. Sayed Elsayed Reengineering Reengineering Also called – –Process management –Process innovation –Process redesign

Dr. Sayed Elsayed Reengineering Reengineering Reengineering – Concerned more with employee and customer well-being than shareholder well-being

Dr. Sayed Elsayed Linking Performance and Pay to Strategies Most companies practicing pay-for- performance

Dr. Sayed Elsayed Linking Performance and Pay to Strategies Dual bonus system becoming more commonDual bonus system becoming more common –Based on both annual objectives and long-term objectives Profit SharingProfit Sharing –Incentive compensation used by 30% of companies Gain SharingGain Sharing –Performance targets set for employees or departments

Dr. Sayed Elsayed 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?

Dr. Sayed Elsayed Managing Resistance to Change Change raises anxiety over fear of: –Economic loss –Inconvenience –Uncertainty –Break in status-quo

Dr. Sayed Elsayed Managing Resistance to Change Resistance to change – –Single greatest threat to successful strategy implementation

Dr. Sayed Elsayed Change Strategies Force Change StrategyForce Change Strategy Educative Change StrategyEducative Change Strategy Rational or Self-Interest Change StrategyRational or Self-Interest Change Strategy

Dr. Sayed Elsayed Managing the Natural Environment Wide appreciation for firms that conduct operations that “mend” rather than “harm” the environment.Wide appreciation for firms that conduct operations that “mend” rather than “harm” the environment.

Dr. Sayed Elsayed Creating a Strategy-Supportive Culture Strategists should strive to preserve, emphasize, and build upon aspects of existing culture that support new strategies.

Dr. Sayed Elsayed Creating a Strategy-Supportive Culture Elements linking culture to strategy: 1.Formal statements of philosophy, charters, etc. used for recruitment and selection, and socialization 2.Designing of physical spaces, facades, buildings 3.Deliberate role modeling, teaching and coaching 4.Explicit reward and status system, promotion criteria 5.Stories, legends, myths about key people and events 6.What leaders pay attention to, measure and control 7.Leader reactions to critical incidents and crises 8.How the organization is designed and structured 9.Organizational systems and procedures 10.Criteria used for recruitment, selection, promotion, retirement

Dr. Sayed Elsayed Production/Operations Concerns 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

Dr. Sayed Elsayed Human Resource Concerns Assessing staffing needs and costs Develop performance incentives ESOPs Child-care policies Work-life balance