1. Chapter 7 Implementing Strategies: Management & Operations Issues
A technically imperfect plan that is implemented well will achieve more than the perfect plan that never gets off the paper on which it is typed.

2. Strategy Implementation
The Strategic Management process does not end when the firm decides what strategy or strategies to pursue
There must be a translation of strategic thought into strategic action
Implementing strategy affects an organization from top –bottom
This chapter focuses on management issues
Chapter 8 focuses on Marketing, finance/accounting , R&D, MIS issues

3. Summary Strategy Implementation means “Change”
Real works begins when strategists are formulated
Strategic Implementation requires support & hard work from all managers & employees
Formulating the right strategies are not enough- managers & employees must be motivated to implement those strategies

4. Formulation vs. Implementation
Nature of Strategy Implementation
Formulation vs. Implementation
Formulation focuses on effectiveness
Implementation focuses on efficiency
Formulation is positioning forces before the action
Implementation is managing forces during the action
It is always more difficult to do something (strategy implementation ) than to say you are going to do it (strategy formulation )

5. Division or Functional Managers
Nature of Strategy Implementation
Management Perspectives
Shift in responsibility
Strategists
Division or Functional Managers

6. Organizational structure
Management Issues
This chapter focuses on Management
Issues most central to Implementing
Strategies
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives

7. Management Issues (cont’d)
Resistance to Change
Natural Environment
Management
Issues
Supportive Culture
Production/Operations
Human Resources

8. Purpose of Annual Objectives --
Management Issues
Purpose of Annual Objectives --
Basis for resource allocation
Mechanism for management evaluation
Major instrument for gauging progress on long-term objectives
Establish priorities (organizational, division, & departmental)

9. Long term Company Objective
Double company revenues in two years through Market development & Market penetration
Divisional I Annual Objective
Increase divisional revenues by 40% this year & 40% next year
(Current revenues are $2 million)
R&D annual Objective
Develop new products this year that are successfully marketed
Personnel annual obj
Reduce employee absenteeism from 10% to 5% this year
Marketing
Increase number of sales people by 40 this year
Divisional II
Hierarchy of Aims
Horizontal consistency of Obj as imp as Vertical Consistency of Obj

10. Policies Company Strategy Divisional Strategy Departmental Strategy
Supporting policies
Divisional Strategy
Departmental Strategy
Supporting Policies
Refers to specific guidelines, methods, procedures, rules, forms & administrative practices established to support and encourage work toward stated goals

11. Management Issues Resources Allocation Financial resources
Central management activity that allows for strategy execution
Harmful if not consistent with priorities indicated by approved annual objectives
Resource allocation often based on political & personal factors in those Org that do not use SM approach
SM itself is sometimes referred to as a “Resource allocation process”
Resources Allocation
Financial resources
Physical resources
Human resources
Technological resources

12.  Management Issues Managing Conflict
Approaches to manage conflict
Avoidance
Defusion
Confrontation
Management Issues
Managing Conflict
Interdependence of Obj &Competition for limited resources often leads to Conflict
Conflict not always “bad”
No conflict may signal apathy(lack of concern / laziness)
Can energize opposing groups to action
May help managers identify problems 

13. Matching Structure with Strategy
Changes in strategy often require changes in the way an organization is structured for two major reasons:

14. Changes in strategy lead to changes in Org structure
Chandler’s Strategy-
Structure Relationship.. Matching Structure with Strategy
New strategy
Is formulated
New administrative
problems emerge
Organizational
performance
declines
Organizational
performance
improves
New organizational
structure is established
Structure largely dictates how objectives & policies will be established

15. Basic Forms of Structure
Management Issues
Basic Forms of Structure
Functional Structure
Divisional Structure
Strategic Business Unit Structure (SBU)
Matrix Structure

16. Management Issues Restructuring Downsizing Rightsizing Delayering
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 firms organization’s structure
Restructuring
Downsizing
Rightsizing
Delayering

17. Management Issues Reengineering Process management Process innovation
Concerned more with employee and customer well-being than shareholder well-being
Involves redesigning work, jobs, and processes for the purpose of improving cost, quality, service and speed
Reengineering
Process management
Process innovation
Process redesign

18. Reengineering Restructuring
Focus is changing the way work is actually carried out.
Concerned more with employee and customer well being than shareholder well being
Cornerstone-Decentralization, reciprocal interdependence & info sharing
No longer is it enough for companies to put up simple Web sites for customers and employees
Companies must reinvent the way they do business to take full advantage of the internet- E-engineering
Concerned with eliminating or establishing, shrinking or enlarging and moving Org departments and divisions

19. Linking Performance-Pay to Strategies
How can an Organization’s reward system be more closely linked to strategic performance?
How can decisions on salary increases, promotions, merit pay, and bonuses be more closely aligned to support the Long term strategic objectives of the Organization?
No widely accepted answers to these questions, but a dual bonus system based on both Annual objectives & Long term objectives is becoming common
A bonus system can be an effective tool for motivating individuals to support Strategy implementation efforts

20. Resistance to change Why do people resist change?
Need accurate information
Develop Org climate conducive to change
Must be viewed as opportunity rather than as a threat by managers & employees
Why do people resist change?
Do not understand what is happening
Why changes are taking place
Approaches for implementing change
Force change strategy
Educative change strategy
Rational /self-interest change strategy
Which one is more desirable?

21. Rational /self-interest change strategy
Forced change strategy
Educative change strategy
Rational /self-interest change strategy
Involves giving orders and enforcing those orders;
Fast but plagued by low commitment & high resistance
Presents info to convince people of the need to change;
Implementation become slow & difficult
Evokes greater commitment & less resistance
Convince individuals that the change is to their personal advantage
Four steps (Read Book)

22. Managing Resistance to Change
No organization or individual can escape change
SM process can impose major changes
Reorienting an organization to get people to think and act strategically is not an easy task
Sabotaging production machines
Absenteeism
Filling unfounded grievances
Unwillingness to cooperate
Resistance regularly occurs

23. Managing the Natural Environment
Earth itself has become a stakeholder for all business firms
All businesses functions are affected by natural environment considerations or by striving to make a profit
Firms that take more than give to the natural environment 
The ecological challenge facing all organizations requires managers to formulate strategies that preserve & conserve natural resources & control pollution
Natural environmental issues in Business administration curricula

24. Firms should formulate & implement strategies from an environmental perspective
Developing or acquiring green businesses
Divesting or altering environmental damaging businesses
Waste minimization and energy conservation & pursuing differentiation strategy through green product features
Environmental representative on BOD
Conduct regular environmental audits
Incorporate Environmental values in Mission statement
Provide training programs for Employees/managers

25. Creating a Strategy-Supportive Culture
Strategists should strive to preserve, emphasize, and build upon aspects of an existing culture that support proposed new strategies
Strategies are often market-driven & dictated by competitive forces
Changing firm’s culture to fit a new strategy is usually more effective than changing a strategy to fit an existing culture
Determine firms culture changes that needs to be made
Obtrusive Observation
Jack Duncan Triangulation
Questionnaire
Personal interviews

26. Management Issues
Production/Operations Concerns
-- adjustments in production systems that could be required to implement various strategies Table 7-4
Bank- adding 10 new branches(market development)-site location analysis
Hospital- adding cancer center( Product development)- Purchase of specialized equipment

27. Inventory/Inventory control Quality control Cost control
Management Issues
Production/Operations Decisions
Plant size
Inventory/Inventory control
Quality control
Cost control
Technological innovation

28. Assessing staffing needs/costs Developing performance incentives
Management Issues
Human Resource Strategic Responsibilities
Assessing staffing needs/costs
Developing performance incentives
ESOP’s
Child-care policies
Work-life balance issues

29. Diversity Issues Women CEO’s in U.S. 2004 (examples) Carly Fiorina
Hewlett-Packard
49 yrs old
Meg Whitman
eBay
47 yrs old
Andrea Jung
Avon Products
45 yrs old
Anne Mulcahy
Xerox
50 yrs old
Marjorie Magner
Citigroup
54 yrs old
Betsy Holden
Kraft Foods
Mary Sammons
Rite Aid
57 yrs old