1. Copyright 2005 Prentice Hall1 Bus 411 DAY 11

2. Copyright 2005 Prentice Hall Ch 7-2 Agenda Assignment #3 corrected  3 A’s, 2 B’s, 1 C, 2 F’s and 1 non-submits  Everyone gets one “freebie” on late homework, many of you have already got your freebie Assignment #4 due at end of week Templates available in WebCT Mid-term will be after Spring Break  Chapters 1-9  Take home  Intense Discussion on Implementing Strategies

3. Copyright 2005 Prentice Hall Ch 7-3 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

4. Copyright 2005 Prentice Hall Ch 7-4 Chapter Outline The Nature of Strategy Implementation Annual Objectives Policies

5. Copyright 2005 Prentice Hall Ch 7-5 Chapter Outline ( cont’d ) Resource Allocation Managing Conflict Matching Structure with Strategy

6. Copyright 2005 Prentice Hall Ch 7-6 Chapter Outline ( cont’d ) Restructuring, Reengineering & E-Engineering Linking Performance & Pay to Strategies Managing Resistance to Change

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

8. Copyright 2005 Prentice Hall Ch 7-8 Chapter Outline ( cont’d ) Human Resource Concerns When Implementing Strategies

9. Copyright 2005 Prentice Hall Ch 7-9 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

10. Copyright 2005 Prentice Hall Ch 7-10 -- Successful strategy formulation does not guarantee successful strategy implementation The Nature of Strategy Implementation

11. Copyright 2005 Prentice Hall Ch 7-11 Formulation positions forces before the action Implementation manages forces during the action Nature of Strategy Implementation Formulation vs. Implementation

12. Copyright 2005 Prentice Hall Ch 7-12 Formulation focuses on effectiveness Implementation focuses on efficiency Nature of Strategy Implementation Formulation vs. Implementation

13. Copyright 2005 Prentice Hall Ch 7-13 Formulation primarily an intellectual process Implementation primarily an operational process Nature of Strategy Implementation Formulation vs. Implementation

14. Copyright 2005 Prentice Hall Ch 7-14 Formulation requires good intuitive & analytical skills Implementation requires special motivational & leadership skills Nature of Strategy Implementation Formulation vs. Implementation

15. Copyright 2005 Prentice Hall Ch 7-15 Formulation requires coordination among a few individuals Implementation requires coordination among many individuals Nature of Strategy Implementation Formulation vs. Implementation

16. Copyright 2005 Prentice Hall Ch 7-16 Varies among different types & sizes of organizations Nature of Strategy Implementation Strategy Implementation

17. Copyright 2005 Prentice Hall Ch 7-17 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

18. Copyright 2005 Prentice Hall Ch 7-18 Shift in responsibility Nature of Strategy Implementation Management Perspectives Division or Functional Managers Strategists

19. Copyright 2005 Prentice Hall Ch 7-19 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

20. Copyright 2005 Prentice Hall Ch 7-20 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

21. Copyright 2005 Prentice Hall Ch 7-21 Management Issues Annual Objectives (Goals)-- -- Decentralized activity -- Directly involve all managers in the organization

22. Copyright 2005 Prentice Hall Ch 7-22 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)

23. Copyright 2005 Prentice Hall Ch 7-23 Management Issues Consistency of Annual Objectives --  Across hierarchical levels  Horizontally consistent  Vertically consistent

24. Copyright 2005 Prentice Hall Ch 7-24 Management Issues Requirements of Annual Objectives  Measurable  Consistent  Reasonable  Challenging  Clear  Understood  Timely

25. Copyright 2005 Prentice Hall Ch 7-25 Management Issues Annual Objectives Should State  Quantity  Quality  Cost  Time  Be Verifiable

26. Copyright 2005 Prentice Hall Ch 7-26 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

27. Copyright 2005 Prentice Hall Ch 7-27 Management Issues Policies -- -- Facilitate the solving of recurring problems & guide implementation of strategy

28. Copyright 2005 Prentice Hall Ch 7-28 Management Issues Policies Establish --  Boundaries  Constraints  Limits

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

30. Copyright 2005 Prentice Hall Ch 7-30 Management Issues Resource Allocation -- Central management activity that allows for the execution of strategy

31. Copyright 2005 Prentice Hall Ch 7-31 Management Issues 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources 4 Types of Resources

32. Copyright 2005 Prentice Hall Ch 7-32 Management Issues Managing Conflict -- Disagreement between two more parties on one or more issues

33. Copyright 2005 Prentice Hall Ch 7-33 Management Issues  Conflict not always “bad”  No conflict may signal apathy  Can energize opposing groups to action  May help managers identify problems Managing Conflict

34. Copyright 2005 Prentice Hall Ch 7-34 Management Issues  Avoidance  Diffusion  Confrontation Conflict Management & Resolution

35. Copyright 2005 Prentice Hall Ch 7-35 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

36. Copyright 2005 Prentice Hall Ch 7-36 Management Issues Matching Structure w/ Strategy -- Changes in strategy = Changes in structure

37. Copyright 2005 Prentice Hall Ch 7-37 Management Issues  Structure dictates how objectives & policies will be established  Structure dictates how resources will be allocated Structure & Strategy

38. Copyright 2005 Prentice Hall Ch 7-38 New administrative problems emerge New strategy Is formulated Organizational performance declines Organizational performance improves New organizational structure is established Chandler’s Strategy-Structure Relationship

39. Copyright 2005 Prentice Hall Ch 7-39 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

40. Copyright 2005 Prentice Hall Ch 7-40 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

41. Copyright 2005 Prentice Hall Ch 7-41 Management Issues Restructuring -- Reducing the size of the firm – # of employees, divisions, and/or units, # of hierarchical levels

42. Copyright 2005 Prentice Hall Ch 7-42 Management Issues Restructuring  Downsizing  Rightsizing  Delayering

43. Copyright 2005 Prentice Hall Ch 7-43 Management Issues Reengineering -- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed.

44. Copyright 2005 Prentice Hall Ch 7-44 Management Issues Reengineering  Process management  Process innovation  Process redesign

45. Copyright 2005 Prentice Hall Ch 7-45 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

46. Copyright 2005 Prentice Hall Ch 7-46 Management Issues Linking Pay/Performance to Strategies -- Pay for performance systems

47. Copyright 2005 Prentice Hall Ch 7-47 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

48. Ch 7-48 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?

49. Copyright 2005 Prentice Hall Ch 7-49 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

50. Copyright 2005 Prentice Hall Ch 7-50 Management Issues Resistance to Change -- Single greatest threat to successful strategy implementation

51. Copyright 2005 Prentice Hall Ch 7-51 Management Issues Resistance to Change -- Raises anxiety; fear concerning  Economic loss  Inconvenience  Uncertainty  Break in status-quo

52. Copyright 2005 Prentice Hall Ch 7-52 Management Issues Change Strategies  Force Change Strategy  Educative Change Strategy  Rational or Self-Interest Change Strategy

53. Copyright 2005 Prentice Hall Ch 7-53 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

54. Copyright 2005 Prentice Hall Ch 7-54 Management Issues Natural Environment -- Wide appreciation for firms that “mend” rather than “harm” the environment

55. Copyright 2005 Prentice Hall Ch 7-55 Management Issues Natural Environment – Environmental Strategies  Develop/acquire “green” businesses  Divesting environmental-damaging business  Low-cost producer through waste minimization & energy conservation

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

57. Copyright 2005 Prentice Hall Ch 7-57 Management Issues Strategy-Supportive Culture -- Preserve, emphasize, & build upon aspects of existing culture that support new strategies

58. Ch 7-58 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:

59. Ch 7-59 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:

60. Copyright 2005 Prentice Hall Ch 7-60 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

61. Copyright 2005 Prentice Hall Ch 7-61 Management Issues Production/Operations Concerns -- Production processes typically constitute more than 70% of firm’s total assets

62. Copyright 2005 Prentice Hall Ch 7-62 Management Issues Production/Operations Decisions  Plant size  Inventory/Inventory control  Quality control  Cost control  Technological innovation

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

64. Copyright 2005 Prentice Hall Ch 7-64 Management Issues Human Resource Concerns -- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.

65. Copyright 2005 Prentice Hall Ch 7-65 Management Issues Human Resource Strategic Responsibilities  Assessing staffing needs/costs  Developing performance incentives  ESOP’s  http://www.beysterinstitute.org/onlinemag/feb99/briefcase.html http://www.beysterinstitute.org/onlinemag/feb99/briefcase.html  Child-care policies  Work-life balance issues

66. Copyright 2005 Prentice Hall Ch 7-66 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. 2004 (examples)