1. Copyright 2005 Prentice Hall1 Bus 411 Day 12

2. Copyright 2007 Prentice Hall Ch 6 -2 Agenda Assignment 4 posted (next Slide)  Due March 6 Assignment 5 Posted (Last One!)  Due March 20  SWOT, SPACE, BCG and QSPM Matrices for Google Mid term Exam will be right after Spring break and will be a take home exam covering the first 9 chapters of the text.  Available March 6  Due March 24  20-25 Short essays  Intense-- ~10 hours Finish Discussion of Strategic Analysis and Choice

3. Copyright 2007 Prentice Hall Ch 6 -3 Assignment 4 For assignment 4, complete Experiential Exercise 5A on page 210 of your text.  Change the name of your report to "Strategies for Google in 2008".  A three page (single-spaced) report is about 1300-1500 words, so if you are double-spacing your report, I expect about five to six pages.  Refer to the strategies listed in table 5-3 (page 173) and/or to Porter’s five generic strategies (figure 5-3 on page 189) when selecting and justifying strategies for Google.  This assignment will be due on March 3 at the beginning of class.  Make sure you provide the sources of your information (source attribution does not count towards the length requirement). Grading rubric  Quality of research (20 points) 3-5 quality sources (not web sites)  Quality of writing (20 points) Spelling, grammar, appropriate vocabulary and tone Directed wring not creative writing  In-Depth Analysis of existing and Planned Google Strategies (30 Points What worked, what didn’t, what will and what won’t  Recommendations for NEW Google strategies (30 points) Should be tied to strategies discussed in the chapter

4. Copyright 2007 Prentice Hall Ch 6 -4 Timeline (tentative) Today  Chapter 7 March 6  Chapter 8  Assignment 4 due  Mid-term assigned  Pick team assign cases March 10-14 Spring Break March 17  Chapter 9  How to present a case study March 20  Assignment 5 Due  Tony Case study One Apple Computer  Team work March 24  Midterm due  Team work March 27  Team Work March 31 First team case study

5. Copyright 2007 Prentice Hall Ch 6 -5 Cultural Aspects of Strategy Choice  Successful strategies depend on the degree of consistency with the firm’s culture Organization Culture Mach Test

6. Copyright 2007 Prentice Hall Ch 6 -6 Mach test Scoring Below 16: Never uses manipulation as a tool. 16 to 20: Rarely uses manipulation as a tool. 21 to 25: Sometimes uses manipulation as a tool. 26 to 30: Often uses manipulation as a tool. Over 30: Always uses manipulation as a tool.

7. Copyright 2007 Prentice Hall Ch 6 -7 Politics of Strategy Choice  Management hierarchy  Career aspirations  Allocation of scarce resources Politics in Organizations

8. Copyright 2007 Prentice Hall Ch 6 -8 Successful Strategists : Were found to let weakly supported ideas and proposals die through inaction and to establish additional hurdles or tests for strongly supported ideas considered unacceptable but not openly opposed.

9. Copyright 2007 Prentice Hall Ch 6 -9 Politics of Strategy Choice  Equifinality  Same outcomes by different means  Satisfying  Good results with acceptable strategy is better than excellent results with an unpopular strategy  Generalization  Less detail  Higher-order issues  Take care of the big stuff first  Political access on important issues for Middle Managers  Agency and political avenues for redress Political tactics for strategists

10. Copyright 2007 Prentice Hall Ch 6 -10 Governance Issues  Control & oversight over management  Adherence to legal prescriptions  Consideration of stakeholder interests  Advancement of stockholder rights Board of Directors (advisors) Roles & Responsibilities

11. Copyright 2007 Prentice Hall Ch 6 -11 Corporate Governance Issues 1.No more than 2 directors are current or former company executives 2.No directors do business with the company 3.Audit, compensation, and nominating committees made up of outside directors 4.Each director owns a large equity stake in the company 5.At least one outside director with extensive experience 6.Fully employed directors sit on no more than 4 boards – Retirees on no more than 7 7.Each director attends at lest 75% of all meetings Business Week’s “Principles of Good Governance”

12. Copyright 2007 Prentice Hall Ch 6 -12 Corporate Governance Issues 8.Board meets regularly without management present 9.Audit committee meets at least four times a year 10.Board is frugal on executive pay, diligent in CEO succession, and prompt to act when trouble arises 11.CEO is not also the Chairperson of the Board 12.Shareholders have considerable power and information to choose & replace directors 13.Stock options are considered a corporate expense 14.No interlocking directorships Business Week’s “principles of good governance”

13. Copyright 2007 Prentice Hall Ch 6 -13 Chapter 7 Implementing Strategies: Management & Operations Issues Strategic Management: Concepts & Cases 11 th Edition Fred David

14. Copyright 2007 Prentice Hall Ch 6 -14 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies Chapter 6 Implement Strategies: Mgmt Issues Chapter 7 Implement Strategies: Marketing, Fin/Acct, R&D, CIS Chapter 8 Measure & Evaluate Performance Chapter 9 Vision & Mission Chapter 2 Comprehensive strategic management model

15. Copyright 2007 Prentice Hall Ch 6 -15 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

16. Copyright 2007 Prentice Hall Ch 6 -16 -- Successful strategy formulation does not guarantee successful strategy implementation The Nature of Strategy Implementation

17. Copyright 2007 Prentice Hall Ch 6 -17 Formulation positions forces before the action Implementation manages forces during the action Nature of Strategy Implementation Formulation vs. Implementation

18. Copyright 2007 Prentice Hall Ch 6 -18 Formulation focuses on effectiveness Implementation focuses on efficiency Nature of Strategy Implementation Formulation vs. Implementation

19. Copyright 2007 Prentice Hall Ch 6 -19 Formulation is primarily an intellectual process Implementation is primarily an operational process Nature of Strategy Implementation Formulation vs. Implementation

20. Copyright 2007 Prentice Hall Ch 6 -20 Formulation requires good intuitive & analytical skills Implementation requires special motivational & leadership skills Nature of Strategy Implementation Formulation vs. Implementation

21. Copyright 2007 Prentice Hall Ch 6 -21 Formulation requires coordination among a few individuals Implementation requires coordination among many individuals Nature of Strategy Implementation Formulation vs. Implementation

22. Copyright 2007 Prentice Hall Ch 6 -22 Varies among different types & sizes of organizations Nature of Strategy Implementation Strategy Implementation

23. Copyright 2007 Prentice Hall Ch 6 -23 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

24. Copyright 2007 Prentice Hall Ch 6 -24 Shift in responsibility Nature of Strategy Implementation Management Perspectives Division or Functional Managers Strategists

25. Copyright 2007 Prentice Hall Ch 6 -25 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

26. Copyright 2007 Prentice Hall Ch 6 -26 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

27. Copyright 2007 Prentice Hall Ch 6 -27 Management Issues Annual Objectives -- -- Decentralized activity -- Directly involve all managers in the organization

28. Copyright 2007 Prentice Hall Ch 6 -28 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)

29. Copyright 2007 Prentice Hall Ch 6 -29 Management Issues Consistency of Annual Objectives --  Across hierarchical levels  Horizontally consistent  Vertically consistent

30. Copyright 2007 Prentice Hall Ch 6 -30 Management Issues Requirements of Annual Objectives  Measurable  Consistent  Reasonable  Challenging  Clear  Understood  Timely

31. Copyright 2007 Prentice Hall Ch 6 -31 Management Issues Annual Objectives Should State  Quantity  Quality  Cost  Time  Be Verifiable

32. Copyright 2007 Prentice Hall Ch 6 -32 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

33. Copyright 2007 Prentice Hall Ch 6 -33 Management Issues Policies -- -- Facilitate the solving or recurring problems & guide implementation of strategy

34. Copyright 2007 Prentice Hall Ch 6 -34 Management Issues Policies Establish --  Boundaries  Constraints  Limits

35. Copyright 2007 Prentice Hall Ch 6 -35 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

36. Copyright 2007 Prentice Hall Ch 6 -36 Management Issues Resource Allocation -- Central management activity that allows for the execution of strategy

37. Copyright 2007 Prentice Hall Ch 6 -37 Management Issues 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources 4 Types of Resources

38. Copyright 2007 Prentice Hall Ch 6 -38 Management Issues Managing Conflict -- Disagreement between two more parties on one or more issues

39. Copyright 2007 Prentice Hall Ch 6 -39 Management Issues  Conflict not always “bad”  No conflict may signal apathy  Can energize opposing groups to action  May help managers identify problems Managing Conflict

40. Copyright 2007 Prentice Hall Ch 6 -40 Management Issues  Avoidance  Diffusion  Confrontation Conflict Management & Resolution

41. Copyright 2007 Prentice Hall Ch 6 -41 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

42. Copyright 2007 Prentice Hall Ch 6 -42 Management Issues Matching Structure w/ Strategy -- Changes in strategy = Changes in structure

43. Copyright 2007 Prentice Hall Ch 6 -43 Management Issues  Structure dictates how objectives & policies will be established  Structure dictates how resources will be allocated Structure & Strategy

44. Copyright 2007 Prentice Hall Ch 6 -44 New administrative problems emerge New strategy Is formulated Organizational performance declines Organizational performance improves New organizational structure is established Chandler’s Strategy-Structure Relationship

45. Copyright 2007 Prentice Hall Ch 6 -45 Management Issues  Functional Structure  Divisional Structure  Strategic Business Unit Structure (SBU)  Matrix Structure Basic Forms of Structure

46. Copyright 2007 Prentice Hall Ch 6 -46 Functional Structure Most widely used  Simple and least expensive Groups activities by business function Disadvantages  Forces accountability to the top  Minimizes career development opportunities  Characterized by low employee morale, line/staff conflict, poor delegation of authority, inadequate planning for products and markets Often leads to short-term and narrow thinking

47. Copyright 2007 Prentice Hall Ch 6 -47 Divisional Structure Second most common type of structure Can be organized by:  Geographic area  Product or service  Customer  Process

48. Copyright 2007 Prentice Hall Ch 6 -48 Divisional Structure Advantages  Clear accountability  Higher employee morale  Creates career development opportunities for managers  Allows local control of situations  Leads to a competitive climate within an organization  Allows new businesses and products to be added easily

49. Copyright 2007 Prentice Hall Ch 6 -49 Divisional Structure Disadvantages  Can be costly to set up  Each division requires functional specialists  Duplication of staff services, facilities, and personnel  Managers must be well qualified  Requires an elaborate, headquarters-driven control system  Competition between divisions may become so intense that it is dysfunctional

50. Copyright 2007 Prentice Hall Ch 6 -50 Appropriateness of Divisional Structure Geographic area – Organizations whose strategies need to be tailored to fit the needs and characteristics of customers in different geographic areas Product or Service – When specific products or services need special emphasis Process – When each process (division) is responsible for generating revenues and profits

51. Copyright 2007 Prentice Hall Ch 6 -51 The Strategic Business Unit (SBU) In multidivisional organizations, an SBU structure can greatly facilitate strategy- implementation efforts. Advantages of improved coordination and accountability Disadvantages  Requires an additional layer of management  Role of the group vice president is often ambiguous

52. Copyright 2007 Prentice Hall Ch 6 -52

53. Copyright 2007 Prentice Hall Ch 6 -53 The Matrix Structure Most complex of all designs – requires both vertical and horizontal flows of authority and communication Disadvantages  Can result in higher overhead  Dual lines of budget authority  Dual sources of reward and punishment  Shared authority  Dual reporting channels  Need for an extensive and effective communication system

54. Copyright 2007 Prentice Hall Ch 6 -54 The Matrix Structure Advantages  Project objectives are clear  Many channels of communication  Workers can see visible results of their work  Shutting down a project can be accomplished relatively easily  Facilitates the use of specialized personnel, equipment, and facilities

55. Copyright 2007 Prentice Hall Ch 6 -55

56. Copyright 2007 Prentice Hall Ch 6 -56 Do’s and Don’ts in Developing Organizational Charts Do’s  Reserve the title CEO for the top executive  Use the title “chief” or “VP” or “manager” for functional business executives  Directly below the CEO it is best to have a COO and other “chief’ officers Don’ts  Use the title president for the top executive  Use the title president for functional business executives

57. Copyright 2007 Prentice Hall Ch 6 -57

58. Copyright 2007 Prentice Hall Ch 6 -58 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

59. Copyright 2007 Prentice Hall Ch 6 -59 Management Issues Restructuring -- Reducing the size of the firm – # of employees, divisions and/or units, # of hierarchical levels

60. Copyright 2007 Prentice Hall Ch 6 -60 Management Issues Restructuring  Downsizing  Rightsizing  Delayering

61. Copyright 2007 Prentice Hall Ch 6 -61 Management Issues Reengineering -- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed

62. Copyright 2007 Prentice Hall Ch 6 -62 Management Issues Reengineering  Process management  Process innovation  Process redesign

63. Copyright 2007 Prentice Hall Ch 6 -63 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

64. Copyright 2007 Prentice Hall Ch 6 -64 Management Issues Linking Pay/Performance to Strategies -- Pay for performance systems

65. Copyright 2007 Prentice Hall Ch 6 -65 Management Issues Linking Pay/Performance to Strategies  Dual bonus systems  Based on annual and long-term objectives  Profit sharing systems  Company makes money.. Employees make money  Gain sharing systems  Exceeding “agreed to” objectives

66. Copyright 2007 Prentice Hall Ch 6 -66 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?

67. Copyright 2007 Prentice Hall Ch 6 -67 http://www.forbes.com/static/execpay2005/totcomp.html

68. Copyright 2007 Prentice Hall Ch 6 -68 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

69. Copyright 2007 Prentice Hall Ch 6 -69 Management Issues Resistance to Change -- Single greatest threat to successful strategy implementation

70. Copyright 2007 Prentice Hall Ch 6 -70 Management Issues Resistance to Change -- Raises anxiety; fear concerning  Economic loss  Inconvenience  Uncertainty  Break in status-quo

71. Copyright 2007 Prentice Hall Ch 6 -71 Management Issues Change Strategies  Force Change Strategy  Just do it  Educative Change Strategy  This is why we are changing  Rational or Self-Interest Change Strategy  This is why change is good for you

72. Copyright 2007 Prentice Hall Ch 6 -72 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

73. Copyright 2007 Prentice Hall Ch 6 -73 Management Issues Natural Environment -- Wide appreciation for firms that “mend” rather than “harm” the environment

74. Copyright 2007 Prentice Hall Ch 6 -74 Management Issues Natural Environment – Environmental Strategies  Develop/acquire “green” businesses  Divesting environmental-damaging business  Low-cost producer through waste minimization & energy conservation

75. Copyright 2007 Prentice Hall Ch 6 -75 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

76. Copyright 2007 Prentice Hall Ch 6 -76 Management Issues Strategy-Supportive Culture -- Preserve, emphasize, & build upon aspects of existing culture that support new strategies

77. Copyright 2007 Prentice Hall Ch 6 -77 Formal statements of philosophy, charters, etc. used for recruitment and selection, 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:

78. Copyright 2007 Prentice Hall Ch 6 -78 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:

79. Copyright 2007 Prentice Hall Ch 6 -79 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

80. Copyright 2007 Prentice Hall Ch 6 -80 Management Issues Production/Operations Concerns -- Production processes typically constitute more than 70% of firm’s total assets

81. Copyright 2007 Prentice Hall Ch 6 -81 Management Issues Production/Operations Decisions  Plant size  Inventory/Inventory control  Quality control  Cost control  Technological innovation

82. Copyright 2007 Prentice Hall Ch 6 -82 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

83. Copyright 2007 Prentice Hall Ch 6 -83 Management Issues Human Resource Concerns -- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.

84. Copyright 2007 Prentice Hall Ch 6 -84 February 29, 2008 March 1, 2008

85. Copyright 2007 Prentice Hall Ch 6 -85 Management Issues Human Resource Strategic Responsibilities  Assessing staffing needs/costs  Developing performance incentives  ESOP’s  Child-care policies  Work-life balance issues

86. Copyright 2007 Prentice Hall Ch 6 -86 Diversity Issues CEOCompanyAge Meg WhitmaneBay49 Andrea JungAvon Products47 Anne MulcahyXerox52 Marjorie MagnerCitigroup56 Betsy HoldenKraft Foods49 Ann MooreAOL Time Warner57 Women CEO’s in U.S. 2005 (examples) http://money.cnn.com/magazines/fortune/fortune500/womenceos/

87. Copyright 2007 Prentice Hall Ch 6 -87 Benefits of a Diverse Workforce Improves corporate culture Improves employee morale Leads to a higher retention of employees Leads to easier recruitment of employees Decreases complaints and litigation Increases creativity Decreases interpersonal conflict

88. Copyright 2007 Prentice Hall Ch 6 -88 Benefits of a Diverse Workforce Enables the organization to move into emerging markets Improves client relations Increases productivity Improves the bottom line Maximizes brand identity Reduces training costs CostsBenefExSumEN.pdf