1. Lecture 17 Implementing Strategies: Management Issues

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

3. Managing Conflict Conflict – Disagreement between two or more parties on one or more issues

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

5. Managing Conflict Conflict Management and Resolution – Avoidance – Defusion – Confrontation

6. 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

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

8. 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

9. 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

10. 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

11. Restructuring Also called – – Downsizing – Rightsizing – Delayering

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

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

14. Reengineering Also called – – Process management – Process innovation – Process redesign

15. Reengineering Reengineering – Concerned more with employee and customer well-being than shareholder well-being

16. Linking Performance and Pay to Strategies Most companies practicing pay-for- performance

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

18. 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?

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

20. Managing Resistance to Change Resistance to change – – Single greatest threat to successful strategy implementation

21. Change Strategies Force Change Strategy Educative Change Strategy Rational or Self-Interest Change Strategy

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

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

24. 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

25. 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

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

27. Key Terms Annual objectives Avoidance Benchmarking Bonus system Conflict Confrontation Culture Defusion Delayering

28. Key Terms Decentralized structure Divisional structure Downsizing Educative change strategy Employee Stock Ownership Plan (ESOP)

29. Key Terms Establishing annual objectives Force change strategy Functional structure Gain sharing Horizontal consistency of objectives Just in time Matrix structure Policy Profit sharing

30. Key Terms Rational change strategy Reengineering Resistance to change Resource allocation Restructuring Rightsizing Self-interest change Triangulation Vertical consistency of objectives

31. Thank You