1. Chapter 7 Implementing Strategies: Management & Operations Issues
Strategic Management: Concepts & Cases
Fred David

2. The Nature of Strategy Implementation
Chapter Outline
The Nature of Strategy Implementation
Annual Objectives
Policies

3. Chapter Outline (cont’d)
Resource Allocation
Managing Conflict
Matching Structure with Strategy

4. Chapter Outline (cont’d)
Restructuring, Reengineering & E-Engineering
Linking Performance & Pay to Strategies
Managing Resistance to Change

5. Chapter Outline (cont’d)
Managing the Natural Environment
Creating a Strategy-Supportive Culture
Production/Operations Concerns When Implementing Strategies

6. Chapter Outline (cont’d)
Human Resource Concerns When Implementing Strategies

7. The Nature of 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
Even the most technically perfect strategic plan will serve little purpose if it is not implemented
Implementing strategy affects an organization from top to bottom

8. Nature of Strategy Implementation
Formulation vs. Implementation
Formulation positions forces before the action
Implementation manages forces during the action

9. Nature of Strategy Implementation
Formulation vs. Implementation
Formulation focuses on effectiveness
Implementation focuses on efficiency

10. Nature of Strategy Implementation
Formulation vs. Implementation
Formulation primarily an intellectual process
Implementation primarily an operational process

11. Nature of Strategy Implementation
Formulation vs. Implementation
Formulation requires good intuitive & analytical skills
Implementation requires special motivational & leadership skills

12. Nature of Strategy Implementation
Formulation vs. Implementation
Formulation requires coordination among a few individuals
Implementation requires coordination among many individuals

13. Nature of Strategy Implementation
Varies among different types & sizes of organizations

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

15. Organizational structure
Management Issues
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives

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

17. Management Issues
Annual Objectives --
-- Decentralized activity
-- Directly involve all managers in the organization

18. Purpose of Annual Objectives --
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)

19. Consistency of Annual Objectives --
Management Issues
Consistency of Annual Objectives --
Across hierarchical levels
Horizontally consistent
Vertically consistent

20. Annual Objectives Should State
Management Issues
Annual Objectives Should State
Quantity
Quality
Cost
Time
Be Verifiable

21. Management Issues
Policies --
-- Facilitate the solving or recurring problems & guide implementation of strategy

22. Management Issues
Policies Establish --
Boundaries-
Constraints
Limits

23. Management Issues
Resource Allocation
-- Central management activity that allows for the execution of strategy

24. Management Issues
Managing Conflict
-- Disagreement between two more parties on one or more issues

25. Management Issues Managing Conflict Conflict not always “bad”
No conflict may signal apathy
Can energize opposing groups to action
May help managers identify problems

26. Management Issues Conflict Management & Resolution Avoidance Defusion
Confrontation

27. Management Issues
Matching Structure / Strategy
Classical view:
-- Changes in strategy Changes in structure

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

29. Management Issues Structure & Strategy Our view:
Structure dictates how objectives & policies will be established
Structure dictates how resources will be allocated

30. Management Issues Structure & Strategy
Structure can shape the choice of strategies
More importantly, to determine what types of structural changes are needed to implement new strategies

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

32. Management Issues
Restructuring (downsizing)
-- Reducing the size of the firm –of employees, divisions, and/or units, of hierarchical levels to improve both efficiency and effectiveness

33. Management Issues
Restructuring
Downsizing
Rightsizing
Delayering

34. Management Issues
Reengineering
-- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed.

35. Management Issues
Reengineering
Process management
Process innovation
Process redesign

36. Management Issues
Reengineering is characterized by many tactical (short- term, business-function-specific ) decisions
Restructuring is characterized by strategic (long-term, affecting all business functions) decisions

37. -- Pay for performance systems
Management Issues
Linking Pay/Performance to Strategies
-- Pay for performance systems

38. Profit sharing systems Gain Sharing systems
Management Issues
Linking Pay/Performance to Strategies
Dual bonus systems
Profit sharing systems
Gain Sharing systems

39. -- Single greatest threat to successful strategy implementation
Management Issues
Resistance to Change
-- Single greatest threat to successful strategy implementation

40. -- Raises anxiety; fear concerning
Management Issues
Resistance to Change
-- Raises anxiety; fear concerning
Economic loss
Inconvenience
Uncertainty
Break in status-quo

41. Educative Change Strategy Rational or Self-Interest Change Strategy
Management Issues
Change Strategies
Force Change Strategy
Educative Change Strategy
Rational or Self-Interest Change Strategy

42. Management Issues
Natural Environment
-- Wide appreciation for firms that “mend” rather than “harm” the environment

43. Management Issues Natural Environment – Environmental Strategies
Develop/acquire “green” businesses
Divesting environmental-damaging business
Low-cost producer through waste minimization & energy conservation

44. Management Issues
Strategy-Supportive Culture
-- Preserve, emphasize, & build upon aspects of existing culture that support new strategies
-- changing a firm’s culture to fit a new strategy is usually more effective than changing a strategy to fit an existing culture

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

46. Management Issues
Human Resource Concerns
-- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.

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