1. CHAPTER 9 Strategy Implementation: Organizing for Action
STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
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2. STRATEGY IMPLEMENTATION --Sum total of activities & choices
required for strategic plan execution
It is a process by which;
objectives + strategies + policies
are put into action through the development of;
programs + budgets + procedures
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3. The most mentioned problems related to poor strategy implementation:
Poor communication
Unrealistic synergy expectations
Structural problems
Missing master plan
Lost momentum
Lack of top management commitment
Unclear strategic fit
Research; A.T.Kearney
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4. Strategy Implementation
The most frequently experienced problems related to poor strategy implementation:
Implementation took more time than originally planned
Unanticipated major problems arose
Activities were ineffectively coordinated
Competing activities and crises took attention away from implementation
The involved employees had insufficient capabilities to perform their jobs
Lover level employees were inadequately trained
Uncontrollable external environmental factors created problems
Departmental managers provided inadequate leadership and direction
Key implementation tasks and activities were poorly defined
The information system inadequately monitored activities
Research; L.D.Alexander
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5. Who carries out strategic plan?
Strategy Implementation
Key Implementation Questions –
Who carries out strategic plan?
What needs doing for alignment w/ strategy?
How is work coordinated?
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6. everyone in the organization
Strategy Implementation
Who carries out strategic plan ?
The implementers are;
everyone in the organization
Unless changes in mission, objectives, strategies and policies and their importance to the company are communicated clearly to all operational managers, there can be a lot of resistance and foot dragging.
This is the reason why involving people from all organizational levels in the formulation and implementation of strategy tends to result in better organizational performance.
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7. Strategy Implementation
WHAT MUST BE DONE ?
The managers of divisions and functional areas work with their fellow managers to develop;
Programs
Budgets, and
Procedures
to implement strategy
They also work to achieve synergy among the divisions and functional areas in order to establish and maintain a company’s distinctive competence
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8. The purpose of a program is to make a strategy “Action oriented”
Strategy Implementation
Programs –
The purpose of a program is to make a strategy “Action oriented”
Matrix of change
Feasibility
Sequence of execution
Location
Pace & nature of change (evolution or revolution)
Stakeholder evaluations
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9. The Matrix of Change
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10. Strategy Implementation
Budgets –
Planning a budget is the last real check a corporation has on the feasibility of its selected strategy
Standard Operating Procedures (SOP’s)
Organizational Routines
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11. Coordinated strategies Shared tangible resources
Strategy Implementation
Achieving Synergy –
Shared know-how
Coordinated strategies
Shared tangible resources
Economies of scale or scope
Pooled negotiating power
New business creation
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12. Organizing Staffing Directing Controlling
Strategy Implementation
How is strategy to be implemented ?
Organizing
Staffing
Directing
Controlling
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13. Any change in corporate strategy is very likely to require
Strategy Implementation
ORGANIZING
Any change in corporate strategy is very likely to require
some sort of change
in the way
an organization is structured
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14. Organizational Structure
Strategy Implementation
Organizational Structure
The formal arrangement of jobs within an organization.
Organizational Design
A process involving decisions about six key elements:
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
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15. Structure follows strategy – New strategy is created
Strategy Implementation
Structure follows strategy –
New strategy is created
New administrative problems emerge
Economic performance declines
New appropriate structure is invented
Profit returns to previous level
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16. Departmentalization by Type
Strategy Implementation
Departmentalization by Type
Functional
Grouping jobs by functions performed
Product
Grouping jobs by product line
Geographical
Grouping jobs on the basis of territory or geography
Process
Grouping jobs on the basis of product or customer flow
Customer
Grouping jobs by type of customer and needs
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17. Stages of Corporate Development –
Strategy Implementation
Stages of Corporate Development –
Stage I: Simple structure (crisis of leadership)
Stage II: Functional structure (crisis of autonomy)
Stage III: Divisional structure (crisis of control)
SBU’s; performance-and-results-oriented-control
Stage IV: Beyond SBU’s (red tape crisis)
Company becomes so large and complex that it tends to become relatively inflexible
Procedures takes precedence over problem solving
PROPOSED SOLUTION:
MATRIX OR NETWORK ORGANIZATION
(pressure-cooker crisis)
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18. Loyalty to comrades Task oriented Single-mindedness
Strategy Implementation
Blocks to Changing Stages –
Loyalty to comrades
Task oriented
Single-mindedness
Working in isolation
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19. Organizational Life Cycle
Even though a company’s strategy may still be sound, its aging structure, culture, and processes may be such that they prevent the strategy from being executed properly.
Its core competencies become
core rigidities that are no longer adapt to changing conditions – thus the company moves into decline.
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20. Changing Structural Characteristics of Modern Organizations
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21. Advanced Types of Organizational Structures –
Strategy Implementation
Advanced Types of Organizational Structures –
Matrix
Temporary cross-functional task forces
Product/brand management
Mature matrix
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22. Independence - Interdependence
Strategy Implementation
Advanced Types of Organizational Structures –
Network structure (virtual organization)
Cellular organization
Cells:
self managing teams, autonomous business units, etc
…can operate alone – can interact with other cells
The combination of
Independence - Interdependence
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23. Network Structure
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24. “If this were a new company, How would we run this place ?”
Strategy Implementation
Reengineering
Radical redesign of business processes to achieve major gains in;
Cost,
Service, or
Time
“If this were a new company,
How would we run this place ?”
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25. Six Sigma – (3,4 defects per million)
Strategy Implementation
Six Sigma – (3,4 defects per million)
Define
Measure
Analyze (pinpoint where things are going wrong)
Improve
Establish controls
Lean Six Sigma –
Lean Manufacturing + Six Sigma
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26. Job design to implement strategy –
Strategy Implementation
Job design to implement strategy –
Job enlargement
(combining tasks)
Job rotation
(moving workers through other jobs)
Job enrichment
(altering jobs for more autonomy and
control by the worker)
Job characteristics model
(combination of the above)
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27. MNC’s (multidomestic – global)
Strategy Implementation
International Issues –
MNC’s (multidomestic – global)
For an MNC to be considered global, it must manage its worldwide operations as if they were totally interconnected.
International Strategic Alliances
Partners contribute key strengths but protect core competencies.
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28. International Development Stages– Domestic company
Strategy Implementation
International Development Stages–
Domestic company
Domestic company w/export division
Domestic company w/int’l division
MNC w/multidomestic emphasis
MNC w/global emphasis
(Any one corporation can be at different stages simultaneously, with different products in different markets at different levels.)
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29. Centralization vs. Decentralization
Strategy Implementation
Centralization vs. Decentralization
Centralization
The degree to which decision-making is concentrated at a single point in the organizations.
Organizations in which top managers make all the decisions and lower-level employees simply carry out those orders.
Decentralization
Organizations in which decision-making is pushed down to the managers who are closest to the action.
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30. Centralization vs. Decentralization
Strategy Implementation
Centralization vs. Decentralization
How to organize authority centrally so that it operates as a vast interlocking system that achieves synergy
and at the same time
decentralize authority so that local managers can make the decisions necessary to meet the demands of the local market or host government
Product-group structure
Geographic-area structure
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31. “think globally – act locally”
Geographic Area Structure
Simultaneous pressures for decentralization to be locally responsive and centralization to be maximally effective are causing interesting structural adjustments.
“think globally – act locally”
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