Chapter 7 Implementing Strategies Management Operations Issues Strategic

Chapter 7 Implementing Strategies: Management & Operations Issues Strategic Management: Concepts & Cases 11 th Edition Fred David Copyright 2007 Prentice Hall 1

Objectives n n n n 1. Explain why strategy implementation is more difficult than strategy formulation. 2. Discuss the importance of annual objectives and policies in achieving organizational commitment for strategies to be implemented. 3. Explain why organizational structure is so important in strategy implementation. 4. Compare and contrast restructuring and reengineering. 5. Describe the relationships between production/operations and strategy implementation. 6. Explain how a firm can effectively link performance and pay to strategies. 7. Discuss employee stock ownership plans (ESOPs) as a strategicmanagement concept. 8. Describe how to modify an organizational culture to support new strategies. Copyright 2007 Prentice Hall 2

Nature of Strategy Implementation Formulation vs. Implementation n Formulation focuses on effectiveness n Implementation focuses on efficiency Copyright 2007 Prentice Hall 3

Nature of Strategy Implementation Management Perspectives n Shift in responsibility Strategists Copyright 2007 Prentice Hall Division or Functional Managers 4

Management Issues Annual Objectives Policies Management Issues Resources Organizational structure Restructuring Rewards/Incentives Copyright 2007 Prentice Hall 5

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

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) Copyright 2007 Prentice Hall 7

Management Issues 4 Types of Resources 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources Copyright 2007 Prentice Hall 8

Management Issues Managing Conflict n § Conflict not always “bad” § No conflict may signal apathy Conflict Management and Resolution § Can energize opposing groups to action § May help managers identify problems Copyright 2007 Prentice Hall q q q Avoidance Defusion Confrontation 9

Managing Conflict Management and Resolution q q q Avoidance Defusion Confrontation Avoidance includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals (or groups). Defusion can include playing down differences between conflicting parties while accentuating similarities and common interests, compromising so that there is neither a clear winner nor loser, resorting to majority rule, appealing to a higher authority, or redesigning present positions. Confrontation is exemplified by exchanging members of conflicting parties so that each can gain an appreciation of the other’s point of view, or holding a meeting at which conflicting parties present their views and work through 10 their differences.

Chandler’s Strategy-Structure Relationship New strategy Is formulated Organizational performance improves Copyright 2007 Prentice Hall New administrative problems emerge Organizational performance declines New organizational structure is established 11

Management Issues Basic Forms of Structure § Functional Structure § Divisional Structure § Strategic Business Unit Structure (SBU) § Matrix Structure Copyright 2007 Prentice Hall 12

Management Issues Restructuring §Downsizing §Rightsizing §Delayering Copyright 2007 Prentice Hall 13

Management Issues Reengineering §Process management §Process innovation §Process redesign Copyright 2007 Prentice Hall 14

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? 15

Management Issues Production/Operations Concerns -- Production processes typically constitute more than 70% of the firm’s total assets Copyright 2007 Prentice Hall 16

Management Issues Production/Operations Decisions §Plant size §Inventory/Inventory control §Quality control §Cost control §Technological innovation Copyright 2007 Prentice Hall 17

Management Issues Human Resource Strategic Responsibilities §Assessing staffing needs/costs §Developing performance incentives §ESOP’s §Child-care policies §Work-life balance issues Copyright 2007 Prentice Hall 18

Diversity Issues Women CEO’s in U. S. 2005 (examples) CEO Company Age Meg Whitman e. Bay 49 Andrea Jung Avon Products 47 Anne Mulcahy Xerox 52 Marjorie Magner Citigroup 56 Betsy Holden Kraft Foods 49 Ann Moore AOL Time Warner 57 Copyright 2007 Prentice Hall 19

Benefits of a Diverse Workforce n n n n 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 Copyright 2007 Prentice Hall 20

Benefits of a Diverse Workforce n n n Enables the organization to move into emerging markets Improves client relations Increases productivity Improves the bottom line Maximizes brand identity Reduces training costs Copyright 2007 Prentice Hall 21