Chapter 7 Implementing Strategies Management Operations Issues Strategic

Chapter 7 Implementing Strategies: Management & Operations Issues Strategic Management: Concepts & Cases 13 th Edition Fred David Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -1

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -2

Strategy Formulation vs. Implementation n n Strategy Formulation Positioning forces before the action Focus on effectiveness Primarily intellectual Requires good intuitive and analytical skills Requires coordination among a few people Strategy Implementation n Managing forces during the action n Focus on efficiency n Primarily operational n Requires special motivation and leadership skills n Requires coordination among many people Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -3

Nature of Strategy Implementation Management Perspectives n Shift in responsibility Strategists Divisional or Functional Managers Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -4

Management Issues Central to Strategy Implementation n n n Establish annual objectives Devise policies Allocate resources Alter existing organizational structure Restructure & reengineer Revise reward & incentive plans Minimize resistance to change n n n Match managers to strategy Develop a strategysupportive culture Adapt production/operations processes Develop an effective human resources function Downsize & furlough as needed Link performance & pay to strategies Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -5

Purpose of Annual Objectives n. Basis for resource allocation n. Mechanism for management evaluation n. Major instrument for monitoring progress toward achieving long-term objectives n. Establish priorities (organizational, divisional, and departmental) Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -6

Annual Objectives n Horizontal consistency of objectives n Vertical consistency of objectives Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -7

Policies n Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -8

Resource Allocation Four Types of Resources 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -9

Managing Conflict not always “bad” n Lack of conflict may signal apathy n Can energize opposing groups to action n May help managers identify problems Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -10

Managing Conflict n Approaches for managing and resolving conflict q Avoidance q Defusion q Confrontation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -11

Matching Structure with Strategy Structure dictates how objectives and policies will be established n Structure dictates how resources will be allocated n Changes in strategy often lead to changes in organizational structure n Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -12

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -13

Basic Forms of Structure n Functional Structure n Divisional Structure n Strategic Business Unit Structure (SBU) n Matrix Structure Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -14

Functional Structure n Group tasks and activities by business function Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -15

Functional Structure Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -16

Divisional Structure n Can be organized in one of four ways: By geographic area q By product or service q By customer q By process q Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -17

Divisional Structure Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -18

Strategic Business Unit Structure (SBU) n Group similar divisions into strategic business units and delegate authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -19

Matrix Structure n The most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -20

Matrix Structure Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -21

Restructuring, Reengineering, and -engineering n. Restructuring q Downsizing q Rightsizing q Delayering E is called Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -22

Restructuring, Reengineering, and E-engineering n. Cornerstones of Reengineering q Decentralization q Reciprocal interdependence q Information sharing Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -23

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? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -24

Managing Resistance to Change Force change strategy n Educative change strategy n Rational or self-interest change strategy n Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -25

Creating a Strategy-Supportive Culture 1. 2. 3. 4. 5. Formal statements of organizational philosophy Design of physical spaces Deliberate role modeling, teaching, and coaching Explicit reward and status system Stories, legends, myths, and parables Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -26

Creating a Strategy-Supportive Culture 6. 7. 8. 9. 10. What leaders pay attention to Leader reactions to critical incidents and crises Organizational design and structure Organizational systems and procedures Criteria for recruitment, selection, promotion, leveling off, retirement, and “excommunication” of. Education, people Copyright © 2011 Pearson Inc. Ch 7 -27 Publishing as Prentice Hall

Production/Operations Concerns n. Production processes typically constitute more than 70% of a firm’s total assets Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -28

Production/Operations Decision Examples n. Plant size n. Inventory n. Quality n. Cost / Inventory control n. Technological innovation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -29

Human Resource Concerns n. Assessing staffing needs/costs n. Furloughs n. Developing performance incentives n. ESOPs n. Work–life balance issues n. Matching managers with strategy Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -30

Corporate Wellness Programs n Wellness of employees has become a strategic issue for many firms Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -31