CHAPTER 9 Strategy Implementation Organizing for Action STRATEGIC

CHAPTER 9 Strategy Implementation: Organizing for Action STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN Prentice Hall, Inc. © 2006 J. DAVID HUNGER 9 -1

Strategy Implementation --Sum total of activities & choices required for strategic plan execution through programs, budgets, and procedures Prentice Hall, Inc. © 2006 9 -2

Strategy Implementation Key Implementation Questions – –Who carries out strategic plan? –What needs to be done for alignment w/strategy? –How is work coordinated? Prentice Hall, Inc. © 2006 9 -3

Strategy Implementation 10 Top Implementation Problems (i. e. excuses) – Took longer than planned • (Problem or result? ) – Unanticipated major problems – Uncontrollable external factors – Competing activities and crises • (It’s Not My Fault!) – Employees not capable • (Duh!) – – Lack of training Ineffective coordination Inadequate leadership Tasks/activities poorly defined • (Those incompetent middle managers…) – Inadequate information systems • (Those incompetent IT Guys…) Prentice Hall, Inc. © 2006 9 -4

Strategy Implementation Who carries out strategic plan? Everyone! Prentice Hall, Inc. © 2006 9 -5

Strategy Implementation Programs – Budgets – Procedures Make a strategy Action oriented –Matrix of change – Program Evaluation 1. Compares Existing versus Target Practices 2. Identifies Practices as complementary or interfering a) Between existing and target b) Among existing or target 3. Evaluates each Practice based on relative importance in accomplishing the strategy 4. Identify problem areas and conflicts Prentice Hall, Inc. © 2006 9 -6

The Matrix of Change Prentice Hall, Inc. © 2006 9 -7

Programs, Budgets and Procedures Budget Detailed costs associated with each Program Procedures Activities that must be carried out to complete the Programs Standard Operating Procedures (SOP) Prentice Hall, Inc. © 2006 9 -8

Strategy Implementation Synergy The ROI of each division is greater than if they were independent separate companies Achieving Synergy – (6 forms) –Shared know-how –Coordinated strategies –Shared tangible resources –Economies of scale or scope –Pooled negotiating power –New business creation Prentice Hall, Inc. © 2006 9 -9

Strategy Implementation STRUCTURE FOLLOWS STRATEGY (Chandler) –New strategy is created –New administrative problems emerge –Economic performance declines –New appropriate structure is invented –Profit returns to previous level Centralization (Control) Prentice Hall, Inc. © 2006 Decentralization (Autonomy) 9 -10

Strategy Implementation Stages of Corporate Development – –Stage I: Simple structure Entrepreneur –Stage II: Functional structure Team of functional specialists –Stage III: Divisional structure Many products/industries –Stage IV: Beyond SBU’s Matrix/Network based on projects Prentice Hall, Inc. © 2006 9 -11

Strategy Implementation Blocks to Changing Stages – Entrepreneur tendencies –Loyalty to comrades –Task oriented –Single-mindedness –Working in isolation Prentice Hall, Inc. © 2006 9 -12

Organizational Life Cycle Prentice Hall, Inc. © 2006 9 -13

Changing Structural Characteristics of Modern Organizations Prentice Hall, Inc. © 2006 9 -14

Strategy Implementation Advanced Types of Organizational Structures – –Matrix • Temporary cross-functional task forces (J&J) • Product/brand management (P&G) • Mature matrix (Aerospace) –Network structure (virtual organization) • Supply Chain Management & Communications –Cellular organization • Self managed teams Prentice Hall, Inc. © 2006 9 -15

Network Structure Prentice Hall, Inc. © 2006 9 -16

Strategy Implementation Business Process Reengineering (BPR) Principles (Hammer) – – Organize around outcomes Those that use the output perform the process Integrate information processing into real work Treat geographically dispersed resources as centralized – Link parallel activities – Put decision point where work is performed – Capture information once at it’s source Prentice Hall, Inc. © 2006 9 -17

Strategy Implementation Six Sigma – DMAIC Methodology –Define –Measure –Analyze –Improve –Control Sigma Performance Levels -- One To Six Sigma Level Defects Per Million Opportunities (DPMO) 1 690, 000 2 308, 537 3 66, 807 4 6, 210 5 233 6 3. 4 Real-World Performance Levels Situation/Example In 1 Sigma World In 3 Sigma World In 6 Sigma World Pieces of your mail lost per year [1, 600 per year] 1, 106 107 <1 Number of empty coffee pots at work (who didn't fill the coffee pot again? ) [680 per year] 470 45 <1 Number of telephone disconnections [7, 000 talk minutes] 4, 839 467 0. 02 Erroneous business orders [250, 000 per year] 172, 924 16, 694 0. 9 Prentice Hall, Inc. © 2006 9 -18

Strategy Implementation Job design to implement strategy – –Job enlargement –Job rotation –Job enrichment –Job characteristics model • Combine tasks to increase variety • Form natural work units - make workers responsible • Establish client relationships • Vertically load the job – authority & responsibility • Open feedback channels Prentice Hall, Inc. © 2006 9 -19

Strategy Implementation International Issues –Multi-National Corporation’s Multi-Domestic versus Global International Development Stages– –Domestic company w/export division –Domestic company w/int’l division –MNC w/multi-domestic emphasis –MNC w/global emphasis Prentice Hall, Inc. © 2006 9 -20

Geographic Area Structure Centralization vs. Decentralization– –Product-group structure –Geographic-area structure Prentice Hall, Inc. © 2006 9 -21

CHAPTER 9 Strategy Implementation: Organizing for Action STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN Prentice Hall, Inc. © 2006 J. DAVID HUNGER 9 -22