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Ch 7 -1
Chapter 7
Implementing Strategies: Management &
Operations Issues

Strategic Management:
Concepts & Cases
13
th
Edition
Fred David


Copyright 2011 Pearson Education, Inc.
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Ch 7 -2
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Ch 7 -3
Strategy Formulation vs.
Implementation
Strategy Formulation (SF)
Positioning forces
before the action
Focus on effectiveness
Primarily intellectual
Requires good intuitive
and analytical skills

Requires coordination
among a few people
Strategy Implementation
(SI)
Managing forces during
the action
Focus on efficiency
Primarily operational
Requires special
motivation and
leadership skills
Requires coordination
among many people

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Ch 7 -4
Shift in responsibility

Nature of Strategy Implementation
SI problems can arise because of the shift in responsibility,
especially if SF decisions come as a surprise to middle- and
lower-level managers. Therefore, it is essential to involve
divisional and functional managers in SF.
Divisional or
Functional
Managers
Strategists
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Ch 7 -5
Management Issues Central to
Strategy Implementation
Establish annual
objectives
Devise policies
Allocate resources
Alter existing
organizational structure
Restructure & reengineer
Revise reward & incentive
plans
Minimize resistance to
change
Match managers to strategy
Develop a strategy-
supportive culture
Adapt production/operations
processes
Develop an effective human
resources function
Downsize & furlough as
needed
Link performance & pay to
strategies
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Ch 7 -6
Purpose of Annual Objectives
Basis for resource allocation
Mechanism for management evaluation
Major instrument for monitoring progress
toward achieving long-term objectives
Establish priorities (organizational, divisional,
and departmental)
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Ch 7 -7
Resource Allocation
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
Four Types of Resources
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Ch 7 -8
Managing Conflict
Conflict a disagreement between two or more
parties. Interdependency of objectives and
competition for limited resources can cause
conflict.
Conflict not always bad
Lack of conflict may signal apathy
Can energize opposing groups to action
May help managers identify problems
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Ch 7 -9
MATCHING STRUCTURE WITH
STRATEGY
Changes in strategy often require changes in the way an
organization is structured because: (1) structure largely dictates how
objectives and policies will be established (e.g., objectives and
policies established under a geographic organizational structure are
couched in geographic terms) and (2) structure dictates how
resources will be allocated (e.g., if an organizations structure is
based on customer groups, then resources will be allocated in that
manner).
Structure should be designed to facilitate the strategic pursuit of a
firm and, therefore, follow strategy.
When a firm changes its strategy, the existing organizational
structure may become ineffective. For example, new strategies to
reduce payroll costs may require a change in span of control.

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Ch 7 -10
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Ch 7 -11
Basic Forms of Structure
Functional Structure
Divisional Structure
Strategic Business Unit Structure
(SBU)
Matrix Structure
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Ch 7 -12
Functional Structure
Groups tasks and activities by business
function (e.g., production, finance,
marketing, R&D, HR, IT, etc.).
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Ch 7 -13
Functional Structure
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Ch 7 -14
Divisional Structure
Can be organized in one of four
ways:
By geographic area
By product or service
By customer
By process
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Ch 7 -15
Divisional Structure
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Ch 7 -16
Strategic Business Unit Structure
(SBU)
Groups similar divisions into
strategic business units and
delegates authority and
responsibility for each unit to a
senior executive who reports
directly to the chief executive
officer.
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Ch 7 -17
Matrix Structure
The most complex of all structures
because it depends upon both
vertical and horizontal flows of
authority and communication.
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Ch 7 -18
Matrix Structure
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Ch 7 -19
Restructuring
Restructuring - reducing the size of an organization.
Also called:
Downsizing
Rightsizing
Delayering
These methods involve, respectively, reducing the
number of employees, number of divisions, and number
of hierarchical levels in a firms organizational structure.
Reducing the size of an organization is intended to
improve its efficiency and effectiveness.

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Ch 7 -20
Creating a Strategy-Supportive Culture
1. Formal statements of organizational
philosophy
2. Design of physical spaces
3. Deliberate role modeling, teaching,
and coaching
4. Explicit reward and status system
5. Stories, legends, myths, and parables
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Ch 7 -21
Creating a Strategy-Supportive Culture
6. What leaders pay attention to
7. Leader reactions to critical incidents and
crises
8. Organizational design and structure
9. Organizational systems and procedures
10. Criteria for recruitment, selection,
promotion, leveling off, retirement, and
excommunication of people
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Ch 7 -22
Production/Operations Decision
Examples
Plant size
Inventory / Inventory control
Quality control
Cost control
Technological innovation
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Ch 7 -23
Human Resource Concerns
Assessing staffing needs and costs.
Selection Methods.
Employee Training.
Motivating Employees Developing
Performance Incentives; Work-Life
Balance Issues; etc.
Selecting Appropriate Leadership
Styles.