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Implementing Strategies:

Management Issues

Pretend that every single person you


meet has a sign around his or her neck
that says, Make me feel important.

-- Mary Kay Ash, CEO of Mary Kay, Inc.

Ch 7-1
Fred R. David
Prentice Hall
Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and


strategy implementation

Formulation is positioning forces before the action

Implementation is managing forces during the action

Ch 7-2
Fred R. David
Prentice Hall
Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and


strategy implementation

Formulation focuses on effectiveness

Implementation focuses on efficiency

Ch 7-3
Fred R. David
Prentice Hall
Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and


strategy implementation

Formulation is primarily an intellectual process

Implementation is primarily an operational process

Ch 7-4
Fred R. David
Prentice Hall
Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and


strategy implementation

Formulation requires good intuitive and analytical


skills

Implementation requires special motivation and


leadership skills

Ch 7-5
Fred R. David
Prentice Hall
Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and


strategy implementation

Formulation requires coordination among a few


individuals

Implementation requires coordination among many


persons

Ch 7-6
Fred R. David
Prentice Hall
Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Strategy implementation

Varies among different types and sizes


of organizations

Ch 7-7
Fred R. David
Prentice Hall
Implementing Strategies:
Strategy Analysis & Choice
Management Issues
Strategy implementation Actions

Altering sales territories


Adding new departments
Closing facilities
Hiring new employees
Cost-control procedures
Changing advertising strategies
Building new facilities
Ch 7-8
Fred R. David
Prentice Hall
Management Perspectives

Formulation to Implementation
transition

Shift in responsibility
From strategists to division and functional
managers

Ch 7-9
Fred R. David
Prentice Hall
Annual Objectives

Decentralized activity
Involves all managers in the firm

Ch 7-10
Fred R. David
Prentice Hall
Annual Objectives

1. Basis for allocating resources


2. Primary mechanism for evaluating
managers
3. Major instrument for monitoring
progress toward long-term objectives
4. Establish organizational, divisional, and
departmental priorities

Ch 7-11
Fred R. David
Prentice Hall
Annual Objectives

Horizontal consistency of objectives

Vertical consistency of objectives

Ch 7-12
Fred R. David
Prentice Hall
Annual Objectives

Objectives should state

Quantity
Quality
Cost
Time

Ch 7-13
Fred R. David
Prentice Hall
Policies

Policies facilitate solving recurring


problems and guide the implementation
of strategy

Ch 7-14
Fred R. David
Prentice Hall
Policies

Policies set

Boundaries
Constraints
Limits

Ch 7-15
Fred R. David
Prentice Hall
Policies
Example Issues requiring management policy --

To offer extensive or limited management


development workshops and seminars
To centralize or decentralize employee-training
activities
To recruit through employment agencies, college
campuses, and/or newspapers
To promote from within or hire from the outside
To establish a high- or low-safety stock of
inventory
To buy lease, or rent new production equipment
Ch 7-16
Fred R. David
Prentice Hall
Resource Allocation

Resource Allocation

A central management activity that allows


for strategy execution

Ch 7-17
Fred R. David
Prentice Hall
Resource Allocation

Four types of resources

1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources

Ch 7-18
Fred R. David
Prentice Hall
Managing Conflict

Conflict

Disagreement between two or more parties


on one or more issues

Ch 7-19
Fred R. David
Prentice Hall
Managing Conflict

Conflict is not always bad


Absence of conflict
Signal indifference or apathy
Can energize opposing groups to action
May help managers identify problems

Ch 7-20
Fred R. David
Prentice Hall
Managing Conflict

Conflict Management and Resolution

Avoidance
Defusion
Confrontation

Ch 7-21
Fred R. David
Prentice Hall
Matching Structure with Strategy

Changes in Strategy Changes in Structure

1. Structure largely dictates how objectives and


policies will be established.

2. Structure dictates how resources will be


allocated
Ch 7-22
Fred R. David
Prentice Hall
Chandlers Strategy-Structure
Relationship

Organizational
New strategy New administrative
performance
Is formulated problems emerge
declines

Organizational
New organizational
performance
structure is established
improves

Ch 7-23
Fred R. David
Prentice Hall
Basic Forms of Structure

1. Functional Structure
Groups tasks and activities by business
function

2. Divisional Structure
Decentralized and organized by geography,
product, customer, or process

Ch 7-24
Fred R. David
Prentice Hall
Basic Forms of Structure

3. Strategic Business Unit Structure (SBU)


Groups similar divisions; delegates authority
and responsibility to SBU executive

4. Matrix Structure
Most complex of all designs. Depends upon
both vertical and horizontal flows of authority
and communication

Ch 7-25
Fred R. David
Prentice Hall
Restructuring
Restructuring

Reducing the size of the firm in terms of


number of employees, divisions, or
units, and the number of hierarchical
levels in the firms organizational
structure

Ch 7-26
Fred R. David
Prentice Hall
Restructuring

Also called

Downsizing
Rightsizing
Delayering

Ch 7-27
Fred R. David
Prentice Hall
Restructuring

Employed when ratios out of line with


benchmarked competitors

Primary benefit sought is cost reduction

Ch 7-28
Fred R. David
Prentice Hall
Reengineering

Reengineering

Involves reconfiguring or redesigning work,


jobs, and processes to improve cost,
quality, service and speed.

Ch 7-29
Fred R. David
Prentice Hall
Reengineering

Also called

Process management
Process innovation
Process redesign

Ch 7-30
Fred R. David
Prentice Hall
Linking Performance and Pay
to Strategies

Most companies practicing pay-for-


performance

Ch 7-31
Fred R. David
Prentice Hall
Linking Performance and Pay
to Strategies
Dual bonus system becoming more common
Based on both annual objectives and long-term
objectives

Profit Sharing
Incentive compensation used by 30% of companies

Gain Sharing
Performance targets set for employees or
departments

Ch 7-32
Fred R. David
Prentice Hall
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?


Ch 7-33
Fred R. David
Prentice Hall
Managing Resistance to Change

Change raises anxiety over fear of:

Economic loss
Inconvenience
Uncertainty
Break in status-quo

Ch 7-34
Fred R. David
Prentice Hall
Managing Resistance to Change

Resistance to change

Single greatest threat to successful strategy


implementation

Ch 7-35
Fred R. David
Prentice Hall
Change Strategies

Force Change Strategy


Educative Change Strategy
Rational or Self-Interest Change Strategy

Ch 7-36
Fred R. David
Prentice Hall
Creating a Strategy-Supportive
Culture

Strategists should strive to preserve,


emphasize, and build upon aspects of
existing culture that support new
strategies.

Ch 7-37
Fred R. David
Prentice Hall
Creating a Strategy-Supportive
Culture
Elements linking culture to strategy:

1. Formal statements of philosophy, charters, etc. used for


recruitment and selection, and socialization
2. Designing of physical spaces, facades, buildings
3. Deliberate role modeling, teaching and coaching
4. Explicit reward and status system, promotion criteria
5. Stories, legends, myths about key people and events
6. What leaders pay attention to, measure and control
7. Leader reactions to critical incidents and crises
8. How the organization is designed and structured
9. Organizational systems and procedures
10. Criteria used for recruitment, selection, promotion, retirement

Ch 7-38
Fred R. David
Prentice Hall
Production/Operations Concerns

Production processes typically


constitute more than 70% of firms total
assets
Decisions on:
Plant size
Inventory/inventory control
Quality control
Cost control
Technological innovation
Ch 7-39
Fred R. David
Prentice Hall
Human Resource Concerns

Assessing staffing needs and costs


Develop performance incentives
ESOPs
Child-care policies
Work-life balance

Ch 7-40
Fred R. David
Prentice Hall