Business Strategy and Policy Lecture 29 1

Recap Nature of Strategy Analysis & Choice Comprehensive Strategy-Formulation Framework SWOT Matrix Strategic Position and Action Evaluation (SPACE) BCG Matrix IE Matrix QSPM 2

Today’s Lecture IMPLEMENTING STRATEGIES: MANAGEMENT AND OPERATIONS ISSUES  Management Perspectives 1. ANNUAL OBJECTIVES 2. POLICIES 3. RESOURCE ALLOCATION 4. MANAGING CONFLICT 5. MATCHING STRATEGY WITH STRUCTURE 6. RESTRUCTURING, REENGINEERING, AND E-ENGINEERING 7. LINKING PERFORMANCE AND PAY TO STRATEGIES 8. MANAGING RESISTANCE TO CHANGE 9. MANAGING THE NATURAL ENVIRONMENT 10. CREATING A STRATEGY-SUPPORTIVE CULTURE 11. PRODUCTION/OPERATIONS CONCERNS 12. HUMAN RESOURCE CONCERNS 3

4 Formulation focuses on effectiveness Implementation focuses on efficiency Nature of Strategy Implementation Formulation vs. Implementation

5 Shift in responsibility Nature of Strategy Implementation Management Perspectives Division or Functional Managers Strategists

6 Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies

7 Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment

8 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)

9 Management Issues 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources 4 Types of Resources

10 Management Issues  Conflict not always “bad”  No conflict may signal apathy  Can energize opposing groups to action  May help managers identify problems Managing Conflict

11 Managing Conflict Conflict Management and Resolution – 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 their differences.

12 New administrative problems emerge New strategy Is formulated Organizational performance declines Organizational performance improves New organizational structure is established Chandler’s Strategy-Structure Relationship

13 Management Issues  Functional Structure  Divisional Structure  Strategic Business Unit Structure (SBU)  Matrix Structure Basic Forms of Structure

14 Management Issues Restructuring  Downsizing  Rightsizing  Delayering

15 Management Issues Reengineering  Process management  Process innovation  Process redesign

16 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?

17 Management Issues Production/Operations Concerns -- Production processes typically constitute more than 70% of the firm’s total assets

18 Management Issues Production/Operations Decisions  Plant size  Inventory/Inventory control  Quality control  Cost control  Technological innovation

19 Management Issues Human Resource Strategic Responsibilities  Assessing staffing needs/costs  Developing performance incentives  ESOP’s  Child-care policies  Work-life balance issues

20 Diversity Issues CEOCompanyAge Meg WhitmaneBay49 Andrea JungAvon Products47 Anne MulcahyXerox52 Marjorie MagnerCitigroup56 Betsy HoldenKraft Foods49 Ann MooreAOL Time Warner57 Women CEO’s in U.S (examples)

21 Benefits of a Diverse Workforce 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

22 Benefits of a Diverse Workforce Enables the organization to move into emerging markets Improves client relations Increases productivity Improves the bottom line Maximizes brand identity Reduces training costs

Summary IMPLEMENTING STRATEGIES: MANAGEMENT AND OPERATIONS ISSUES  Management Perspectives 1. ANNUAL OBJECTIVES 2. POLICIES 3. RESOURCE ALLOCATION 4. MANAGING CONFLICT 5. MATCHING STRATEGY WITH STRUCTURE 6. RESTRUCTURING, REENGINEERING, AND E-ENGINEERING 7. LINKING PERFORMANCE AND PAY TO STRATEGIES 8. MANAGING RESISTANCE TO CHANGE 9. MANAGING THE NATURAL ENVIRONMENT 10. CREATING A STRATEGY-SUPPORTIVE CULTURE 11. PRODUCTION/OPERATIONS CONCERNS 12. HUMAN RESOURCE CONCERNS 23

Next Lecture STRATEGY REVIEW, EVALUATION, AND CONTROL CHAPTER OUTLINE – The Nature of Strategy Evaluation – A Strategy-Evaluation Framework – The Balanced Scorecard – Published Sources of Strategy-Evaluation Information – Characteristics of an Effective Evaluation System – Contingency Planning – Auditing – 21st Century Challenges in Strategic Management 24