Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -1 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 -2

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

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

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 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

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 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)

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

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 7 -8 Policies 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 -9 Resource Allocation 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources Four Types of Resources

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

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

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

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

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

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

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

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

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

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Strategic Business Unit Structure (SBU) 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 Matrix Structure 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 Matrix Structure

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

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

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

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

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

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

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

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

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

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.