1. PART 7: Strategy Implementation

2. Main Learning Objectives: Explain how implementation is more difficult than strategy formulation. Describe hoe firms can effectively link performance and pay to strategies. Discuss the role of organizational culture in in supporting new strategies.

3. The Nature of Strategy Implementation
-- Successful strategy formulation does not guarantee successful strategy implementation

4. Nature of Strategy Implementation
The Strategy-Implementation Stage of Strategic Management
Successful strategy formulation does not guarantee successful strategy implementation. It is always more difficult to do something (strategy implementation) than to say you are going to do it (strategy formulation).

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

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

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

8. Management Issues
Annual Objectives --
-- Decentralized activity
-- Directly involve all managers in the organization

9. Purpose of Annual Objectives --
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)

10. Consistency of Annual Objectives --
Management Issues
Consistency of Annual Objectives --
Across hierarchical levels
Horizontally consistent
Vertically consistent
Consistency أتساق

11. Requirements of Annual Objectives
Management Issues
Requirements of Annual Objectives
Measurable
Consistent
Reasonable
Challenging
Clear
Understood
Timely

12. Annual Objectives Should State
Management Issues
Annual Objectives Should State
Quantity
Quality
Cost
Time
Be Verifiable
State يقرر
Verifiable ممكن اثباتها

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

14. Management Issues
Policies --
-- Facilitate the solving or recurring problems & guide implementation of strategy

15. Management Issues Policies Establish -- Boundaries Constraints Limits

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

17. Management Issues
Resource Allocation
-- Central management activity that allows for the execution of strategy

18. Management Issues 4 Types of Resources Financial resources
Physical resources
Human resources
Technological resources

19. -- Disagreement between two more parties on one or more issues
Management Issues
Managing Conflict
-- Disagreement between two more parties on one or more issues
Conflict صراعات

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

21. Management Issues Conflict Management & Resolution Avoidance Diffusion
Confrontation
Resolution حل
Diffusion انتشار

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

23. Management Issues
Matching Structure with Strategy
-- Changes in strategy = Changes in structure

24. Basic Forms of Structure
Management Issues
Basic Forms of Structure
Functional Structure
Divisional Structure
Strategic Business Unit Structure (SBU)
Matrix Structure

25. The Strategic Business Unit (SBU)
In multidivisional organizations, an SBU structure can greatly facilitate strategy-implementation efforts.
Advantages of improved coordination and accountability
Disadvantages
Requires an additional layer of management
Role of the group vice president is often ambiguous

27. The Matrix Structure
Most complex of all designs – requires both vertical and horizontal flows of authority and communication
Disadvantages
Can result in higher overhead
Dual lines of budget authority
Dual sources of reward and punishment
Shared authority
Dual reporting channels
Need for an extensive and effective communication system

28. The Matrix Structure Advantages Project objectives are clear
Many channels of communication
Workers can see visible results of their work
Shutting down a project can be accomplished relatively easily
Facilitates the use of specialized personnel, equipment, and facilities

30. -- Pay for performance systems
Management Issues
Linking Pay/Performance to Strategies
-- Pay for performance systems

31. Profit sharing systems Gain sharing systems
Management Issues
Linking Pay/Performance to Strategies
Dual bonus systems
Profit sharing systems
Gain sharing systems

32. 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?

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

34. -- Single greatest threat to successful strategy implementation
Management Issues
Resistance to Change
-- Single greatest threat to successful strategy implementation

35. -- Raises anxiety; fear concerning
Management Issues
Resistance to Change
-- Raises anxiety; fear concerning
Economic loss
Inconvenience
Uncertainty
Break in status-quo
Anxiety قلق

36. Educative Change Strategy Rational or Self-Interest Change Strategy
Management Issues
Change Strategies
Force Change Strategy
Educative Change Strategy
Rational or Self-Interest Change Strategy

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

38. Management Issues
Natural Environment
-- Wide appreciation for firms that “mend” rather than “harm” the environment

39. Management Issues Natural Environment – Environmental Strategies
Develop/acquire “green” businesses
Divesting environmental-damaging business
Low-cost producer through waste minimization & energy conservation

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

41. Management Issues
Strategy-Supportive Culture
-- Preserve, emphasize, & build upon aspects of existing culture that support new strategies
Preserve يصون, يحفظ
Emphasize يشدد , يؤكد

42. Management Issues Elements linking culture to strategy:
Formal statements of philosophy, charters, etc. used for recruitment and selection, socialization
Designing of physical spaces, facades, buildings
Deliberate role modeling, teaching and coaching
Explicit reward and status system, promotion criteria
Stories, legends, myths about key people and events
Charters رخص
Facades واجهات المباني , مظاهر كاذبة
Deliberate مدروس
Explicit واضح , صريح

43. Management Issues Elements linking culture to strategy:
What leaders pay attention to, measure and control
Leader reactions to critical incidents and crises
How the organization is designed and structured
Organizational systems and procedures
Criteria used for recruitment, selection, promotion, retirement

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

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

46. Inventory/Inventory control Quality control Cost control
Management Issues
Production/Operations Decisions
Plant size
Inventory/Inventory control
Quality control
Cost control
Technological innovation

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

48. Management Issues
Human Resource Concerns
-- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.

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

50. Implementing Strategies: Management and Operations Issues

51. The Nature of Strategy Implementation
-- Less than 10% of strategies formulated are successfully implemented!

52. The Nature of Strategy Implementation
Low Success Rate – Strategy Implementation
Failing to segment markets appropriately
Paying too much for a new acquisition
Falling behind competition in R&D
Not recognizing benefit of computers in managing information

53. The Nature of Strategy Implementation
Successful Strategy Implementation
Market goods & services well
Raise needed working capital
Produce technologically sound goods
Sound information systems

54. Marketing Issues
-- Marketing variables affect success/failure of strategy implementation

55. Marketing Issues Marketing decisions requiring policies
Exclusive dealerships – multiple channels of distribution
Heavy, light, or no TV advertising
Price leader or price follower
Advertise online or not
Offer complete or limited warranty
Exclusive حصري

56. Marketing Issues Centrally important to Implementation
Market segmentation
Product positioning

57. Marketing Issues Market Segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits

58. Marketing Issues Market Segmentation Key to matching supply & demand
Market development, product-development, market penetration & diversification strategies
Allows operating with limited resources
Enables small firms to compete successfully

59. Marketing Issues Market Segmentation
Directly affect marketing mix variables:
Product
Place
Promotion
Price

60. Marketing Mix – Component Factors
Service level
Warranty
Transportation carriers
Product line
Inventory levels/locations
Packaging
Publicity
Sales territories
Brand name
Payment terms
Sales promotion
Outlet location
Style
Discounts & allowances
Personal selling
Distribution coverage
Features
Level
Advertising
Distribution channels
Quality
Price
Promotion
Place
Product

61. Finance/Accounting Issues
-- Central to strategy implementation

62. Finance/Accounting Issues
Essential for implementation
Acquiring needed capital
Developing projected financial statements
Preparing financial budgets
Evaluating worth of a business
Projected تصور

63. Finance/Accounting Issues
Decisions based on Finance/Accounting
Raise capital – short-term, long-term, preferred, or common stock
Lease or buy fixed assets
Determine appropriate dividend payout ratio

64. Finance/Accounting Issues
Decisions based on Finance/Accounting
LIFO, FIFO, or market-value accounting approach
Extend time of accounts receivable (AR)
Establish % discount on accounts for terms
Determine the amount of cash kept on hand

65. Finance/Accounting Issues
Capital acquisition to implement strategies
Debt
Equity
Equity اسهم

66. Finance/Accounting Issues
Debt vs. Equity Decisions
EPS/EBIT analysis
Earnings per share/Earnings before interest and taxes

69. Research & Development Issues
• R&D personnel can play an integral part in strategy implementation.
• Surveys suggest that the most successful organizations use an R&D strategy that ties external opportunities to internal strengths and is linked with objectives.
• R&D policies can enhance strategy-implementation efforts to:
o Emphasize product or process improvements.
o Stress basic or applied research.

70. Research & Development Issues
o Be leaders or followers in R&D.
o Develop robotics or manual-type processes.
o Spend a high, average, or low amount of money on R&D.
o Perform R&D within the firm or contract R&D to outside firms.
o Use university researchers or private sector researchers.

71. Research & Development Issues
R&D Approaches for Implementing Strategy
• There are at least three major R&D approaches for implementing strategies.
o The first strategy is to be the first firm to market new technological products.
o The second R&D approach is to be an innovative imitator of successful products, thus minimizing the risks and costs of start-up.

72. Research & Development Issues
o A third R&D strategy is to be a low-cost producer by mass-producing products similar to, but less expensive than products recently introduced.

73. Research & Development Issues
• R&D activities among American firms need to be more closely aligned to business objectives.
• Perhaps the most current trend in R&D management has been lifting the veil of secrecy whereby firms, even major competitors, are joining forces to develop new products.

74. Management Information Systems (MIS) Issues
-- Information is the basis for understanding the firm. One of the most important factors differentiating successful from unsuccessful firms

75. MIS Issues
•Although no firm would use the same marketing or management approach for 20 years, many companies have 20-year-old computer information systems that threaten their very existence.
•Firms that gather, assimilate, and evaluate external and internal information most effectively are gaining competitive advantages over other firms.

76. MIS Issues
•Information collection, retrieval, and storage can be used to create competitive advantages in ways such as cross-selling to beneficiaries, monitoring suppliers, keeping managers and employees informed, coordinating activities among divisions, and managing funds.