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Chapter 7 Implementing Strategies: Management & Operations Issues

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1 Chapter 7 Implementing Strategies: Management & Operations Issues
Strategic Management: Concepts & Cases 13th Edition Fred David Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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

3 Strategy Formulation vs. Implementation
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

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

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

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

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

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

9 Resource Allocation Four Types of Resources Financial resources
Physical resources Human resources Technological resources Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

10 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

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

12 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

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

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

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

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

17 Can be organized in one of four ways:
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

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

19 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

20 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

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

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

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

24 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

25 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

26 Creating a Strategy-Supportive Culture
Formal statements of organizational philosophy Design of physical spaces Deliberate role modeling, teaching, and coaching Explicit reward and status system Stories, legends, myths, and parables Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

27 Creating a Strategy-Supportive Culture
What leaders pay attention to Leader reactions to critical incidents and crises Organizational design and structure Organizational systems and procedures Criteria for recruitment, selection, promotion, leveling off, retirement, and “excommunication” of people Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

28 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

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

30 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

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

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


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