Prentice Hall, Inc. © 20069-1 STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER CHAPTER 9 Strategy Implementation:

Prentice Hall, Inc. © 2006 9-1

STRATEGIC MANAGEMENT & BUSINESS POLICY10TH EDITION

THOMAS L. WHEELEN J. DAVID HUNGER

CHAPTER 9 Strategy Implementation: Organizing for Action


Strategy Implementation

STRATEGY IMPLEMENTATION

--Sum total of activities & choices required for strategic plan execution

It is a process by which;

objectives + strategies + policiesare put into action through the development of;

programs + budgets + procedures



The most mentioned problems related to poor strategy implementation:

•Poor communication•Unrealistic synergy expectations•Structural problems•Missing master plan•Lost momentum•Lack of top management commitment•Unclear strategic fit

Research; A.T.Kearney



The most frequently experienced problems related to poor strategy implementation:

1.Implementation took more time than originally planned2.Unanticipated major problems arose3.Activities were ineffectively coordinated4.Competing activities and crises took attention away from implementation5.The involved employees had insufficient capabilities to perform their jobs6.Lover level employees were inadequately trained7.Uncontrollable external environmental factors created problems8.Departmental managers provided inadequate leadership and direction9.Key implementation tasks and activities were poorly defined10.The information system inadequately monitored activities

Research; L.D.Alexander



Key Implementation Questions –

–Who carries out strategic plan?

–What needs doing for alignment w/ strategy?

–How is work coordinated?



Who carries out strategic plan ?

The implementers are;everyone in the organization

Unless changes in mission, objectives, strategies and policies and their importance to the company are communicated clearly to all operational managers, there can be a lot of resistance and foot dragging.

This is the reason why involving people from all organizational levels in the formulation and implementation of strategy tends to result in better organizational performance.



WHAT MUST BE DONE ?

The managers of divisions and functional areas work with their fellow managers to develop;

-Programs-Budgets, and-Procedures

to implement strategy

They also work to achieve synergy among the divisions and functional areas in order to establish and maintain a company’s distinctive competence



Programs –

The purpose of a program is to make a strategy “Action oriented”

–Matrix of change•Feasibility•Sequence of execution•Location•Pace & nature of change (evolution or revolution)•Stakeholder evaluations


The Matrix of Change



Budgets –

Planning a budget is the last real check a corporation has on the feasibility of its selected strategy

–Standard Operating Procedures (SOP’s)–Organizational Routines



Achieving Synergy –

–Shared know-how

–Coordinated strategies

–Shared tangible resources

–Economies of scale or scope

–Pooled negotiating power

–New business creation



How is strategy to be implemented ?

•Organizing•Staffing•Directing•Controlling



ORGANIZING

Any change in corporate strategy is very likely to require some sort of change in the way an organization is structured



Organizational Structure

The formal arrangement of jobs within an organization.

Organizational Design

A process involving decisions about six key elements:

•Work specialization

•Departmentalization

•Chain of command

•Span of control

•Centralization and decentralization

•Formalization



Structure follows strategy –

–New strategy is created–New administrative problems emerge–Economic performance declines–New appropriate structure is invented–Profit returns to previous level



Departmentalization by Type

• Functional – Grouping jobs by

functions performed

• Product– Grouping jobs by

product line

• Geographical– Grouping jobs on the

basis of territory or geography

• Process – Grouping jobs on the

basis of product or customer flow

• Customer– Grouping jobs by

type of customer and needs



Stages of Corporate Development –

–Stage I: Simple structure (crisis of leadership)

–Stage II: Functional structure (crisis of autonomy)

–Stage III: Divisional structure (crisis of control)

SBU’s; performance-and-results-oriented-control

–Stage IV: Beyond SBU’s (red tape crisis)

Company becomes so large and complex that it tends to

become relatively inflexible

Procedures takes precedence over problem solving

PROPOSED SOLUTION:

MATRIX OR NETWORK ORGANIZATION

(pressure-cooker crisis)



Blocks to Changing Stages –

–Loyalty to comrades–Task oriented–Single-mindedness–Working in isolation


Organizational Life Cycle

Even though a company’s strategy may still be sound, its aging structure, culture, and processes may be such that they prevent the strategy from being executed properly.

Its core competencies become

core rigidities that are no longer adapt to changing conditions – thus the company moves into decline.


Changing Structural Characteristics of Modern Organizations



Advanced Types of Organizational Structures –

–Matrix•Temporary cross-functional task forces•Product/brand management•Mature matrix



Advanced Types of Organizational Structures –

–Network structure (virtual organization)

–Cellular organizationCells: self managing teams, autonomous business units, etc

…can operate alone – can interact with other cells

The combination ofIndependence - Interdependence


Network Structure



Reengineering

Radical redesign of business processes to achieve major gains in;

•Cost,•Service, or•Time

“If this were a new company,How would we run this place ?”



Six Sigma – (3,4 defects per million)

–Define –Measure–Analyze (pinpoint where things are going wrong)

–Improve–Establish controls

Lean Six Sigma –

Lean Manufacturing + Six Sigma



Job design to implement strategy –

–Job enlargement(combining tasks)

–Job rotation(moving workers through other jobs)

–Job enrichment(altering jobs for more autonomy and

control by the worker)

Job characteristics model (combination of the above)



International Issues –

–MNC’s (multidomestic – global)For an MNC to be considered global, it must manage its worldwide operations as if they were totally interconnected.

–International Strategic AlliancesPartners contribute key strengths but protect core competencies.



International Development Stages–

–Domestic company–Domestic company w/export division–Domestic company w/int’l division–MNC w/multidomestic emphasis–MNC w/global emphasis

(Any one corporation can be at different stages simultaneously, with different products in different markets at different levels.)



Centralization vs. Decentralization

CentralizationThe degree to which decision-making is concentrated at a single point in the organizations.

Organizations in which top managers make all the decisions and lower-level employees simply carry out those orders.

DecentralizationOrganizations in which decision-making is pushed down to the managers who are closest to the action.



Centralization vs. Decentralization

How to organize authority centrally so that it operates as a vast interlocking system that achieves synergy

and at the same timedecentralize authority so that local managers can make the decisions necessary to meet the demands of the local market or host government

–Product-group structure–Geographic-area structure


Geographic Area Structure

Simultaneous pressures for decentralization to be locally responsive and centralization to be maximally effective are causing interesting structural adjustments.

“think globally – act locally”

Prentice Hall, Inc. © 20069-1 STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER CHAPTER 9 Strategy Implementation:

Documents

implementation of strategy

poor strategy implementation

prentice hall

action slide

key implementation tasks

alignment w strategy

kearney slide

alexander slide