strategic management Chapter 07

7/21/2019 strategic management Chapter 07

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Fred R. David

Prentice Hall

Ch 7-1

Chapter 7

Implementing Strategies:

Management Issues

Strategic Management:

Concepts and Cases. 9thedition

Fred R. David

PowerPoint Slides by

Anthony F. Chelte

Western New England College


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Prentice Hall

Ch 7-2

Chapter Outline

The nature of Strategy Implementation

Annual Objectives

Policies

Resource Allocation


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Prentice Hall

Ch 7-3

Chapter Outline

Managing Conflict

Matching Structure with Strategy

Restructuring, Reengineering, and E-

Engineering

Linking Performance and Pay to Strategies


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Prentice Hall

Ch 7-4

Chapter Outline

Managing Resistance to Change

Managing the Natural Environment

Creating a Strategy-Supportive Culture


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Prentice Hall

Ch 7-5

Chapter Outline

Production/Operations Concerns

When Implementing Strategies

Human Resource Concerns WhenImplementing Strategies


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Ch 7-6


Management Issues

Pretend that every single person you

meet has a sign around his or her neckthat says, Make me feel important.

-- Mary Kay Ash, CEO of Mary Kay, Inc.


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Ch 7-7

Strategy Analysis & Choice

Contrasting strategy formulation andstrategy implementation

Formulation is positioning forces before the action

Implementation is managing forces during the action


Management Issues


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Ch 7-8



Formulation focuses on effectiveness

Implementation focuses on efficiency


Management Issues


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Ch 7-9



Formulation is primarily an intellectual process

Implementation is primarily an operational process


Management Issues


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Ch 7-10



Formulation requires good intuitive and analyticalskills

Implementation requires special motivation andleadership skills


Management Issues


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Ch 7-11



Formulation requires coordination among a fewindividuals

Implementation requires coordination among manypersons


Management Issues


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Ch 7-12


Strategy implementation

Varies among different types and sizes

of organizations


Management Issues


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Ch 7-13


Strategy implementation Actions

Altering sales territoriesAdding new departments

Closing facilities

Hiring new employees

Cost-control procedures

Changing advertising strategies

Building new facilities


Management Issues


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Ch 7-14

Formulation to Implementation

transition

Shift in responsibility

From strategists to division and functional

managers

Management Perspectives


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Ch 7-15

Management Issues

Management

Issues

Resources

Organizational structure

Restructuring

Rewards/Incentives

Annual Objectives

Policies


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Ch 7-16

Management Issues (continued)

Management

Issues

Supportive culture

Production/operations

Human resources

Downsizing

Resistance to Change

Managers & strategy


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Ch 7-17

Annual Objectives

Decentralized activity

Involves all managers in the firm


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Ch 7-18

Annual Objectives

1. Basis for allocating resources

2. Primary mechanism for evaluatingmanagers

3. Major instrument for monitoringprogress toward long-term objectives

4. Establish organizational, divisional, anddepartmental priorities


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Ch 7-19

Annual Objectives

Horizontal consistency of objectives

Vertical consistency of objectives


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Ch 7-20

Annual Objectives

Objectives should state

Quantity

Quality

Cost Time


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Ch 7-21

Policies

Policies facilitate solving recurringproblems and guide the implementation

of strategy


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Ch 7-22

Policies

Policies set

Boundaries

Constraints

limits


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Ch 7-23

Policies

Example Issues requiring management policy --

To offer extensive or limited management

development workshops and seminars To centralize or decentralize employee-trainingactivities

To recruit through employment agencies, collegecampuses, and/or newspapers

To promote from within or hire from the outside To establish a high- or low-safety stock of

inventory

To buy lease, or rent new production equipment


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Ch 7-24

Resource Allocation

Resource Allocation

A central management activity that allows

for strategy execution


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Ch 7-25

Resource Allocation

Four types of resources

1. Financial resources

2. Physical resources

3. Human resources

4. Technological resources


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Ch 7-26

Managing Conflict

Conflict

Disagreement between two or more parties

on one or more issues


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Ch 7-27

Managing Conflict

Conflict is not always bad

Absence of conflict Signal indifference or apathy

Can energize opposing groups to action

May help managers identify problems


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Ch 7-28

Managing Conflict

Conflict Management and Resolution

Avoidance

Defusion

Confrontation


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Ch 7-29

Matching Structure with Strategy

Changes in Strategy Changes in Structure

1. Structure largely dictates how objectives and

policies will be established.

2. Structure dictates how resources will be

allocated


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Ch 7-30

Chandlers Strategy-Structure

Relationship

New administrative

problems emerge

New strategy

Is formulated

Organizational

performance

declines

Organizational

performance

improves

New organizationalstructure is established


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Ch 7-31

Basic Forms of Structure

1. Functional Structure

Groups tasks and activities by business

function

2. Divisional Structure

Decentralized and organized by geography,

product, customer, or process


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Ch 7-32

Basic Forms of Structure

3. Strategic Business Unit Structure (SBU)

Groups similar divisions; delegates authority

and responsibility to SBU executive

4. Matrix Structure

Most complex of all designs. Depends uponboth vertical and horizontal flows of authority

and communication


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Ch 7-33

Restructuring

Restructuring

Reducing the size of the firm in terms ofnumber of employees, divisions, or

units, and the number of hierarchical

levels in the firms organizationalstructure


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Ch 7-34

Restructuring

Also called

Downsizing

Rightsizing

Delayering


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Ch 7-35

Restructuring

Employed when ratios out of line with

benchmarked competitors

Primary benefit sought is cost reduction


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Ch 7-36

Reengineering

Reengineering

Involves reconfiguring or redesigning work,

jobs, and processes to improve cost,

quality, service and speed.


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Ch 7-37

Reengineering

Also called

Process management

Process innovation

Process redesign


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Ch 7-38

Reengineering

Reengineering

Concerned more with employee and

customer well-being than shareholder

well-being


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Ch 7-39

Linking Performance and Pay

to Strategies

Most companies practicing pay-for-performance


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Ch 7-40

Linking Performance and Pay

to Strategies

Dual bonus system becoming more common Based on both annual objectives and long-term

objectives

Profit Sharing Incentive compensation used by 30% of companies

Gain Sharing Performance targets set for employees or

departments


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Ch 7-41

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?


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Ch 7-42


Change raises anxiety over fear of:

Economic loss

Inconvenience

Uncertainty

Break in status-quo


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Ch 7-43


Resistance to change

Single greatest threat to successful strategy

implementation


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Ch 7-44

Change Strategies

Force Change Strategy

Educative Change Strategy

Rational or Self-Interest Change Strategy


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Ch 7-45

Managing the Natural

Environment

Wide appreciation for firms that conduct

operations that mend rather than harm

the environment.


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Ch 7-46

Creating a Strategy-Supportive

Culture

Strategists should strive to preserve,

emphasize, and build upon aspects of

existing culture that support new

strategies.


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Ch 7-47

Creating a Strategy-Supportive

Culture

Elements linking culture to strategy:

1. Formal statements of philosophy, charters, etc. used forrecruitment and selection, and socialization

2. Designing of physical spaces, facades, buildings3. Deliberate role modeling, teaching and coaching

4. Explicit reward and status system, promotion criteria

5. Stories, legends, myths about key people and events

6. What leaders pay attention to, measure and control

7. Leader reactions to critical incidents and crises

8. How the organization is designed and structured9. Organizational systems and procedures

10. Criteria used for recruitment, selection, promotion, retirement


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Ch 7-48

Production/Operations Concerns

Production processes typicallyconstitute more than 70% of firms totalassets

Decisions on: Plant size

Inventory/inventory control

Quality control Cost control

Technological innovation


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Ch 7-49

Human Resource Concerns

Assessing staffing needs and costs

Develop performance incentives ESOPs

Child-care policies

Work-life balance


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Ch 7-50

Key Terms

Annual objectives

Avoidance

Benchmarking

Bonus system Conflict

Confrontation

Culture

Defusion

Delayering


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Ch 7-51

Key Terms

Decentralized structure

Divisional structure

Downsizing Educative change strategy

Employee Stock Ownership Plan

(ESOP)


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Ch 7-52

Key Terms

Establishing annual objectives

Force change strategy

Functional structure

Gain sharing Horizontal consistency of objectives

Just in time

Matrix structure Policy

Profit sharing


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Ch 7 53

Key Terms

Rational change strategy

Reengineering

Resistance to change

Resource allocation Restructuring

Rightsizing

Self-interest change

Triangulation

Vertical consistency of objectives

strategic management Chapter 07

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