Strategic Management: strategy implementation

Zafra, MayJumawid, Bryan JosephDegoma, Junaisah Nissi

Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

There must be a translation of strategic thought into strategic action.Implementing strategy affect an organization from top to bottom; it impacts all the functional and divisional areas of business.


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)!


Strategy formulation is positioning forces before the action.Strategy implementation is managing forces during the action.Strategy formulation focuses on effectiveness.Strategy implementation focuses on efficiency.


Strategy formulation is primarily an intellectual process.Strategy implementation is primarily an operational process.Strategy formulation requires good intuitive and analytical skills.Strategy implementation requires special motivation and leadership skills.


Managers and employees are motivated more by perceived self-interests than by organizational interests, unless the two coincide.Therefore, it is essential that divisional and functional managers be involved as much as possible in strategy-formulation activities.

Managers and employees throughout an organization should participate early and directly in strategy-implementation decisions.Their role in strategy implementation should build upon prior involvement in strategy-formulation activities.


Annual objectives:represent the basis for allocating resourcesare a primary mechanism for evaluating managersare the major instrument for monitoring progress toward achieving long-term objectivesestablish organizational, divisional, and departmental priorities


Annual objectives should be measurable, consistent, reasonable, challenging, clear, communicated throughout the organization, characterized by an appropriate time, dimension, and accompanied by commensurate rewards and sanctions.Annual objectives should be compatible with employees values and should be supported by clearly stated polices.

Policy specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goalsinstruments for strategy implementation


Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behaviorclarify what can and cannot be done in pursuit of an organizations objectives


Policies let both employees and managers know what is expected of them, thereby increasing the likelihood that strategies will be implemented successfully.Policies serve as a mechanism for implementing strategies and obtaining objectives. It should be stated in writing whenever possible. They represent the means for carrying out strategic decisions.


Resource allocation central management activity that allows for strategy execution often based on political or personal factors Strategic management enables resources to be allocated according to priorities established by annual objectives


Number of factors that commonly prohibit effective resource allocation

Overprotection of resourcesTo great an emphasis on short-run financial criteriaOrganizational politicsVague strategy targetsReluctance to take risksLack of sufficient knowledge


Effective resource allocation does not guarantee successful strategy implementation because programs, personnel, controls, and commitment must breathe life into the resources provided.STRATEGIC MANAGEMENT itself is sometimes referred to as a resource-allocation process.


Jumawid, Bryan Joseph


Conflict

Disagreement between two or more parties on one or more issues


Conflict is not always badAbsence of conflictSignal indifference or apathyCan energize opposing groups to actionMay help managers identify problems


Conflict Management and ResolutionAvoidanceDefusionConfrontation


Changes in Strategy Changes in Structure

Structure largely dictates how objectives and policies will be established.Structure dictates how resources will be allocated


OBJECTIVES AND POLICIESORGANIZATIONALSTRUCTURESTRATEGIES


New administrativeproblems emergeNew strategyIs formulatedOrganizationalperformance declinesOrganizational performanceimprovesNew organizationalstructure is established


Basic Forms of StructureFunctional StructureDivisional StructureStrategic Business Unit Structure (SBU)Matrix Structure


Group tasks and activities by business function


Can be organized in one of four ways:By geographic areaBy product or serviceBy customerBy process


Appropriate for organizations whose strategies need to be tailored to fit the particular needs and characteristics of customers in different areas.


Most effective for implementing strategies when specific products or services need emphasis.


Allows an organization to cater effectively to the requirements of clearly defined customer groups.


Similar to functional structureKey difference is division is accountable for profits and revenues.


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


The most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication


Most companies practicing pay-for-performance


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

Profit SharingIncentive compensation used by 30% of companies

Gain SharingPerformance targets set for employees or departments


Tests for Performance-Pay PlansDoes 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?


Change raises anxiety over fear of:

Economic lossInconvenienceUncertaintyBreak in status-quo


Resistance to change

Single greatest threat to successful strategy implementation


Force Change StrategyEducative Change StrategyRational or Self-Interest Change Strategy


Giving orders and enforcing those orders;Advantage = FastDisadvantage = Plagued by low commitment and high resistance.


Presents information to convince people of the need for change;Disadvantage = implementation of slow and difficult.But evokes greater commitment and less resistance.


Attempts to convince individuals that the change is to their personal advantage.If successful, implementation is easyHowever, changes are seldom to everyones advantage.


Consists of 4 steps 1. Participation 2. Motivation or Incentive 3. Communication 4. Feedback


Involves anticipating the focus of resistance and its intensityEliminating unnecessary resistanceMustering power base base necessaryPlanning the process of changeMonitoring and controlling


Junaisah Nissi L. Degoma


set a goal in 1988 to reduce its toxic air emission by 90% not later than year 1992.

Zero Spills, Zero Release, Zero Incidents and Zero Excuses.


Environmental IssuesOzone depletionGlobal warmingDepletion of rain forestsWaster managementClean airClean waterErosionPollution controlDeveloping biodegradable products and packages


Environmental concerns touch all aspects of a business operations including workplace risk exposures, packaging, waste reduction, energy use, alternative fuels, environment cost accounting and recycling practices.

Environmental affairs can no longer be simply a technical function performed by specialist in a firm; more emphasis must be placed on developing and environmental perspective among all employees and managers of the firm.


Some companies also include environmental factors in their performance appraisal instruments and trying environmental performance directly to raises, bonuses and promotions.


Managing environmental affairs can no longer be a secondary function of company operations. Firms that excel in the management of environmental affairs will benefit from construction relations with consumers, regulators, vendors and other industry players substantially improving their prospects of success.

Starik and Caroll advocate strategic environmental management whereby firms formulate and implement strategies from an environmental perspective.


Strategist should strive to preserve, emphasize and build upon aspects of an existing culture that support proposed new strategies. Meanwhile, aspects of an existing culture that is opposed to a proposed strategy should be identified and changed.


Formal statements of organization philosophy, or materials used for recruitment and selectionDesigning of physical spaces, facades, buildingDeliberate role modeling, teaching and coaching by leadersExplicit reward and status system, promotion criteriaWhat leaders pay attention toOrganizational systems and procedures


Just In Time (JIT) production approaches can significantly reduce the cost of implementing strategies.

An inventory strategy that companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. With JIT, parts and materials are delivered to a production site just as they are needed, rather than being stockpiled as a hedge against later deliveries.


Strategic responsibilities of the human resource manager include assessing the staging needs and costs for alternative strategies proposed during strategy formulation and developing a manpower plan for effectively implementing strategies.

This plan must consider how best to manage spiraling health care insurance costs. Employers health coverage expenses consume an average 26 percent of firms net profits, even though most companies now require employees to pay part of their health insurance premiums. The plan must also include how to motivate employees and managers during a time when layoffs are common and workloads are high.


Three especially important variables used in the ranking the best companies for Working Mothers

availability of flextimeadvancement opportunities and equitable distribution of benefits among companies.


Other important criteria are compressed weeks, telecommuting, job sharing, childcare facilities, maternity leave for both parents, mentoring, career development, and promotion for women. Some organizations have developed family days, when family members are invited into the workplace, taken on plant or office tours, dined by management, and given a chance to see exactly what other family members do each day.



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Strategic Management: strategy implementation

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