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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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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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Ch 7-4
Chapter Outline
Managing Resistance to Change
Managing the Natural Environment
Creating a Strategy-Supportive Culture
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Ch 7-5
Chapter Outline
Production/Operations Concerns
When Implementing Strategies
Human Resource Concerns WhenImplementing Strategies
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Ch 7-6
Implementing Strategies:
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
Implementing Strategies:
Management Issues
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Ch 7-8
Strategy Analysis & Choice
Contrasting strategy formulation andstrategy implementation
Formulation focuses on effectiveness
Implementation focuses on efficiency
Implementing Strategies:
Management Issues
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Ch 7-9
Strategy Analysis & Choice
Contrasting strategy formulation andstrategy implementation
Formulation is primarily an intellectual process
Implementation is primarily an operational process
Implementing Strategies:
Management Issues
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Ch 7-10
Strategy Analysis & Choice
Contrasting strategy formulation andstrategy implementation
Formulation requires good intuitive and analyticalskills
Implementation requires special motivation andleadership skills
Implementing Strategies:
Management Issues
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Ch 7-11
Strategy Analysis & Choice
Contrasting strategy formulation andstrategy implementation
Formulation requires coordination among a fewindividuals
Implementation requires coordination among manypersons
Implementing Strategies:
Management Issues
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Ch 7-12
Strategy Analysis & Choice
Strategy implementation
Varies among different types and sizes
of organizations
Implementing Strategies:
Management Issues
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Ch 7-13
Strategy Analysis & Choice
Strategy implementation Actions
Altering sales territoriesAdding new departments
Closing facilities
Hiring new employees
Cost-control procedures
Changing advertising strategies
Building new facilities
Implementing Strategies:
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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Prentice Hall
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
Managing Resistance to Change
Change raises anxiety over fear of:
Economic loss
Inconvenience
Uncertainty
Break in status-quo
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Ch 7-43
Managing Resistance to Change
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