Chapter 7 Implementing Strategies: Management & Operations Issues

Strategic Management: Concepts & Cases 13th Edition Fred David

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Ch 7 -1

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Ch 7 -2

Strategy Formulation vs. Implementation

Strategy Formulation 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
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Nature of Strategy Implementation

Management Perspectives

Shift in responsibility
Divisional or Functional Managers

Strategists

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Ch 7 -4

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 strategysupportive culture Adapt production/operations processes Develop an effective human resources function Downsize & furlough as needed Link performance & pay to strategies
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Purpose of Annual Objectives

Basis

for resource allocation

for management evaluation

Mechanism Major

instrument for monitoring progress toward achieving long-term objectives

Establish

priorities (organizational, divisional, and departmental)

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Annual Objectives

Horizontal consistency of objectives Vertical consistency of objectives

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Policies

Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior

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Ch 7 -8

Resource Allocation
Four Types of Resources
1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources

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Managing Conflict

Conflict not always bad Lack of conflict may signal apathy

Can energize opposing groups to action

May help managers identify problems

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Managing Conflict

Approaches for managing and resolving conflict Avoidance Defusion Confrontation

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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

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Basic Forms of Structure

Functional Structure
Divisional Structure Strategic Business Unit Structure (SBU) Matrix Structure

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Functional Structure

Group tasks and activities by business function

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Functional Structure

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Divisional Structure
Can

be organized in one of four ways:

By geographic area By product or service By customer By process

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Divisional Structure

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Ch 7 -18

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
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Matrix Structure
The

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

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Ch 7 -20

Matrix Structure

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Restructuring, Reengineering, and E-engineering

Restructuring

is called

Downsizing Rightsizing

Delayering
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Restructuring, Reengineering, and E-engineering

Cornerstones

of Reengineering

Decentralization Reciprocal interdependence

Information sharing
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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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Managing Resistance to Change

Force change strategy Educative change strategy Rational or self-interest change strategy

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Ch 7 -25

Creating a Strategy-Supportive Culture

1.

2. 3.

4. 5.

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
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Creating a Strategy-Supportive Culture

6. 7.

8. 9. 10.

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
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Production/Operations Concerns

Production

processes typically constitute more than 70% of a firms total assets

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Production/Operations Decision Examples

Plant

size
/ Inventory control

Inventory Quality Cost

control

control

Technological

innovation
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Human Resource Concerns

Assessing Furloughs Developing

staffing needs/costs

performance incentives

ESOPs
Worklife Matching

balance issues managers with strategy

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Corporate Wellness Programs

Wellness of employees has become a strategic issue for many firms

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