Chapter 7

Implementing Strategies: Management &

Operations Issues
Strategic Management: Concepts & Cases

Course coordinator
Prof. Begum Khaleda Khanam
Ch 7 -1

Copyright 2011 Pearson Education, Inc.

Publishing as Prentice Hall

Ch 7 -2

Strategy Formulation vs.

Implementation
Strategy Formulation (SF)
Positioning forces
before the action
Focus on effectiveness
Primarily intellectual
Requires good intuitive
and analytical skills

Requires coordination
among a few people

Strategy Implementation
(SI)
Managing forces during
the action
Focus on efficiency
Primarily operational
Requires special
motivation and
leadership skills
Requires coordination
among many people
Ch 7 -3

Nature of Strategy Implementation

SI problems can arise because of the shift in responsibility,
especially if SF decisions come as a surprise to middle- and
lower-level managers. Therefore, it is essential to involve
divisional and functional managers in SF.

Shift in responsibility

Strategists

Divisional or
Functional
Managers

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
Ch 7 -5

Purpose of Annual Objectives

Basis

for resource allocation

Mechanism

for management evaluation

Major

instrument for monitoring progress

toward achieving long-term objectives
Establish

priorities (organizational, divisional,

and departmental)

Ch 7 -6

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

Ch 7 -7

MATCHING STRUCTURE WITH

STRATEGY

Changes in strategy often require changes in the way an

organization is structured because: (1) structure largely dictates
how objectives and policies will be established (e.g., objectives and
policies established under a geographic organizational structure are
couched in geographic terms) and (2) structure dictates how
resources will be allocated (e.g., if an organizations structure is
based on customer groups, then resources will be allocated in that
manner).
Structure should be designed to facilitate the strategic pursuit of a
firm and, therefore, follow strategy.
When a firm changes its strategy, the existing organizational
structure may become ineffective. For example, new strategies to
reduce payroll costs may require a change in span of control.

Ch 7 -8

Basic Forms of Structure

Functional Structure

Divisional Structure

Strategic Business Unit Structure

(SBU)

Matrix Structure

Ch 7 -9

Restructuring
Restructuring - reducing the size of an organization.
Also called:

Downsizing

Rightsizing

Delayering

These methods involve, respectively, reducing the

number of employees, number of divisions, and number
of hierarchical levels in a firms organizational structure.
Reducing the size of an organization is intended to
improve its efficiency and effectiveness.

Ch 7 -10

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
Ch 7 -11

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
Ch 7 -12

Human Resource Concerns

Assessing staffing needs and costs.
Selection Methods.
Employee Training.
Motivating Employees Developing
Performance Incentives; Work-Life
Balance Issues; etc.
Selecting Appropriate Leadership
Styles.
Ch 7 -13