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Business Strategy and Policy

Lecture 29

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Recap

• Nature of Strategy Analysis & Choice

• Comprehensive Strategy-Formulation Framework

• SWOT Matrix• Strategic Position and Action Evaluation (SPACE)• BCG Matrix• IE Matrix• QSPM

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Today’s Lecture

• IMPLEMENTING STRATEGIES: MANAGEMENT AND OPERATIONS ISSUES Management Perspectives1. ANNUAL OBJECTIVES2. POLICIES3. RESOURCE ALLOCATION4. MANAGING CONFLICT5. MATCHING STRATEGY WITH STRUCTURE6. RESTRUCTURING, REENGINEERING, AND E-ENGINEERING7. LINKING PERFORMANCE AND PAY TO STRATEGIES8. MANAGING RESISTANCE TO CHANGE9. MANAGING THE NATURAL ENVIRONMENT10. CREATING A STRATEGY-SUPPORTIVE CULTURE11. PRODUCTION/OPERATIONS CONCERNS 12. HUMAN RESOURCE CONCERNS

Ch 7-4

• Formulation focuses on effectiveness

• Implementation focuses on efficiency

Nature of Strategy Implementation

Formulation vs. Implementation

Ch 7-5

• Shift in responsibility

Nature of Strategy Implementation

Management Perspectives

Division or FunctionalManagers

Strategists

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Management Issues

ManagementIssues

Resources

Organizational structure

Restructuring

Rewards/Incentives

Annual Objectives

Policies

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Management Issues (cont’d)

ManagementIssues

Supportive Culture

Production/Operations

Human Resources

Resistance to Change

Natural Environment

Ch 7-8

Management Issues

Purpose of Annual Objectives --

Basis for resource allocation

Mechanism for management evaluation

Metric for gauging progress on long-term objectives

Establish priorities (organizational, division, & departmental)

Ch 7-9

Management Issues

1. Financial resources

2. Physical resources

3. Human resources

4. Technological resources

4 Types of Resources

Ch 7-10

Management Issues

Conflict not always “bad”

No conflict may signal apathy

Can energize opposing groups to action

May help managers identify problems

Managing Conflict

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Managing Conflict

Conflict Management and Resolution

– Avoidance– Defusion– Confrontation

Avoidance includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals (or groups).

Defusion can include playing down differences between conflicting parties while accentuating similarities and common interests, compromising so that there is neither a clear winner nor loser, resorting to majority rule, appealing to a higher authority, or redesigning present positions.

Confrontation is exemplified by exchanging members of conflicting parties so that each can gain an appreciation of the other’s point of view, or holding a meeting at which conflicting parties present their views and work through their differences.

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New administrativeproblems emerge

New strategyIs formulated

Organizationalperformance

declines

Organizational performance

improves

New organizationalstructure is established

Chandler’s Strategy-Structure Relationship

Ch 7-13

Management Issues

Functional Structure

Divisional Structure

Strategic Business Unit Structure (SBU)

Matrix Structure

Basic Forms of Structure

Ch 7-14

Management Issues

Restructuring

Downsizing

Rightsizing

Delayering

Ch 7-15

Management Issues

Reengineering

Process management

Process innovation

Process redesign

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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?

Ch 7-17

Management Issues

Production/Operations Concerns

-- Production processes typically constitute more than 70% of the firm’s total assets

Ch 7-18

Management Issues

Production/Operations Decisions

Plant size

Inventory/Inventory control

Quality control

Cost control

Technological innovation

Ch 7-19

Management Issues

Human Resource Strategic Responsibilities

Assessing staffing needs/costs

Developing performance incentives

ESOP’s

Child-care policies

Work-life balance issues

Ch 7-20

Diversity Issues

CEO Company Age

Meg Whitman eBay 49

Andrea Jung Avon Products 47

Anne Mulcahy Xerox 52

Marjorie Magner Citigroup 56

Betsy Holden Kraft Foods 49

Ann Moore AOL Time Warner 57

Women CEO’s in U.S. 2005 (examples)

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Benefits of a Diverse Workforce

• Improves corporate culture• Improves employee morale• Leads to a higher retention of employees• Leads to easier recruitment of employees• Decreases complaints and litigation• Increases creativity• Decreases interpersonal conflict

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Benefits of a Diverse Workforce

• Enables the organization to move into emerging markets

• Improves client relations• Increases productivity• Improves the bottom line• Maximizes brand identity• Reduces training costs

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Summary• IMPLEMENTING STRATEGIES: MANAGEMENT AND OPERATIONS ISSUES

Management Perspectives1. ANNUAL OBJECTIVES2. POLICIES3. RESOURCE ALLOCATION4. MANAGING CONFLICT5. MATCHING STRATEGY WITH STRUCTURE6. RESTRUCTURING, REENGINEERING, AND E-ENGINEERING7. LINKING PERFORMANCE AND PAY TO STRATEGIES8. MANAGING RESISTANCE TO CHANGE9. MANAGING THE NATURAL ENVIRONMENT10. CREATING A STRATEGY-SUPPORTIVE CULTURE11. PRODUCTION/OPERATIONS CONCERNS 12. HUMAN RESOURCE CONCERNS

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Next Lecture

STRATEGY REVIEW, EVALUATION, AND CONTROL

• CHAPTER OUTLINE

– The Nature of Strategy Evaluation– A Strategy-Evaluation Framework– The Balanced Scorecard– Published Sources of Strategy-Evaluation Information– Characteristics of an Effective Evaluation System– Contingency Planning– Auditing– 21st Century Challenges in Strategic Management