1

Chapter 7Implementing Strategies:

Management Issues

2

Strategy Formulation vsStrategy Implementation

• Formulation– Positioning forces

– Effectiveness

– Intellectual process

– Requires intuitive and analytical skills

– Coordination among a few individuals

• Implementation– Managing forces

– Efficiency

– Operational process

– Requires motivation and leadership skills

– Coordination among many people

3

Strategy Implementation Requirements

• Annual objectives

• Policies (set boundaries, constrains, limits)

• Resource allocation– Financial– Human– Physical– Technological

4

Conflict Management StrategiesConflict Management Strategies

How to Prevent Conflict

Emphasize Organizational Goals

Structure Tasks

Promote Organizational Communication

Avoid Win-Lose situations

©1999 Prentice Hall

5

Strategy and Structure

• A change in strategy often requires a change in structure because:– Structure largely dictates how objectives and policies

will be established;

– Structure dictates how resources will be allocated.

6

New strategy is formulated

New strategy is formulated

New administrative problems emerge

New administrative problems emerge

Organizational performance

declines

Organizational performance

declines

Organizational performance

improves

Organizational performance

improves

A new organizational structure is establishedA new organizational

structure is established

Figure 7-3: Chandler’s Strategy-Structure Relationship

©1999 Prentice Hall

7

Types of Organizational StructureTypes of Organizational Structure

Functional (Centralized)

Divisional (Decentralized)

Geographic

Product

Customer

Process

Strategic Business Unit (SBU)

Matrix

©1999 Prentice Hall

8

A Functional Organizational Structure

Chief Executive Officer

Chief Executive Officer

VP of Production

VP of Production

VP of Marketing

VP of Marketing

VP of Finance

VP of Finance

Plant Manager

Plant Manager

Sales Manager

Sales Manager

AccountingManager

AccountingManager

Engineering Manager

Engineering Manager

AdvertisingManager

AdvertisingManager

Budgeting Manager

Budgeting Manager

©1999 Prentice Hall

9

A Divisional Organizational Structure

Chief Executive OfficerChief Executive Officer

Vice-President of Personnel

Vice-President of Personnel

Vice-President of Operations

Vice-President of Operations

Vice-President of Finance

Vice-President of Finance

U.S. Manager

U.S. Manager

Asian Manager

Asian Manager

European Manager

European Manager

©1999 Prentice Hall

10

The Strategic Business Unit (SBU) Structure

Chief Executive Officer

Chief Executive Officer

Group V.P.

SBU

Group V.P.

SBU

Vice-President of Operations

Vice-President of Operations

Group V.P.

SBU

Group V.P.

SBU

Vice-President of Administration

Vice-President of Administration

Group V.P.

SBU

Group V.P.

SBU

Division 1

Division 2

Division 3

Division 4

Division 5

Division 6

©1999 Prentice Hall

11

Restructuring & Reengineering

• Restructuring (downsizing, rightsizing, delayering) – involves reducing the number of employees, number of divisions or units, and number of hierarchical levels in the firm’s organizational structure.

• Reengineering –reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed.

12

Ways to Link Compensation With Company Performance

Ways to Link Compensation With Company Performance

Profit SharingProfit Sharing

Gain SharingGain Sharing

Stock OptionsStock Options

CommissionsCommissions

BonusesBonuses

©1999 Prentice Hall

13

Factors Influencing Employee Compensation

Individual Performance

Group Performance

Plant-Wide Productivity

Company Performance

Profit-Sharing

Pay Systems

Job Description

Job Analysis

Labor/Market Conditions

Seniority

©1999 Prentice Hall

14

Tests for Performance-Pay PlansTests 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?

15

Managing Resistance to Change

• Force change strategy

• Educative change strategy

• Rational or self-interest change strategy

16

Strategy Implementation:Production/operations & HR Concerns

• Production related decisions have a dramatic impact on the success or failure of strategy implementation efforts.

• Staffing, compensation and benefits must all be addressed.

Implementation Through Leadership

Leadership is any behavior that develops or uses power to influence other peoples’ behavior. It is used by management to achieve enthusiastic, willing, zealous participation of followers to accomplish the organization’s objectives.

18

LEADERSHIP STYLES

Research has shown that managers have a tendency to

use the same leadership behaviors or process regardless of

the people they are trying to influence or the specific

situation. This is referred to as your default style. It is

important to recognize that no one leadership style is best,

rather a mix of styles depending on the people and the

situation provide the best results. Based upon the work of

David McClelland and work by fellow researchers at

McAer and Company, six leadership styles emerge as

follows:

Coercive: Managers with this style tend to expect

immediate compliance with their directions and solicit

very little to no input. They manage by controlling

subordinates tightly and tend to influence with

discipline.

19

Authoritative: Managers who use this style are often referredto as "firm but fair." They tend to manage by providing clearinstruction, soliciting some input (while leaving no doubt as towho is boss), monitoring behavior, and motivating with bothdiscipline and rewards. They see influence as a key part of themanager's job.

Affiliative: Managers with this as their dominant leadershipstyle tend to feel people come first and tasks second. They seethe manager's job as one of maintaining a pleasant workingenvironment and providing job security and other benefits. Theywant to be liked and they tend to provide little direction,especially feedback about unsatisfactory performance.

Authoritative: Managers who use this style are often referredto as "firm but fair." They tend to manage by providing clearinstruction, soliciting some input (while leaving no doubt as towho is boss), monitoring behavior, and motivating with bothdiscipline and rewards. They see influence as a key part of themanager's job.

Affiliative: Managers with this as their dominant leadershipstyle tend to feel people come first and tasks second. They seethe manager's job as one of maintaining a pleasant workingenvironment and providing job security and other benefits. Theywant to be liked and they tend to provide little direction,especially feedback about unsatisfactory performance.

20

Democratic: These managers are known for their participativestyle. They tend to believe that individuals and groups function bestwhen allowed to work together and, therefore, tend to feel that closesupervision or very detailed instructions are not necessary.Democratic managers tend to hold many meetings, they rewardadequate performance, and they dislike disciplining employees.

Pacesetting: These managers like to perform technical activities aswell as manage. They have very high standards for themselves and

expect the same of others. These managers usually expect their

employees to develop a keen sense of personal responsibility. They

often have little concern for interpersonal relations and may reassign

work if employee ability or willingness hampers performance.

Coaching: Managers using a coaching style see themselves as

developing their employees and have high standards of performance.

They delegate authority and allow followers flexibility in setting goals

and completing tasks. They provide strong support when needed.

21

LEADERSHIP STYLES SUMMARY

Coercive "do it or else"

Authoritative "firm but fair"

Affiliative "good buddy"

Democratic "let's vote"

Pace Setting "follow me"

Coaching "developer, delegator"

22

LEADERSHIP STYLES:ADVANTAGES AND DISADVANTAGES

CoerciveAdvantages Short term efficiency - fast

Clear line of authority - know who is in charge and desired action is usually taken

Disadvantages: Most people don't like it Inhibits employee growth and development May lead to high staff turnover

AuthoritativeAdvantages Efficient

Clear who is in charge A way of exercising power without intimidation

Disadvantages Not conducive to personal growth and developmentSome people may not like it Could lead to turnover

23

AffiliativeAdvantages: Keeps people happy (short term)

Allows people freedom

Disadvantages: Change is avoided and becomes a source of

conflict

Low productivity

Decisions may not be in best interest of

organization

Little encouragement for personal growth

DemocraticAdvantages: Involves people

Opportunity for personal and organizational growth

Disadvantages: Time consuming Losers may sabotage organizational goals Majority decisions aren't always in best interest of the

organization

24

Pace &SettingAdvantages: Can be very productive (short term)

Works well with committed followers

Disadvantages: Doesn't work well with unwilling or unable followers Followers may not follow Problem in absence of the pacesetter

CoachingAdvantages: Encourages growth and development

Long-term productivity

People respond well

Disadvantages: Time consuming

Costs are high if you have turnover due to the

development investment that is lost