Ch 8 -1 Copyright © 2011 Pearson Education. Strategic Management: Concepts and Cases Arab World...

Strategic Management: Concepts and CasesArab World EditionFred R. DavidAbbas J. AliAbdulrahman Y. Al-Aali

Chapter 8: Implementing Strategies:Management andOperations Issues


Chapter Outline


• The Nature of Strategy Implementation

• Annual Objectives

• Policies

• Resource Allocation

• Managing Conflict

• Matching Structure With Strategy

Chapter Outline (cont’d)


• Restructuring, Reengineering, and E-Engineering

• Linking Performance and Pay to Strategies

• Managing Resistance to Change

• Managing the Natural Environment

• Production/Operations Concerns When Implementing Strategies

• Human Resource Concerns When Implementing Strategies


Source: Adapted from Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 3 (June 1988) 40.

• Strategy implementation is different from strategy formulation

• Formulation focuses on effectiveness

• Implementation focuses on efficiency

Nature of Strategy Implementation

Formulation vs. Implementation


Shift in responsibility

Nature of Strategy Implementation

Management Perspectives

Divisional and FunctionalManagers

Strategists


Management Issues

ManagementIssues

ResourcesResources

Organizational StructureOrganizational Structure

RestructuringRestructuring

Rewards/IncentivesRewards/Incentives

Annual ObjectivesAnnual Objectives

PoliciesPolicies


Management Issues (cont’d)

ManagementIssues

Supportive CultureSupportive Culture

Production/OperationsProduction/Operations

Human ResourcesHuman Resources

Resistance to ChangeResistance to Change

Natural EnvironmentNatural Environment


Ch 7-10

Annual ObjectivesPurpose of Annual Objectives

• Basis for resource allocation

• Mechanism for management evaluation

• Metric for measuring the progress on long-term objectives

• Establish priorities (organizational, divisional, and departmental)


Polices

• Refers to specific guidelines , methods ,

procedures , rules , forms and administrative practices established to support and encourage work toward stated goals

• Some examples that may requires a policy:-

• To use one or more suppliers • To operate one ,two , or three shifts • To discourage smoking at work • To discourage insider trading • To discourage working on a secondary job for a

different employees Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice HallCh 7-

11

Ch 7-12

Resource Allocation

• Resources allocation is a central management activity

• A process of allocating resources consistent with priorities indicated by approved annual objectives

• All organizations have four types of resources:

1. Financial resources

2. Physical resources

3. Human resources

4. Technological resourcesCh 8 -12 Copyright © 2011 Pearson Education

Ch 7-13

Managing Conflict

• Conflict can be defined as--------- a disagreement between two or more parties on one or more issues

• Conflict not always “bad”

• An absence of conflict can signal apathy

• Conflict can help managers identify problems


Ch 7-14

Managing ConflictApproaches for Managing Conflicts

Avoidance Ignoring the problem in hopes that the conflict will resolve itself

Compromising (Defusing) playing down differences between conflicting parties (there is neither a clear winner nor loser )

Confrontation holding a meeting at which conflicting parties present their views and work through their differences.


Ch 7-15

Matching Structure with Strategy

• Changes in strategy lead to changes in organizational Structure Structure largely dictates how

objectives and policies will be established

Structure dictates how resources will be allocated


Ch 7-16

Matching Structure with Strategy

• Functional Structure

• Divisional Structure

• Strategic Business Unit Structure (SBU)

• Matrix Structure

Basic Forms of Structure


The Functional Structure

• A functional structure groups tasks & activities by business functions such as production &operation ; marketing ; finance ;accounting …etc

• The functional structure is the widely used structure because it is the simplest , least expensive, and promotes much specialization of labor

• A university may structure its activates by major functions that include academic affairs , student service , alumni relation , maintenance , and accounting

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Ch 7-17

The Divisional Structure (decentralized structure )

• It is suitable for the large corporations • It can be organized in one of four ways By geographic area By product or service By customers By process The divisional structure is the second widely used

structure because it enables the corporation to motivate employees ; control operation and compete successfully in diverse location

The national investor (a comprehensive banking investment firm ) organizes its activates into four divisions ; investment banking ; private equity ; asset management ; and real estate


Ch 7-18

The Strategic Business Unit (SBU) structure

• As the number , size , and diversity of divisions in an organization increase , the SBU structure is needed .

• SABIC has grouped its many divisions into six primary SBUs ; chemicals ;; plastic ;polymers ; innovative plastics ; fertilizers and metals

• SBU can greatly facilitate strategy implementation efforts

• The SBU structure places similar divisions into SBU and delegates authority and responsibility for each unit to a senior executive who directly report to the CEO

•


Ch 7-19

The Matrix Structure

• A matrix structure is the most complex of all design because it depends on both vertical and horizontal flows of authority and communication

some advantages of the matrix structure ; The project objectives are clear channel of communication will be increased Facilitate the use of specialized personal, equipments ,

and facilities For a matrix structure to be effective , Organizations need participative planning Training Clear mutual understanding of roles and responsibilities Excellent internal communication Mutual trust and confidence


Ch 7-20

Ch 7-21

Restructuring,, and Re-Engineering

Restructuring (also called Downsizing, rightsizing) )

• Reducing the size of the firm in terms of number of employees , number of divisions or units

• The target is---------- to improve both efficiency and effectiveness


Ch 7-22

Re-engineering ;it is called also Process innovation , Process redesign

• Reengineering is concerned with employee and customer well being than shareholder well – being .

• The purpose is improving cost - quality – service – and speed of the production


Ch 7-23

Linking Performance and Pay to Strategies

Situation in the Arab World

• Most companies adopt a compensation system which primarily includes a base salary with annual rises.

• Increasingly in large Arab corporations there is a tendency to utilize pay systems similar to those found in western countries.


Ch 7-24

Production/Operations Concerns

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


Production/Operations Concerns (cont’d)Production/Operations Decisions

• Plant size

• Plant location

• Product design

• Choice of equipment

• Shipping and packaging

• Technological innovation

• Equipment and resource utilization

• Kind of tooling

• Inventory / Inventory control

• Quality control

• Cost control

• Use of standards

• Job specialization

• Employee training


Ch 7-26

Human Resource Concerns

Human Resource Strategic Responsibilities

• Assessing staffing needs/costs

• Developing performance incentives

• Child-care policies

• Work–life balance issues


Benefits of a Diverse Workforce

• Improves corporate culture

• Improves employee morale

• Leads to easier recruitment of employees

• Decreases complaints and litigation

• Increases creativity

• Improves client relations

• Increases productivity

• Maximizes brand identity

• Reduces training costs


Ch 8 -1 Copyright © 2011 Pearson Education. Strategic Management: Concepts and Cases Arab World...

Documents

Transcript of Ch 8 -1 Copyright © 2011 Pearson Education. Strategic Management: Concepts and Cases Arab World...