Copyright 2005 Prentice Hall1 Bus 411 Day 13. Copyright 2007 Prentice Hall Ch 7-2 Agenda Assignment...
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Copyright 2007 Prentice Hall Ch 7-3 Timeline Today Chapter 7 Determine team assignments (3 teams, 4 Case Studies each ) March 9 Chapter 8 Assignment 5 due March 13 Chapter 9 Mid-term assigned March 16 How to present a case study Mid-term due Tony Case study One Apple Computer March 20 Team 1 Case Study Two Dell Computer March 23 Team 2 Case Study Three PepsiCo March Spring Break
Transcript of Copyright 2005 Prentice Hall1 Bus 411 Day 13. Copyright 2007 Prentice Hall Ch 7-2 Agenda Assignment...
Copyright 2005 Prentice Hall 1
Bus 411
Day 13
Copyright 2007 Prentice Hall Ch 7-2
Agenda
Assignment 4 Not Corrected yet Will have done by next class
Assignment 5 Due March 9 Mid-term exam
March 13-16 Take home (non-group work) 20-25 Short essays Intense-- ~10 hours
Pick 3 teams Discussion on Implementing Strategies: Management &
Operations Issues
Copyright 2007 Prentice Hall Ch 7-3
Timeline Today
Chapter 7 Determine team assignments (3 teams, 4 Case Studies each )
March 9 Chapter 8 Assignment 5 due
March 13 Chapter 9 Mid-term assigned
March 16 How to present a case study Mid-term due Tony Case study One Apple Computer
March 20 Team 1 Case Study Two Dell Computer
March 23 Team 2 Case Study Three PepsiCo
March 26-30 Spring Break
Copyright 2007 Prentice Hall Ch 7-4
Chapter 7Implementing Strategies: Management & Operations Issues
Strategic Management:
Concepts & Cases11th EditionFred David
Copyright 2007 Prentice Hall Ch 7-5
Pretend that every single person you meet has a sign around his or her neck that says, “Make me feel important” –
Mary Kay Ash, CEO of Mary Kay, Inc.
Implementing Strategies
Copyright 2007 Prentice Hall Ch 7-6
-- Successful strategy formulation does not guarantee successful strategy implementation
The Nature of Strategy Implementation
Copyright 2007 Prentice Hall Ch 7-7
Formulation positions forces before the action
Implementation manages forces during the action
Nature of Strategy Implementation
Formulation vs. Implementation
Copyright 2007 Prentice Hall Ch 7-8
Formulation focuses on effectiveness
Implementation focuses on efficiency
Nature of Strategy Implementation
Formulation vs. Implementation
Copyright 2007 Prentice Hall Ch 7-9
Formulation is primarily an intellectual process
Implementation is primarily an operational process
Nature of Strategy Implementation
Formulation vs. Implementation
Copyright 2007 Prentice Hall Ch 7-10
Formulation requires good intuitive & analytical skills
Implementation requires special motivational & leadership skills
Nature of Strategy Implementation
Formulation vs. Implementation
Copyright 2007 Prentice Hall Ch 7-11
Formulation requires coordination among a few individuals
Implementation requires coordination among many individuals
Nature of Strategy Implementation
Formulation vs. Implementation
Copyright 2007 Prentice Hall Ch 7-12
Varies among different types & sizes of organizations
Nature of Strategy Implementation
Strategy Implementation
Copyright 2007 Prentice Hall Ch 7-13
Altering sales territories Adding new departments Closing facilities Hiring new employees Cost-control procedures Modifying advertising strategies Building new facilities
Nature of Strategy Implementation
Implementation Activities
Copyright 2007 Prentice Hall Ch 7-14
Shift in responsibility
Nature of Strategy Implementation
Management Perspectives
Division or FunctionalManagers
Strategists
Copyright 2007 Prentice Hall Ch 7-15
Management Issues
ManagementIssues
Resources
Organizational structure
Restructuring
Rewards/Incentives
Annual Objectives
Policies
Copyright 2007 Prentice Hall Ch 7-16
Management Issues (cont’d)
ManagementIssues
Supportive Culture
Production/Operations
Human Resources
Resistance to Change
Natural Environment
Copyright 2007 Prentice Hall Ch 7-17
Management Issues
Annual Objectives --
-- Decentralized activity
-- Directly involve all managers in the organization
Copyright 2007 Prentice Hall Ch 7-18
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)
Copyright 2007 Prentice Hall Ch 7-19
Management Issues
Consistency of Annual Objectives --
Across hierarchical levels
Horizontally consistent
Vertically consistent
Copyright 2007 Prentice Hall Ch 7-20
Management Issues
Requirements of Annual Objectives
Measurable
Consistent
Reasonable
Challenging
Clear
Understood
Timely
Copyright 2007 Prentice Hall Ch 7-21
Management Issues
Annual Objectives Should State
Quantity
Quality
Cost
Time
Be Verifiable
Copyright 2007 Prentice Hall Ch 7-22
Management Issues
ManagementIssues
Resources
Organizational structure
Restructuring
Rewards/Incentives
Annual Objectives
Policies
Copyright 2007 Prentice Hall Ch 7-23
Management Issues
Policies --
-- Facilitate the solving or recurring problems & guide implementation of strategy
Copyright 2007 Prentice Hall Ch 7-24
Management Issues
Policies Establish --
Boundaries
Constraints
Limits
Copyright 2007 Prentice Hall Ch 7-25
Management Issues
ManagementIssues
Resources
Organizational structure
Restructuring
Rewards/Incentives
Annual Objectives
Policies
Copyright 2007 Prentice Hall Ch 7-26
Management Issues
Resource Allocation
-- Central management activity that allows for the execution of strategy
Copyright 2007 Prentice Hall Ch 7-27
Management Issues
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
4 Types of Resources
Copyright 2007 Prentice Hall Ch 7-28
Management Issues
Managing Conflict
-- Disagreement between two more parties on one or more issues
Copyright 2007 Prentice Hall Ch 7-29
Management Issues
Conflict not always “bad”
No conflict may signal apathy
Can energize opposing groups to action
May help managers identify problems
Managing Conflict
Copyright 2007 Prentice Hall Ch 7-30
Management Issues
Avoidance
Diffusion
Confrontation
Conflict Management & Resolution
Copyright 2007 Prentice Hall Ch 7-31
Management Issues
ManagementIssues
Resources
Organizational structure
Restructuring
Rewards/Incentives
Annual Objectives
Policies
Copyright 2007 Prentice Hall Ch 7-32
Management Issues
Matching Structure w/ Strategy
-- Changes in strategy = Changes in structure
Copyright 2007 Prentice Hall Ch 7-33
Management Issues
Structure dictates how objectives & policies will be established
Structure dictates how resources will be allocated
Structure & Strategy
Copyright 2007 Prentice Hall Ch 7-34
New administrativeproblems emerge
New strategyIs formulated
Organizationalperformance
declines
Organizational performance
improves
New organizationalstructure is established
Chandler’s Strategy-Structure Relationship
Copyright 2007 Prentice Hall Ch 7-35
Management Issues
Functional Structure
Divisional Structure
Strategic Business Unit Structure (SBU)
Matrix Structure
Basic Forms of Structure
Copyright 2007 Prentice Hall Ch 7-36
Functional Structure
Most widely used Simple and least expensive
Groups activities by business function Disadvantages
Forces accountability to the top Minimizes career development opportunities Characterized by low employee morale, line/staff
conflict, poor delegation of authority, inadequate planning for products and markets
Often leads to short-term and narrow thinking
Copyright 2007 Prentice Hall Ch 7-37
Divisional Structure
Second most common type of structure Can be organized by:
Geographic area Product or service Customer Process
Copyright 2007 Prentice Hall Ch 7-38
Divisional Structure
Advantages Clear accountability Higher employee morale Creates career development opportunities for
managers Allows local control of situations Leads to a competitive climate within an
organization Allows new businesses and products to be added
easily
Copyright 2007 Prentice Hall Ch 7-39
Divisional Structure
Disadvantages Can be costly to set up Each division requires functional specialists Duplication of staff services, facilities, and
personnel Managers must be well qualified Requires an elaborate, headquarters-driven
control system Competition between divisions may become so
intense that it is dysfunctional
Copyright 2007 Prentice Hall Ch 7-40
Appropriateness of Divisional Structure
Geographic area – Organizations whose strategies need to be tailored to fit the needs and characteristics of customers in different geographic areas
Product or Service – When specific products or services need special emphasis
Process – When each process (division) is responsible for generating revenues and profits
Copyright 2007 Prentice Hall Ch 7-41
The Strategic Business Unit (SBU)
In multidivisional organizations, an SBU structure can greatly facilitate strategy-implementation efforts.
Advantages of improved coordination and accountability
Disadvantages Requires an additional layer of management Role of the group vice president is often
ambiguous
Copyright 2007 Prentice Hall Ch 7-42
Copyright 2007 Prentice Hall Ch 7-43
The Matrix Structure Most complex of all designs – requires both
vertical and horizontal flows of authority and communication
Disadvantages Can result in higher overhead Dual lines of budget authority Dual sources of reward and punishment Shared authority Dual reporting channels Need for an extensive and effective
communication system
Copyright 2007 Prentice Hall Ch 7-44
The Matrix Structure
Advantages Project objectives are clear Many channels of communication Workers can see visible results of their work Shutting down a project can be accomplished
relatively easily Facilitates the use of specialized personnel,
equipment, and facilities
Copyright 2007 Prentice Hall Ch 7-45
Copyright 2007 Prentice Hall Ch 7-46
Do’s and Don’ts in Developing Organizational Charts
Do’s Reserve the title CEO for
the top executive Use the title “chief” or
“VP” or “manager” for functional business executives
Directly below the CEO it is best to have a COO and other “chief’ officers
Don’ts Use the title president for
the top executive Use the title president for
functional business executives
Copyright 2007 Prentice Hall Ch 7-47
Copyright 2007 Prentice Hall Ch 7-48
Management Issues
ManagementIssues
Resources
Organizational structure
Restructuring
Rewards/Incentives
Annual Objectives
Policies
Copyright 2007 Prentice Hall Ch 7-49
Management Issues
Restructuring
-- Reducing the size of the firm – # of employees, divisions and/or units, # of hierarchical levels
Copyright 2007 Prentice Hall Ch 7-50
Management Issues
Restructuring
Downsizing
Rightsizing
Delayering
Copyright 2007 Prentice Hall Ch 7-51
Management Issues
Reengineering
-- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed
Copyright 2007 Prentice Hall Ch 7-52
Management Issues
Reengineering
Process management
Process innovation
Process redesign
Copyright 2007 Prentice Hall Ch 7-53
Management Issues
ManagementIssues
Resources
Organizational structure
Restructuring
Rewards/Incentives
Annual Objectives
Policies
Copyright 2007 Prentice Hall Ch 7-54
Management Issues
Linking Pay/Performance to Strategies
-- Pay for performance systems
Copyright 2007 Prentice Hall Ch 7-55
Management Issues
Linking Pay/Performance to Strategies
Dual bonus systemsBased on annual and long-term objectives
Profit sharing systemsCompany makes money .. Employees make money
Gain sharing systemsExceeding “agreed to” objectives
Copyright 2007 Prentice Hall Ch 7-56
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?
Copyright 2007 Prentice Hall Ch 7-57
http://www.forbes.com/static/execpay2005/totcomp.html
Copyright 2007 Prentice Hall Ch 7-58
Management Issues (cont’d)
ManagementIssues
Supportive Culture
Production/Operations
Human Resources
Resistance to Change
Natural Environment
Copyright 2007 Prentice Hall Ch 7-59
Management Issues
Resistance to Change
-- Single greatest threat to successful strategy implementation
Copyright 2007 Prentice Hall Ch 7-60
Management Issues
Resistance to Change
-- Raises anxiety; fear concerningEconomic loss
Inconvenience
Uncertainty
Break in status-quo
Copyright 2007 Prentice Hall Ch 7-61
Management Issues
Change StrategiesForce Change Strategy
Just do it
Educative Change StrategyThis is why we are changing
Rational or Self-Interest Change Strategy
This is why change is good for you
Copyright 2007 Prentice Hall Ch 7-62
Management Issues (cont’d)
ManagementIssues
Supportive Culture
Production/Operations
Human Resources
Resistance to Change
Natural Environment
Copyright 2007 Prentice Hall Ch 7-63
Management Issues
Natural Environment
-- Wide appreciation for firms that “mend” rather than “harm” the environment
Copyright 2007 Prentice Hall Ch 7-64
Management Issues
Natural Environment – Environmental Strategies
Develop/acquire “green” businesses
Divesting environmental-damaging business
Low-cost producer through waste minimization & energy conservation
Copyright 2007 Prentice Hall Ch 7-65
Management Issues (cont’d)
ManagementIssues
Supportive Culture
Production/Operations
Human Resources
Resistance to Change
Natural Environment
Copyright 2007 Prentice Hall Ch 7-66
Management Issues
Strategy-Supportive Culture
-- Preserve, emphasize, & build upon aspects of existing culture that support new strategies
Copyright 2007 Prentice Hall Ch 7-67
• Formal statements of philosophy, charters, etc. used for recruitment and selection, socialization
• Designing of physical spaces, facades, buildings• Deliberate role modeling, teaching and coaching• Explicit reward and status system, promotion criteria• Stories, legends, myths about key people and events
Management IssuesElements linking culture to strategy:
Copyright 2007 Prentice Hall Ch 7-68
• What leaders pay attention to, measure and control• Leader reactions to critical incidents and crises• How the organization is designed and structured• Organizational systems and procedures• Criteria used for recruitment, selection, promotion,
retirement
Management IssuesElements linking culture to strategy:
Copyright 2007 Prentice Hall Ch 7-69
Management Issues (cont’d)
ManagementIssues
Supportive Culture
Production/Operations
Human Resources
Resistance to Change
Natural Environment
Copyright 2007 Prentice Hall Ch 7-70
Management Issues
Production/Operations Concerns
-- Production processes typically constitute more than 70% of firm’s total assets
Copyright 2007 Prentice Hall Ch 7-71
Management Issues
Production/Operations Decisions
Plant size
Inventory/Inventory control
Quality control
Cost control
Technological innovation
Copyright 2007 Prentice Hall Ch 7-72
Management Issues (cont’d)
ManagementIssues
Supportive Culture
Production/Operations
Human Resources
Resistance to Change
Natural Environment
Copyright 2007 Prentice Hall Ch 7-73
Management Issues
Human Resource Concerns
-- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.
Copyright 2007 Prentice Hall Ch 7-74
Management Issues
Human Resource Strategic Responsibilities
Assessing staffing needs/costs
Developing performance incentives
ESOP’s
Child-care policies
Work-life balance issues
Copyright 2007 Prentice Hall Ch 7-75
Diversity Issues
CEO Company AgeMeg Whitman eBay 49Andrea Jung Avon Products 47Anne Mulcahy Xerox 52Marjorie Magner Citigroup 56Betsy Holden Kraft Foods 49Ann Moore AOL Time Warner 57
Women CEO’s in U.S. 2005 (examples)
http://money.cnn.com/magazines/fortune/fortune500/womenceos/
Copyright 2007 Prentice Hall Ch 7-76
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
Copyright 2007 Prentice Hall Ch 7-77
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 CostsBenefExSumEN.pdf
