Implementing Strategies - Management Issues

Chapter 7 Implementing Strategies: Management IssuesStrategic Management: Concepts and Cases Fred R. David

Fred R. David Prentice Hall

Ch 7-1

Chapter Outline The nature of Strategy Implementation Annual Objectives Policies Resource AllocationFred R. David Prentice Hall Ch 7-2

Chapter Outline Managing Conflict Matching Structure with Strategy Restructuring, Reengineering, and EEngineering Linking Performance and Pay to StrategiesFred R. David Prentice Hall Ch 7-3

Chapter Outline Managing Resistance to Change Managing the Natural Environment Creating a Strategy-Supportive CultureCh 7-4


Chapter Outline Production/Operations Concerns When Implementing Strategies Human Resource Concerns When Implementing StrategiesFred R. David Prentice Hall Ch 7-5

Implementing Strategies: Management IssuesPretend 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.


Ch 7-6

Implementing Strategies: Strategy Analysis Issues & Choice ManagementContrasting strategy formulation and strategy implementation Formulation is positioning forces before the action Implementation is managing forces during the action


Ch 7-7

Implementing Strategies: Strategy Analysis Issues & Choice ManagementContrasting strategy formulation and strategy implementation Formulation focuses on effectiveness Implementation focuses on efficiency


Ch 7-8

Implementing Strategies: Strategy Analysis Issues & Choice ManagementContrasting strategy formulation and strategy implementation Formulation is primarily an intellectual process Implementation is primarily an operational process


Ch 7-9

Implementing Strategies: Strategy Analysis Issues & Choice ManagementContrasting strategy formulation and strategy implementation Formulation requires good intuitive and analytical skills Implementation requires special motivation and leadership skillsFred R. David Prentice Hall Ch 7-10

Implementing Strategies: Strategy Analysis Issues & Choice ManagementContrasting strategy formulation and strategy implementation Formulation requires coordination among a few individuals Implementation requires coordination among many personsFred R. David Prentice Hall Ch 7-11

Implementing Strategies: Strategy Analysis Issues & Choice ManagementStrategy implementation Varies among different types and sizes of organizations


Ch 7-12

Implementing Strategies: Strategy Analysis Issues & Choice ManagementStrategy implementation Actions Altering sales territories Adding new departments Closing facilities Hiring new employees Cost-control procedures Changing advertising strategies Building new facilitiesFred R. David Prentice Hall Ch 7-13

Management PerspectivesFormulation to Implementation transition Shift in responsibility From strategists to division and functional managers


Ch 7-14

Management Issues

Annual Objectives Policies Resources Organizational structure Restructuring Rewards/Incentives

Management Issues


Ch 7-15

Management Issues (continued)

Resistance to Change Managers & strategy Supportive culture Production/operations Human resources Downsizing

Management Issues


Ch 7-16

Annual Objectives

Decentralized activity Involves all managers in the firm


Ch 7-17

Annual Objectives1. Basis for allocating resources 2. Primary mechanism for evaluating managers 3. Major instrument for monitoring progress toward long-term objectives 4. Establish organizational, divisional, and departmental prioritiesFred R. David Prentice Hall Ch 7-18

Annual Objectives

Horizontal consistency of objectives Vertical consistency of objectives


Ch 7-19

Annual ObjectivesObjectives should state Quantity Quality Cost Time


Ch 7-20

Policies

Policies facilitate solving recurring problems and guide the implementation of strategy


Ch 7-21

PoliciesPolicies set Boundaries Constraints limits


Ch 7-22

PoliciesExample Issues requiring management policy - To offer extensive or limited management development workshops and seminars To centralize or decentralize employee-training activities To recruit through employment agencies, college campuses, and/or newspapers To promote from within or hire from the outside To establish a high- or low-safety stock of inventory To buy lease, or rent new production equipmentFred R. David Prentice Hall Ch 7-23

Resource AllocationResource Allocation A central management activity that allows for strategy execution


Ch 7-24

Resource AllocationFour types of resources 1. 2. 3. 4. Financial resources Physical resources Human resources Technological resources


Ch 7-25

Managing ConflictConflict Disagreement between two or more parties on one or more issues


Ch 7-26

Managing Conflict Conflict is not always bad Absence of conflict Signal indifference or apathy

Can energize opposing groups to action May help managers identify problems


Ch 7-27

Managing ConflictConflict Management and Resolution Avoidance Defusion Confrontation


Ch 7-28

Matching Structure with Strategy

Changes in Strategy

Changes in Structure

1. Structure largely dictates how objectives and policies will be established. 2. Structure dictates how resources will be allocatedFred R. David Prentice Hall Ch 7-29

Chandlers Strategy-Structure RelationshipNew strategy Is formulated New administrative problems emerge Organizational performance declines

Organizational performance improves

New organizational structure is established


Ch 7-30

Basic Forms of Structure1. Functional Structure Groups tasks and activities by business function

1. Divisional Structure Decentralized and organized by geography, product, customer, or process


Ch 7-31

Basic Forms of Structure3. Strategic Business Unit Structure (SBU) Groups similar divisions; delegates authority and responsibility to SBU executive

4. Matrix Structure Most complex of all designs. Depends upon both vertical and horizontal flows of authority and communicationFred R. David Prentice Hall Ch 7-32

RestructuringRestructuring Reducing the size of the firm in terms of number of employees, divisions, or units, and the number of hierarchical levels in the firms organizational structureCh 7-33


RestructuringAlso called Downsizing Rightsizing Delayering


Ch 7-34

Restructuring Employed when ratios out of line with benchmarked competitors Primary benefit sought is cost reduction


Ch 7-35

ReengineeringReengineering Involves reconfiguring or redesigning work, jobs, and processes to improve cost, quality, service and speed.


Ch 7-36

ReengineeringAlso called Process management Process innovation Process redesign


Ch 7-37

ReengineeringReengineering Concerned more with employee and customer well-being than shareholder well-being


Ch 7-38

Linking Performance and Pay to Strategies

Most companies practicing pay-forperformance


Ch 7-39

Linking Performance and Pay to Strategies Dual bonus system becoming more common Based on both annual objectives and long-term objectives

Profit Sharing Gain Sharing

Incentive compensation used by 30% of companies

Performance targets set for employees or departmentsFred R. David Prentice Hall Ch 7-40

Tests for Performance-Pay PlansDoes 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?Fred R. David Prentice Hall Ch 7-41

Managing Resistance to ChangeChange raises anxiety over fear of: Economic loss Inconvenience Uncertainty Break in status-quo


Ch 7-42

Managing Resistance to ChangeResistance to change Single greatest threat to successful strategy implementation


Ch 7-43

Change Strategies

Force Change Strategy Educative Change Strategy Rational or Self-Interest Change Strategy


Ch 7-44

Managing the Natural Environment Wide appreciation for firms that conduct operations that mend rather than harm the environment.


Ch 7-45

Creating a Strategy-Supportive CultureStrategists should strive to preserve, emphasize, and build upon aspects of existing culture that support new strategies.


Ch 7-46

Creating a Strategy-Supportive CultureElements linking culture to strategy:1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Formal statements of philosophy, charters, etc. used for recruitment and selection, and 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 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, retirementCh 7-47


Production/Operations Concerns Production processes typically constitute more than 70% of firms total assets Decisions on: Plant size Inventory/inventory control Quality control Cost control Technological innovationFred R. David Prentice Hall Ch 7-48

Human Resource Concerns Assessing staffing needs and costs Develop performance incentives ESOPs Child-care policies Work-life balance


Ch 7-49

Key Terms

Annual objectives Avoidance Benchmarking Bonus system Conflict Confrontation Culture Defusion DelayeringFred R. David Prentice Hall Ch 7-50

Key Terms

Decentralized structure Divisional structure Downsizing Educative change strategy Employee Stock Ownership Plan (ESOP)


Ch 7-51

Key Terms

Establishing annual objectives Force change strategy Functional structure Gain sharing Horizontal consistency of objectives Just in time Matrix structure Policy Profit sharingFred R. David Prentice Hall Ch 7-52

Key Terms

Rational change strategy Reengineering Resistance to change Resource allocation Restructuring Rightsizing Self-interest change Triangulation Vertical consistency of objectivesFred R. David Prentice Hall Ch 7-53

Implementing Strategies - Management Issues

Documents

Transcript of Implementing Strategies - Management Issues