Strategic Management 7

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Ch 7 -1
Chapter 7
Implementing Strategies: Management &
Operations Issues
Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Ch 7 -2

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Ch 7 -3
Strategy Formulation vs.
Implementation
Strategy Formulation
 Positioning forces
before the action
 Focus on effectiveness
 Primarily intellectual
 Requires good intuitive
and analytical skills
 Requires coordination
among a few people
Strategy Implementation
 Managing forces during
the action
 Focus on efficiency
 Primarily operational
 Requires special
motivation and
leadership skills
 Requires coordination
among many people

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 Shift in responsibility
Nature of Strategy Implementation
Management Perspectives
Divisional or
Functional
Managers
Strategists

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Ch 7 -5
Management Issues Central to
Strategy Implementation
 Establish annual
objectives
 Devise policies
 Allocate resources
 Alter existing
organizational structure
 Restructure & reengineer
 Revise reward & incentive
plans
 Minimize resistance to
change
 Match managers to strategy
 Develop a strategy-
supportive culture
 Adapt production/operations
processes
 Develop an effective human
resources function
 Downsize & lay off as
needed
 Link performance & pay to
strategies

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Purpose of Annual Objectives
Basis for resource allocation
Mechanism for management evaluation
Major instrument for monitoring progress
toward achieving long-term objectives
Establish priorities (organizational, divisional,
and departmental)

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Annual Objectives
 Horizontal consistency of objectives
 Vertical consistency of objectives

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Policies
 Policies set boundaries, constraints,
and limits on the kinds of
administrative actions that can be
taken to reward and sanction
behavior

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Resource Allocation
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
Four Types of Resources

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Managing Conflict
 Conflict not always “bad”
 Lack of conflict may signal apathy
 Can energize opposing groups to action
 May help managers identify problems

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Managing Conflict
 Approaches for managing and resolving
conflict
 Avoidance
 Defusion
 Confrontation

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Matching Structure with Strategy
 Structure dictates how objectives
and policies will be established
 Structure dictates how resources
will be allocated
 Changes in strategy often lead to
changes in organizational structure

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Basic Forms of Structure
 Functional Structure
 Divisional Structure
 Strategic Business Unit Structure
(SBU)
 Matrix Structure

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Functional Structure
 Group tasks and activities by
business function

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Functional Structure

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Divisional Structure
 Can be organized in one of four
ways:
 By geographic area
 By product or service
 By customer
 By process

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Divisional Structure

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Strategic Business Unit Structure
(SBU)
 Group similar divisions into
strategic business units and
delegate authority and
responsibility for each unit to a
senior executive who reports
directly to the chief executive
officer

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Matrix Structure
 The most complex of all designs
because it depends upon both
vertical and horizontal flows of
authority and communication

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Matrix Structure

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Restructuring, Reengineering, and
E-engineering
Restructuring is called
Downsizing
Rightsizing
Delayering

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Restructuring, Reengineering, and
E-engineering
Cornerstones of Reengineering
Decentralization
Reciprocal interdependence
Information sharing

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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?

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Creating a Strategy-Supportive Culture
1. Formal statements of organizational
philosophy
2. Design of physical spaces
3. Deliberate role modeling, teaching,
and coaching
4. Explicit reward and status system
5. Stories, legends, myths

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Creating a Strategy-Supportive Culture
6. What leaders pay attention to
7. Leader reactions to critical incidents and
crises
8. Organizational design and structure
9. Organizational systems and procedures
10. Criteria for recruitment, selection,
promotion, leveling off, retirement, and
“excommunication” of people

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Production/Operations Concerns
Production processes typically
constitute more than 70% of a
firm’s total assets

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Production/Operations Decision
Examples
Plant size
Inventory / Inventory control
Quality control
Cost control
Technological innovation

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Human Resource Concerns
Assessing staffing needs/costs
Furloughs/Layoffs
Developing performance incentives
ESOPs
Work–life balance issues
Matching managers with strategy

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Corporate Wellness Programs
 Wellness of employees has
become a strategic issue for many
firms