David sm13 ppt_07

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Ch 7 -1

Chapter 7Implementing Strategies: Management & Operations Issues

Strategic Management: Concepts & Cases

13th EditionFred David


Ch 7 -2


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


Ch 7 -4

Shift in responsibility

Nature of Strategy Implementation

Management Perspectives

Divisional or FunctionalManagers

Strategists


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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 & furlough as

needed Link performance & pay to

strategies


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Purpose of Annual Objectives

Basis for resource allocationMechanism for management evaluationMajor instrument for monitoring progress toward achieving long-term objectivesEstablish 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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Ch 7 -14

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


Ch 7 -16

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


Ch 7 -21

Matrix Structure


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Restructuring, Reengineering, and E-engineering

Restructuring is calledDownsizingRightsizingDelayering


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Restructuring, Reengineering, and E-engineering

Cornerstones of ReengineeringDecentralizationReciprocal interdependenceInformation 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?


Ch 7 -25

Managing Resistance to Change

Force change strategy Educative change strategy Rational or self-interest change

strategy


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Creating a Strategy-Supportive Culture

1. Formal statements of organizational philosophy

2. Design of physical spaces3. Deliberate role modeling, teaching,

and coaching4. Explicit reward and status system5. Stories, legends, myths, and parables


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Creating a Strategy-Supportive Culture

6. What leaders pay attention to7. Leader reactions to critical incidents and

crises8. Organizational design and structure9. Organizational systems and procedures10. 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 ExamplesPlant sizeInventory / Inventory controlQuality controlCost controlTechnological innovation


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Human Resource ConcernsAssessing staffing needs/costsFurloughsDeveloping performance incentivesESOPsWork–life balance issuesMatching managers with strategy


Ch 7 -31

Corporate Wellness Programs

Wellness of employees has become a strategic issue for many firms


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David sm13 ppt_07

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