MNG302B 2011-S2_discussion Class Slides Incl

Business Management 3B STRATEGY IMPLEMENTATION

Discussion class

Presented by:

Annemarie Davis

Tel: 012-429 8688

Email: [email protected]

mailto:[email protected]

Programme• Administrative Matters – myUnisa orientation

• Overview strategic management process

• Topic 1: What is strategy implementation?

• Topic 2: The drivers of strategy implementation

• Topic 3: The structural drivers of strategy

implementation

• Topic 4: The instruments of strategy

implementation

• Topic 5: Strategic control and evaluation

• Exam preparation

Admin matters

• Assignments:

–Compulsory assignments

–Self-assessment

• Tutorial matter

–Study guide

–Prescribed book

–Other sources

Join myUnisa

Download Acrobat Reader

myUnisa Announcements

myUnisa discussion forum

Official study material on myUnisa

myUnisa Schedule

myUnisa Additional Resources

Study skills

MNG 302B: Learning

outcomes1. Explain the challenge of strategy

implementation in the contemporary

business environment

2. Defend the choice of strategy

implementation drivers and instruments in

the light of the chosen strategies

3. Interpret strategy control decisions to

ensure that strategic planning and

strategy implementation decisions remain

on track and achieve the desired results

Strategic management process

Comprises three phases:

• Strategic planning (MNG301A)

• Strategy implementation

(MNG302B)

• Strategic control (MNG302B)

Key concepts

• Strategic management

• Strategic management process

• Stakeholders

• Competitive advantage

• Strategies

• Strategic planning

• Top management

• Survival in strategic management terms

Strategic direction

Long-term goals &

strategies

Grand strategies

Drivers for strategy

implementation

External

analysis

Internal

analysis

Strategic analysis

and choice

Structural drivers

and instruments

Strategic control

MNG302B

• The number one challenge facing

managers in the 21st century is

strategy implementation

20

What is strategy implementation?

• From thinking to doing

• Different from strategic planning

• Problems and barriers

• Drivers for strategy implementation: leadership,

culture, reward systems, structure, resource

allocation

• Instruments: short-term objectives, functional

tactics, policies

• Corporate governance

Strategy formulation versus strategy

implementation

• Formulation

• Positioning forces before

the action

• Focuses on

effectiveness

• An intellectual process

• Requires good intuitive

and analytical skills

• Requires co-ordination

among a few individuals

• Implementation

• Managing forces during

the action

• Focuses on efficiency

• An operational process

• Requires special

motivational and

leadership skills

• Requires co-ordination

among many individuals

(Ehlers & Lazenby, 2010:261-262)

Why is strategy implementation so

challenging?

• Lack of resources

• The strategy is poorly communicated

• As the strategy is cascaded down the organisation,

critical issues become lost in translation

• Actions required for implementation are not clearly

defined

• Organisational culture is not aligned to the strategy

• Reward and incentive systems are not aligned to

strategic goals

• Poor leadership

23

(Pienaar, Muell & Cronje, 2008:13)

Barriers to strategy implementation

• Refer to SG page 13 and myUnisa

discussion

• Vision barrier

• Management barrier

• Resource barrier

• People barrier


Learning outcomes activity

1. Explain what strategy implementation entails.

2. Comment on the importance of strategy implementation

as a component of the strategic management process

3. Distinguish between strategic planning and strategy

implementation

4. Discuss the strategy implementation challenges and

problems that organisations face in the contemporary

business environment

5. Comment briefly on the importance of corporate

governance in strategy implementation

Strategic change and types of change

• Strategic change = all the efforts and

actions that are taking place to move an

organisation from its present state toward

the desired future state to increase its

competitive position and its profitability

Section 1.5 on pg 7 in SG

Types of strategic change

• Adaptation – only adapt to new situation,

organisation can handle it

• Reconstruction – a sudden alteration in

the market conditions; reconstruct

processes and policies

• Evolution – fundamental changes over

time

• Revolution – fundamental changes as a

result of sudden and fast-changing

conditions

Issues to consider during change

• Time – how quickly the change is needed

• Scope – is it dramatic revolutionary change or

moderate change?

• Diversity – what is the level of homogeneity in

the organisation?

Issues to consider during change

• Capacity – does the organisation have the

capacity in terms of the resources needed to

change?

• Readiness – are the employees ready for the

change? Refers to the level of resistance to

change.

• Capability - do the organisation‟s employees

and managers have the capabilities to

implement the change?

Causes of strategic change

• Environment

• Technology

• Regulation

• Business relationships

• Strategic awareness and skills of managers and

employees

Learning organisation

• Learning must be a continuous process

• Employees work and learn as a team

• Management development and personal growth

• Shared visions of the future

• Employees‟ skills are most important asset in the

organisation

• Reconsider organisational habits

• Systems approach

The strategic change process

• Identify the areas of change

• Manage resistance to change

• Power and influence

• The learning organisation

Section 1.7 on pg 9 in SG

Identify the areas of change

• New technology

• Administrative changes

• People

Manage resistance to change

• Education and communication

• Participation and involvement

• Facilitation and support

• Negotiation and agreement

• Manipulation and cooptation

• Giving clear direction

• Explicit and implicit coercion

Power and influence

• Managers must have power to implement

the decisions that will bring about change

• Influence to change perceptions


1. Explain the different types of strategic change and the

issues involved

2. Comment on the strategic change process

3. Provide guidelines on overcoming resistance to change

Strategy implementation approaches

• Refer to SG page 20

• McKinsey 7-S framework

• Modified McKinsey 7-S framework

(MNG302B Study Guide, 2010:23)


1. Diagrammatically depict the modified McKinsey 7S

framework

2. Discuss the components of the modified McKinsey 7S

framework

3. Described the drivers of strategy implementation

4. Describe the instruments of strategy implementation

The role of leadership in strategy

implementation


implementation: strategies cannot be

implemented by itself – someone

needs to lead and coordinate this

process

Leadership drives strategic change

Leadership

• Very important for successful

implementation

• Leaders vs. managers – table 2.1 on

page 38 in SG

• Various responsibilities



implementation

Emotional intelligence• Self-awareness - refers to the extent to which

an individual is aware of his or her emotions, strengths and weaknesses.

• Self-regulation - refers to the extent that people are in control of their emotions

• Motivation - one trait common to almost all effective leaders is motivation

• Empathy - refers to the extent that a leader can thoughtfully consider employees‟ feelings in the process of making decision.

• Social skills - leading people in a desired direction, capable of managing teams and build relationship throughout the entire organisation

(MNG302B Study Guide, 2010:28) & (Ehlers & Lazenby, 2010:284-285)

Birth Rapid

growthMaturity Decline

Risk

taker

CaretakerSurgeon

Under-

taker

(Ehlers & Lazenby, 2010:290)

Leadership styles and the organisational life cycle


1. Give reasons why leadership is an important driver of strategy

implementation.

2. Discuss the attributes of emotional intelligence.

3. Indicate the differences between management and leadership

4. Distinguish between visionary leaders and managerial leaders

5. Comment on the „vehicles‟ that leaders can use to shape the

organisational culture

6. Explain why different strategies require different leadership styles

7. Interpret decisions made by top management regarding leadership

in strategy implementation

8. Discuss corporate governance and leadership in light of the King

Reports

Activity

• Answer question B1 on page 147 in the study guide

• The strategy implementation process can be very challenging, and

organisations often find it difficult to implement strategies. Various

approaches exist that organisations can follow to ensure that

strategy implementation is successful.

In the light of the above statement, answer the following questions:

1. Discuss the strategy implementation challenges and problems that

organisations face in the contemporary business environment (10).

2. Comment briefly on the importance of corporate governance in

strategy implementation (5).

3. Discuss the components of the modified McKinsey 7-s framework

(10).

Organisational culture

• Organisational culture as a driver of strategy implementation

• What is culture?

• Why important?

• Origin of culture

• Types of culture:

– Role

– Power

– Task

– Person(MNG302B Study Guide, 2010:52) & (Ehlers & Lazenby, 2010:292)

Adaptive, weak, strong and unhealthy

cultures

• An adaptive organisational culture comprises members who share a feeling of

confidence that the organisation can neutralise threats and exploit

opportunities that cross its path. There is a receptiveness to risk taking,

innovation and experimentation and follows a pro-active approach to strategic

change.

• A weak culture is fragmented and there are very few traditions, few values

and beliefs that are shared. Subcultures exist and there is very little cohesion

and no sense of a corporate identity.

• Strong organisational culture – the values are norms are deeply ingrained and

difficult to eliminate. It can be a valuable asset if a tight fit exists between the

chosen strategy and a strong culture.

• An unhealthy culture has a politicised internal environmental where influential

managers operate in autonomous kingdoms. It is characterised by hostile

resistance to change and people who advocate new things.


Types of culture (Charles Handy)

• A power culture is frequently found in entrepreneurial organisations. It

can be compared to a spider (power and influence source) and a web

(functional areas). The power culture depends on trust and empathy for

effectiveness and personal communication. Typically, within a power culture

few rules and procedures exist and individuals employed tend to be power-

oriented. Power cultures are strong and have the ability to move quickly.

• A role culture is often stereotyped as a bureaucracy where logic,

rationality, rules and procedures dominate. Within this type of culture, the

role, or job description, is considered more important than the individual

who fills it. Performance over and above job description or role is not

required. Role cultures offer individuals security, predictability and

opportunity to acquire specialist expertise. It is a frustrating environment for

power-orientated and ambitious individuals. This type of culture can

succeed as long as it operates in a stable environment. It is often found in

organisations where economies of scale are more important than flexibility

and innovation.

Types of culture (Charles Handy)

• Organisations with a task culture are project-oriented and this type of

culture is often found in organisations with matrix structures. It seeks to

bring together the right people, functional expertise and resources. Groups,

project teams and task forces are formed for a specific purpose and can be

reformed, abandoned or ended. It offers a team culture where the project

outcomes are more important than the individual objectives. Influence is

widely dispersed and individuals have a high degree of control over their

work. The task culture is appropriate where flexibility, speed of reaction and

sensitivity to the market or environment is important.

• Organisations with a person culture have the individual as the central point

and the organisation only exists to serve the individuals within it. This

type of culture is formed if a group of individuals decide to band together in

order to serve their own interests better through, for example, sharing office

space, secretarial services and equipment. Examples include partnerships

of architects, doctors, lawyers and even social groups. Few organisations

can exist with this type of culture since organisations tend to have

objectives over and above those of the individual.

Cultural dimensions of Hofstede

• power distance - the extent to which people accept that

power is distributed unequally

• uncertainty avoidance - the extent to which people feel

uncomfortable with uncertainty and ambiguity

• individualism/collectivism - the extent to which there is

a preference for belonging to a tightly knit collective

rather than a more loosely knit society

• masculinity/femininity - the extent to which gender

roles are clearly distinct

• confusion dynamism - the extent to which long-

termism or short-termism tends to predominate


Activity

• Read “Google‟s Magic Formula:

Company Culture Plus

Innovation” on pages 53-56 in SG

Google

• "Googleplex" headquarters today is crammed with conference rooms,

hallway buzz sessions, sandy volleyball courts, youngsters whizzing around

on motorised scooters, and an 'anything goes' spirit. In addition –

• The 17 legendary cafes on Google's main campus offers 20 cuisines and

fantastic (and free) food (e.g., lobster gets served for lunch).

• Google engineers spend 20 per cent of their time pursuing and developing

their own ideas.

• Google's organisational hierarchy is flat.

• Google holds 64 per cent of the market share in its category in the U.S.

• In its 10-year history, Google has created more investor wealth in less time

than any other company in history-US$10.6 billion in revenue earned.

• Sheryl Sandberg, a 37-year-old VP, made a mistake that cost Google

several million dollars. When she informed founder Larry Page, he replied,

"I'm so glad you made this mistake."

Aspects of culture

• Refer to SG page 58

• Artefacts and symbols

• Values

• Underlying assumptions

• Behaviours

• People

• Leadership and management style

• Communications

• Power

• Structural issues

• Politics

Link changes

to mission

and

organisational

norms 1

Focus on

synergy and

reinforce

current

culture2

Reformulate

strategy or

change

culture

4Manage

around the

culture

3

Strong

Weak

Many FewKey factors that need to be changed

In order to implement new strategy

Match

between

change

required

and

existing

culture

(Ehlers & Lazenby, 2010:297)


1. Explain what organisational culture encompasses.

2. Discuss the aspects and levels of culture,

3. Explain why culture is an important driver for strategy

implementation.

4. Differentiate between a power, role, task and person

culture.

5. Differentiate between adaptive, weak, strong and

unhealthy cultures.

6. Explain Hofstede‟s five value dimensions.

7. Comment on the link between leadership and

organisational culture.

8. Recommend a framework for managing the strategy-

culture relationship

Activity

• Answer question B2.2 in on page 152 in

the Study Guide

• Distinguish between Handy‟s four different

types of organisational cultures.

(Tutorial letter MNG302B/103

Reward systems

• Role of reward systems

• Types of reward systems:

– Share options

– Restricted share plan

– Golden handcuffs

– Golden parachutes

– Cash

• Strategy and reward systems

• Executive compensation and King II Report

(MNG302B Study Guide, 2010:69) & (Ehlers & Lazenby, 2010:298)

The role of recognition in reward

systems

• Existential recognition

• Recognition of the way work is

performed

• Recognition of dedication to a job

• Recognition of results

Refer to table 11.3 on pg 303 in prescribed book

Role of reward systems

• Role of rewards is to motivate managers and

employees to give their commitment to the

implementation of the chosen strategy

• Reward systems should be created in such a

way that they are tightly linked to the strategy,

encourage a change in behaviour to support

strategy implementation and reward managers

for performance over the long term


Aligning the reward system with the chosen

strategy

• The start-up phase. Organisations that pursue

growth strategies should incorporate large

salaries and equity into their reward systems.

• The rapid growth phase. Reward systems

should include a salary plus large bonuses for

growth targets, plus equity for key people.

• The maturity phase. Link reward systems to

efficiency and profit-margin performance.

• The decline phase. Reward systems should be

linked to cost savings.


1. Explain the importance of reward systems in strategy

implementation.

2. Describe the major executive bonus compensation

plans.

3. Discuss recognition as a component of reward systems.

4. Match an organisation‟s compensation plan to its

chosen strategies.

5. Provide guidelines for structuring effective reward

systems.

6. Discuss corporate governance and reward systems in

light of the King Report.

The role of organisational design in the

strategy implementation process

• organisational design can be a source of

competitive advantage if it ensures that

organisational structures are

• aligned with the chosen strategy

• functional

• difficult to copy

• make it easy for customers to do business

with the organisation

Building blocks of organisational design

• Five basic parts of an organisation

– strategic apex

– middle line

– operating core

– technostructure

– support staff

Six coordinating mechanisms

• mutual adjustment

• direct supervision

• standardisation of work processes

• standardisation of outputs

• standardisation of skills and

knowledge

• standardisation of norms

Essential parameters of design

• job specialisation

• behaviour formalisation

• training

• socialisation

• unit size

• unit grouping

• planning and control systems

• liaison devices

• centralisation/decentralisation

Different types of organisational

structure

• entrepreneurial structures

• functional structures

• divisional structures

• strategic business units (SBUs)

• matrix structures

• network structures

Matching structures with strategy

Chandler’s

Strategy-Structure

Relationship


Matching structures with strategies

• Single-product or dominant product

organisations: functional structure

• Organisations with several business lines:

divisional structure

• Large, diverse organisations with unrelated

business divisions: SBU

• Product development and innovation oriented

organisations: matrix structure

Activity

• Answer question B3.1 on page 156 in the

study guide

• Provide guidelines for matching structures

with strategies (4).


1. Comment on the statement “structure follows strategy”.

2. Explain what the structure encompasses.

3. Expound on the role that structure plays in

implementing the chosen strategy.

4. Briefly explain „structure‟ as one of the components of

the McKinsey 7S framework.

5. Explain how structures evolve over time.

6. Discuss the building blocks of organisational design.

7. Explain what organisational architecture entails.

8. Describe the components of organisational architecture.

9. Discuss the role of structure in organisational

architecture.

Resource allocation

• Role of resource allocation

• Types of resources – tangible and intangible resources

– Human resources

– Financial resources

– Technological resources

– Information resources

– Physical resources

• Change in strategy = change in resource plan


The role of budgets

• A budget is a resource plan, a guideline, a

summary of what is available, planned

expenditure or a list of priorities.

• Budgets support strategy implementation

and should be based on the organisation‟s

short-term objectives and operating

results.

Role of HR in strategy implementation

Pretend that every single person you

meet has a sign around his or her

neck that says: “Make me feel

important.”

Mary Kay Ash

77

Activity

• Answer question B3.2 on page 156 in the

study guide

• Explain the role of resource allocation in

strategy implementation with specific

reference to the importance of human

resources (8).


1. Identify the different resources of an organisation.

2. Explain how the chosen strategy could be implemented

through resource allocation.

3. Match an organisation‟s resource allocation plan to its

chosen strategy.

4. Explain the role of the master budget in strategy

implementation.

5. Defend the importance of resource allocation in strategy

implementation and control.

6. Comment on the link between short-term objectives,

functional tactics and resource allocation.

7. Differentiate between strategic funds and operational

funds.

Implementing strategy through short-term

objectives, functional tactics and policies

“To become Africa‟s leading

cellular network with the best

customer service and to be the

best company to work for in

Southern Africa”

(MNG302B Study Guide, 2010:102-116) & (Ehlers & Lazenby, 2010:338-344)

Long-term goal

To have 12 million cellular

phone users in South Africa by

2016.

Finance

To obtain financing of R 15

million by the end of 2011

Human Resources

Employ ten additional

expert radio

engineers by

November 2011

Marketing

To develop two

advertising

campaigns in the

next six months

Production

To roll out 10 new

base stations in

each quarter of the

year

Finance

-Obtain one short-

term loan

-Sell debentures

Human Resources

-Headhunt

candidates from

competition

-Advertise abroad

Marketing

Buy one contract,

get second one free

for family member

for 1st year

promotion

Production

Outbid competition

for contractors

responsible for

building towers

Production

-All contractors must

adhere to ISO standards

-All tower locations must

be approved by relevant

City councils

-Preference will be given

to BEE contractors

Finance

-Debt equity ratio

may not exceed

60%

Human Resources

-All engineers must

have at least 3 years

industry experience

-Candidates from

previously

disadvantaged

backgrounds receive

preference

Marketing

- Certified copy of ID

to accompany

applications

The long-term goal is translated into short-term goals

Functional tactics are action plans that help achieve the short-term objectives

Policies guide thinking, decisions and action of managers and employees

Short-term goals

• Helps with strategy implementation:

– Operationalises long-term objectives

– Agreement about conflict that may arise

– Identifies measurable outcomes of action plans

• Different from long-term goals (breadth, specificity)

• Qualities of well formulated short-term objectives (measurable, linked to long-term goals)


Using the balanced scorecard to set

short-term goals

Creates framework for setting of:

Long-term (strategic) goals

Measures

Targets (Short-term objectives)

Initiatives (Functional tactics)

Links strategy formulation and implementation

FINANCIAL

“To succeed financially, how

should we appear to our

shareholders?

•Goals

•Measures

•Targets

•Initiatives

CUSTOMER

“To achieve our vision, how


customers?

•Goals

•Measures

•Targets

•Initiatives

INTERNAL BUSINESS

“To satisfy our shareholders

and customers, what business

process should we excel at?”

•Goals

•Measures

•Targets

•Initiatives

LEARNING & GROWTH

“To achieve our vision, how will

we sustain the ability to change

and improve?

•Goals

•Measures

•Targets

•Initiatives

Vision &

Strategy


1. Distinguish between the different levels of goals

2. Explain what a short-term goal is

3. Describe the position of short-term goals in the strategic

management process

4. Explain how long-term goals are translated into short-

term goals

5. Differentiate between a well-formulated and badly

formulated short-term goal

6. Interpret short-term goals in the light of the chosen

strategy

Functional tactics and policies

• Functional tactics– Different from corporate and business strategies (time

horizon, specificity, developers)

– Specific guidance in functional areas

• Policies– Standard operating procedure

– Policies that empower



1. Explain what a functional tactic is

2. Explain how functional tactics differ from corporate and

business strategies

3. Depict the position of functional tactics in the strategic

management process

4. Suggest key concerns that functional tactics in human

resources, finance, R&D, operations management and

marketing have to deal with

5. Interpret the functional tactics of an organisation in the

light of the chosen strategy

6. Describe the relationship between functional tactics,

short-term goals, long-term goals and the mission of an

organisation


1. Explain what a policy is

2. Expound on the importance of having sound policies in

place in strategy implementation

3. Interpret a set of organisational policies in light of the

chosen strategy

Strategic control

• Strategic control as a component of the

strategic management process

• Types of strategic control

• Operational control

• Continuous improvement and TQM

• The Balanced Scorecard


Types of Strategic Control

• Premise control

• Strategic surveillance

• Special alert control

• Implementation control


Dynamic control systems

• In addition to the different types of strategic

control, there are also four levers of control that

should be taken into consideration in designing

strategic control systems. These four levers are

• diagnostic control systems

• belief systems

• boundary systems

• interactive control systems

Activity

• Answer question B3.4 on page 156 in

study guide

• Differentiate between different types of

strategic control.

Balanced Scorecard

• Creates framework for setting of:

– Long-term (strategic) goals

– Measures

– Targets (Short-term objectives)

– Initiatives (Functional tactics)

• Links strategy formulation and implementation


FINANCIAL

“To succeed financially, how


shareholders?

•Goals

•Measures

•Targets

•Initiatives

CUSTOMER

“To achieve our vision, how


customers?

•Goals

•Measures

•Targets

•Initiatives

INTERNAL BUSINESS

“To satisfy our shareholders

and customers, what business

process should we excel at?”

•Goals

•Measures

•Targets

•Initiatives

LEARNING & GROWTH

“To achieve our vision, how will

we sustain the ability to change

and improve?

•Goals

•Measures

•Targets

•Initiatives

Vision &

Strategy

Sustaining competitive advantage


Evaluating strategic success

• Table 13.1 on page 368 in textbook

• Appropriateness – is the strategy in line

with the mission?

• Feasibility – can it be carried out?

• Desirability – stakeholder preferences?

Has the strategy produces adequate

results in the short term?


1. Indicate the position of strategic control in the strategic

management process

2. Explain what strategic control entails

3. Differentiate between the different types of strategic

control

4. Explain how strategic control can alter an organisation‟s

chosen strategy

5. Diagrammatically depict the components of an

operational control system

6. Diagrammatically depict and explain the four dimension

of the balanced scorecard

7. Comment on the criteria used to evaluate strategies

during the strategic control phase


1. Comment on the approaches to sustaining competitive

advantage through continuous improvement.

Final Questions?

Format of the exam paper

• Learning outcome standards

• Activities in the study guide

• Study guide, tutorial letters and prescribed

book

• Self-assessment assignments

• Previous exam paper

• Start preparing today!

• Use diagram of strategic management

process for context

• Do section B first

Examination matters

• Students need to be seated 15 minutes before the

examination starts; doors will be locked and students

who arrive late will forfeit the opportunity to write the

exam and will need to re-register

• Students need to provide their identity documents and

students cards

• Candidates may make no notes on any part of the body

(eg. the hands) or clothing either before or during the

examination.

• Examination scripts containing illegible writing will not be

marked, and no marks will be awarded to illegible

answers or answers written in pencil

Examination matters

• Candidates who, without authorization, take any book, document or

object (such as tissues, rulers or pocket calculators with notes on it)

that may help them in the examination into the examination venue

and neglect to hand such unauthorised material to the invigilator

before the first answer book or question paper is made available to

candidates, are guilty of contravening the examination regulations of

the University and expose themselves to disciplinary measures as

determined by the University Council.

• The examination answer book is the property of the University and

under no circumstances may a candidate retain it, remove it from

the examination venue or remove pages from it. In addition, certain

question papers, as determined by the University, may not be

retained and must be returned to the invigilator.

Under no circumstances will an incorrect interpretation of

examination dates and times be considered a reason for admittance

to a supplementary examination

MNG302B 2011-S2_discussion Class Slides Incl

Documents

Transcript of MNG302B 2011-S2_discussion Class Slides Incl