Implementing Strategies:Management Issues

© 2001 Prentice HallCh.7-1

Strategic ManagementConcepts & Cases

8th edition

Fred R. David

Chapter 7:Implementing

Strategies: Management Issues

PowerPoint Slides By:

Anthony F. Chelte

Western New England College

© 2001 Prentice HallCh.7-2

Comprehensive Strategic Management ModelComprehensive Strategic Management Model

Vision &

Mission Statements

Chapter 2

ExternalAudit

Chapter 3

InternalAudit

Chapter 4

Strategies In

Action

Chapter 5

Strategy Analysis

&Choice

Chapter 6

ImplementStrategies:Marketing,Fin/Acct,R&D, CISChapter 8

Measure &Evaluate

Performance

Chapter 9

Strategy Implementation:

Management Issues

Chapter 7

© 2001 Prentice HallCh.7-3

Management IssuesManagement Issues

“You want your people to run the business as if it were their own.”

—William Fulmer —

© 2001 Prentice HallCh.7-4

Management IssuesManagement Issues

“A management truism says structure follows strategy. However, this truism is often ignored. Too many organizations attempt to carry out a new strategy with an old structure.”

—Dale McConkey—

© 2001 Prentice HallCh.7-5

Management IssuesManagement Issues

“In most organizations, the top performers are paid too little and the worst performers too much.”

—Cass Bettinger—

© 2001 Prentice HallCh.7-6

Management IssuesManagement Issues

Successful strategy formulation does NOT guarantee

successful strategy implementation!

© 2001 Prentice HallCh.7-7

Management IssuesManagement Issues

Strategy Implementation—more difficult to “do” something

Strategy Formulation—easier to say “going to do it”

© 2001 Prentice HallCh.7-8

Management IssuesManagement Issues

Strategy Implementation

Strategy Formulation

Requires coordination among many persons

Requires coordination among a few individuals

Requires motivation and leadership skills

Requires good intuitive and analytical skills

Primarily an operational process

Primarily an intellectual process

Focuses on efficiencyFocuses on effectiveness

Managing forces during the action

Positioning forces before the action

© 2001 Prentice HallCh.7-9

Management IssuesManagement Issues

Transition to Strategy Implementation

Shift in responsibility from strategists to divisional and functional managers

Implementation problems may arise

© 2001 Prentice HallCh.7-10

Management IssuesManagement Issues

Important Implementation Concerns

• Managers & employees motivated more by self-interests than organizational interests

• Need to involve divisional and functional managers in strategy formulation

© 2001 Prentice HallCh.7-11

Management Issues & Strategy Implementation

EstablishingAnnual

Objectives

DevisingPolicies

AllocatingResources

AlteringExisting

OrganizationalStructure

Restructuring&

Reengineering

© 2001 Prentice HallCh.7-12

Management Issues & Strategy Implementation

RevisingReward &IncentivePrograms

MinimizingResistance

toChange

Managing the

NaturalEnvironment

Developing aStrategy

SupportiveCulture

Adapting Production/OperationsProcesses

DevelopingHR

Function

If NecessaryDownsizing

© 2001 Prentice HallCh.7-13

Management Issues & Strategy Implementation

• Basis for allocating resources

• Mechanism for evaluating managers

• Monitor progress toward long-term objectives

• Establish organizational, divisional, and departmental priorities

EstablishingAnnual

Objectives

© 2001 Prentice HallCh.7-14

Management Issues & Strategy Implementation

• Basis for solving recurring problems

• Sets boundaries, constraints, and limits on administrative actions

• Sets expectations for managers and employees

• Basis for management control and coordination

DevisingPolicies

© 2001 Prentice HallCh.7-15

Management Issues & Strategy Implementation

• Allows for strategy execution

• Sets allocation plan based on annual objectives

• Allocation based on four types of resources: financial, physical, human, and technological

AllocatingResources

© 2001 Prentice HallCh.7-16

Management Issues & Strategy Implementation

• Function• Divisional• SBU Structure• Matrix Structure

AlteringExisting

OrganizationalStructure

© 2001 Prentice HallCh.7-17

Management Issues & Strategy Implementation

• Reducing size of firm Employees Divisions or units Hierarchical levels

• Benchmarking against competitors Ratios out of line

• Primary benefit = cost reduction

Restructuring

© 2001 Prentice HallCh.7-18

Management Issues & Strategy Implementation

• Employee/customer well-being Redesign work Redesign jobs Redesign processes

• Improvement in: Costs Quality Service Speed

Reengineering

© 2001 Prentice HallCh.7-19

Management Issues & Strategy Implementation

• Pay-for-performance plans

• Flexibility in compensation systems is necessary

• Dual bonus system Annual objectives Long-term objectives

• Profit Sharing

RevisingReward &IncentivePrograms

© 2001 Prentice HallCh.7-20

Management Issues & Strategy Implementation

• Raises anxiety/fear• Force change strategy• Educative change

strategy• Rational or self-interest

change strategy Most desirable

ManagingResistance

ToChange

© 2001 Prentice HallCh.7-21

Management Issues & Strategy Implementation

• Customer & employee sensitivity to environment

• Legal requirements• Earth has become a

stakeholder for all firms• Preserve and conserve

natural resources• Emphasis on developing

environmental perspective

Managingthe

NaturalEnvironment

© 2001 Prentice HallCh.7-22

Management Issues & Strategy Implementation

• Triangulation as method to determine changes in a firm’s culture that could benefit strategy

• Weak linkages between strategic management and organizational culture can jeopardize performance and success

Creating aStrategy-

SupportiveCulture

© 2001 Prentice HallCh.7-23

Management Issues & Strategy Implementation

• Production processes typically constitute more than 70% of firm’s total assets

• Decisions on: Plant size Inventory/inventory

control Quality control Cost control Technological innovation

Production/OperationsConcerns

© 2001 Prentice HallCh.7-24

Management Issues & Strategy Implementation

• Assessing staffing needs and costs

• Develop performance incentives

• ESOPs• Child-care policies• Work-life balance

Human ResourcesConcerns

© 2001 Prentice HallCh.7-25

Management IssuesManagement Issues

Important Implementation Concerns

• Strategy implementation means change

• Successful implementation requires:SupportDisciplineMotivationHard work

© 2001 Prentice HallCh.7-26

Key Terms & ConceptsKey Terms & Concepts

• Annual objectives• Avoidance• Benchmarking• Bonus system• Conflict• Confrontation• Culture• Defusion• Delayering

• Decentralized structure

• Divisional structure

• Downsizing• Educative change

strategy• Employee Stock

Ownership Plan (ESOP)

© 2001 Prentice HallCh.7-27

Key Terms & ConceptsKey Terms & Concepts

• Establishing annual objectives

• Force change strategy

• Functional structure• Gain sharing• Horizontal

consistency of objectives

• Just in time• Matrix structure• Policy• Profit sharing

• Rational change strategy

• Reengineering• Resistance to change• Resource allocation• Restructuring• Rightsizing• Self-interest change• Triangulation• Vertical consistency

of objectives