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Ch 7 -1
Chapter 7Implementing 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. ImplementationStrategy Formulation (SF) Positioning forces
before the action Focus on effectiveness Primarily intellectual Requires good intuitive
and analytical skills
Requires coordination among a few people
Strategy Implementation (SI)
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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Ch 7 -4
Shift in responsibility
Nature of Strategy ImplementationSI problems can arise because of the shift in responsibility, especially if SF decisions come as a surprise to middle- and lower-level managers. Therefore, it is essential to involve divisional and functional managers in SF.
Divisional or FunctionalManagers
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 & furlough as
needed Link performance & pay to
strategies
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Ch 7 -6
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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Resource Allocation
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
Four Types of Resources
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Ch 7 -8
Managing ConflictConflict – a disagreement between two or more parties. Interdependency of objectives and competition for limited resources can cause 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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Ch 7 -9
MATCHING STRUCTURE WITH STRATEGY
Changes in strategy often require changes in the way an organization is structured because: (1) structure largely dictates how objectives and policies will be established (e.g., objectives and policies established under a geographic organizational structure are couched in geographic terms) and (2) structure dictates how resources will be allocated (e.g., if an organization’s structure is based on customer groups, then resources will be allocated in that manner).
Structure should be designed to facilitate the strategic pursuit of a firm and, therefore, follow strategy.
When a firm changes its strategy, the existing organizational structure may become ineffective. For example, new strategies to reduce payroll costs may require a change in span of control.
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Ch 7 -10
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Ch 7 -11
Basic Forms of Structure
Functional Structure
Divisional Structure
Strategic Business Unit Structure (SBU)
Matrix Structure
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Ch 7 -12
Functional Structure
Groups tasks and activities by business function (e.g., production, finance, marketing, R&D, HR, IT, etc.).
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Ch 7 -13
Functional Structure
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Ch 7 -14
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) Groups similar divisions into
strategic business units and delegates authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer.
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Ch 7 -17
Matrix Structure
The most complex of all structures because it depends upon both vertical and horizontal flows of authority and communication.
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Ch 7 -18
Matrix Structure
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Ch 7 -19
Restructuring
Restructuring - reducing the size of an organization. Also called:
Downsizing
Rightsizing
Delayering
These methods involve, respectively, reducing the number of employees, number of divisions, and number of hierarchical levels in a firm’s organizational structure. Reducing the size of an organization is intended to improve its efficiency and effectiveness.
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Ch 7 -20
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, and parables
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Ch 7 -21
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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Ch 7 -22
Production/Operations Decision ExamplesPlant size
Inventory / Inventory control
Quality control
Cost control
Technological innovation
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Ch 7 -23
Human Resource Concerns
Assessing staffing needs and costs.Selection Methods.Employee Training.Motivating Employees – Developing Performance Incentives; Work-Life Balance Issues; etc.Selecting Appropriate Leadership Styles.