© 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