Transcript Chapter 7 Implementing Strategies

Chapter 7
Implementing Strategies: Management &
Operations Issues
Strategic Management:
Concepts & Cases
13th Edition
Fred David
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Ch 7 -1
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Ch 7 -2
Strategy Formulation vs.
Implementation
Strategy 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 -3
Nature of Strategy Implementation
SI 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.

Shift in responsibility
Strategists
Divisional or
Functional
Managers
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Ch 7 -4
Management Issues Central to
Strategy Implementation
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Establish annual
objectives
Devise policies
Allocate resources
Alter existing
organizational structure
Restructure & reengineer
Revise reward & incentive
plans
Minimize resistance to
change
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Match managers to strategy
Develop a strategysupportive 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 -5
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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Ch 7 -6
Resource Allocation
Four Types of Resources
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
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Ch 7 -7
Managing Conflict
Conflict – a disagreement between two or more
parties. Interdependency of objectives and
competition for limited resources can cause
conflict.
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Conflict not always “bad”
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Lack of conflict may signal apathy

Can energize opposing groups to action

May help managers identify problems
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Ch 7 -8
MATCHING STRUCTURE WITH
STRATEGY
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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 -9
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Ch 7 -10
Basic Forms of Structure

Functional Structure
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Divisional Structure

Strategic Business Unit Structure
(SBU)

Matrix Structure
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Ch 7 -11
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 -12
Functional Structure
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Ch 7 -13
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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Ch 7 -14
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 -16
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 -17
Matrix Structure
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Ch 7 -18
Restructuring
Restructuring - reducing the size of an organization.
Also called:
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Downsizing
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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 -19
Creating a Strategy-Supportive Culture
1.
2.
3.
4.
5.
Formal statements of organizational
philosophy
Design of physical spaces
Deliberate role modeling, teaching,
and coaching
Explicit reward and status system
Stories, legends, myths, and parables
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Ch 7 -20
Creating a Strategy-Supportive Culture
6.
7.
8.
9.
10.
What leaders pay attention to
Leader reactions to critical incidents and
crises
Organizational design and structure
Organizational systems and procedures
Criteria for recruitment, selection,
promotion, leveling off, retirement, and
“excommunication” of people
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Ch 7 -21
Production/Operations Decision
Examples
Plant
size
Inventory
Quality
Cost
/ Inventory control
control
control
Technological
innovation
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Ch 7 -22
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.
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Ch 7 -23