Implementing Strategies ( Part 1 )

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Implementing Strategies ( Part 1 )

  1. 1. Chapter 7 Implementing Strategies: Management & Operations Issues <ul><li>Strategic Management: Concepts & Cases </li></ul><ul><li>10 th Edition </li></ul><ul><li>Fred David PowerPoint Slides by </li></ul><ul><li>Anthony F. Chelte </li></ul><ul><li>Western New England College </li></ul>
  2. 2. Chapter Outline The Nature of Strategy Implementation Annual Objectives Policies
  3. 3. Chapter Outline ( cont’d ) Resource Allocation Managing Conflict Matching Structure with Strategy
  4. 4. Chapter Outline ( cont’d ) Restructuring, Reengineering & E-Engineering Linking Performance & Pay to Strategies Managing Resistance to Change
  5. 5. Chapter Outline ( cont’d ) Managing the Natural Environment Creating a Strategy-Supportive Culture Production/Operations Concerns When Implementing Strategies
  6. 6. Chapter Outline ( cont’d ) Human Resource Concerns When Implementing Strategies
  7. 7. <ul><li>Pretend that every single person you meet has a sign around his or her neck that says, “Make me feel important” – </li></ul><ul><li>Mary Kay Ash, CEO of Mary Kay, Inc. </li></ul>Implementing Strategies
  8. 8. <ul><li>-- Successful strategy formulation does not guarantee successful strategy implementation </li></ul>The Nature of Strategy Implementation
  9. 9. <ul><li>Formulation positions forces before the action </li></ul><ul><li>Implementation manages forces during the action </li></ul>Nature of Strategy Implementation Formulation vs. Implementation
  10. 10. <ul><li>Formulation focuses on effectiveness </li></ul><ul><li>Implementation focuses on efficiency </li></ul>Nature of Strategy Implementation Formulation vs. Implementation
  11. 11. <ul><li>Formulation primarily an intellectual process </li></ul><ul><li>Implementation primarily an operational process </li></ul>Nature of Strategy Implementation Formulation vs. Implementation
  12. 12. <ul><li>Formulation requires good intuitive & analytical skills </li></ul><ul><li>Implementation requires special motivational & leadership skills </li></ul>Nature of Strategy Implementation Formulation vs. Implementation
  13. 13. <ul><li>Formulation requires coordination among a few individuals </li></ul><ul><li>Implementation requires coordination among many individuals </li></ul>Nature of Strategy Implementation Formulation vs. Implementation
  14. 14. <ul><li>Varies among different types & sizes of organizations </li></ul>Nature of Strategy Implementation Strategy Implementation
  15. 15. <ul><li>Altering sales territories </li></ul><ul><li>Adding new departments </li></ul><ul><li>Closing facilities </li></ul><ul><li>Hiring new employees </li></ul><ul><li>Cost-control procedures </li></ul><ul><li>Modifying advertising strategies </li></ul><ul><li>Building new facilities </li></ul>Nature of Strategy Implementation Implementation Activities
  16. 16. <ul><li>Shift in responsibility </li></ul>Nature of Strategy Implementation Management Perspectives Division or Functional Managers Strategists
  17. 17. Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies
  18. 18. Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment
  19. 19. Management Issues Annual Objectives -- -- Decentralized activity -- Directly involve all managers in the organization
  20. 20. Management Issues Purpose of Annual Objectives -- <ul><li>Basis for resource allocation </li></ul><ul><li>Mechanism for management evaluation </li></ul><ul><li>Metric for gauging progress on long-term objectives </li></ul><ul><li>Establish priorities (organizational, division, & departmental) </li></ul>
  21. 21. Management Issues Consistency of Annual Objectives -- <ul><li>Across hierarchical levels </li></ul><ul><li>Horizontally consistent </li></ul><ul><li>Vertically consistent </li></ul>
  22. 22. Management Issues Requirements of Annual Objectives <ul><li>Measurable </li></ul><ul><li>Consistent </li></ul><ul><li>Reasonable </li></ul><ul><li>Challenging </li></ul><ul><li>Clear </li></ul><ul><li>Understood </li></ul><ul><li>Timely </li></ul>
  23. 23. Management Issues Annual Objectives Should State <ul><li>Quantity </li></ul><ul><li>Quality </li></ul><ul><li>Cost </li></ul><ul><li>Time </li></ul><ul><li>Be Verifiable </li></ul>
  24. 24. Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies
  25. 25. Management Issues Policies -- -- Facilitate the solving or recurring problems & guide implementation of strategy
  26. 26. Management Issues Policies Establish -- <ul><li>Boundaries </li></ul><ul><li>Constraints </li></ul><ul><li>Limits </li></ul>
  27. 27. Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies
  28. 28. Management Issues Resource Allocation -- Central management activity that allows for the execution of strategy
  29. 29. Management Issues <ul><li>Financial resources </li></ul><ul><li>Physical resources </li></ul><ul><li>Human resources </li></ul><ul><li>Technological resources </li></ul>4 Types of Resources
  30. 30. Management Issues Managing Conflict -- Disagreement between two more parties on one or more issues
  31. 31. Management Issues <ul><li>Conflict not always “bad” </li></ul><ul><li>No conflict may signal apathy </li></ul><ul><li>Can energize opposing groups to action </li></ul><ul><li>May help managers identify problems </li></ul>Managing Conflict
  32. 32. Management Issues <ul><li>Avoidance </li></ul><ul><li>Diffusion </li></ul><ul><li>Confrontation </li></ul>Conflict Management & Resolution
  33. 33. Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies
  34. 34. Management Issues Matching Structure w/ Strategy -- Changes in strategy = Changes in structure
  35. 35. Management Issues <ul><li>Structure dictates how objectives & policies will be established </li></ul><ul><li>Structure dictates how resources will be allocated </li></ul>Structure & Strategy
  36. 36. New administrative problems emerge New strategy Is formulated Organizational performance declines Organizational performance improves New organizational structure is established Chandler’s Strategy-Structure Relationship
  37. 37. Management Issues <ul><li>Functional Structure </li></ul><ul><li>Divisional Structure </li></ul><ul><li>Strategic Business Unit Structure (SBU) </li></ul><ul><li>Matrix Structure </li></ul>Basic Forms of Structure
  38. 38. Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies
  39. 39. Management Issues Restructuring -- Reducing the size of the firm – # of employees, divisions, and/or units, # of hierarchical levels
  40. 40. Management Issues Restructuring <ul><li>Downsizing </li></ul><ul><li>Rightsizing </li></ul><ul><li>Delayering </li></ul>
  41. 41. Management Issues Reengineering -- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed.
  42. 42. Management Issues Reengineering <ul><li>Process management </li></ul><ul><li>Process innovation </li></ul><ul><li>Process redesign </li></ul>
  43. 43. Management Issues Management Issues Resources Organizational structure Restructuring Rewards/Incentives Annual Objectives Policies
  44. 44. Management Issues Linking Pay/Performance to Strategies -- Pay for performance systems
  45. 45. Management Issues Linking Pay/Performance to Strategies <ul><li>Dual bonus systems </li></ul><ul><li>Profit sharing systems </li></ul><ul><li>Gain Sharing systems </li></ul>
  46. 46. Tests for Performance-Pay Plans Does the plan capture attention? Do employees understand the plan? Is the plan improving communication? Does the plan pay out when it should? Is the company or unit performing better?
  47. 47. Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment
  48. 48. Management Issues Resistance to Change -- Single greatest threat to successful strategy implementation
  49. 49. Management Issues Resistance to Change <ul><li>-- Raises anxiety; fear concerning </li></ul><ul><ul><ul><li>Economic loss </li></ul></ul></ul><ul><ul><ul><li>Inconvenience </li></ul></ul></ul><ul><ul><ul><li>Uncertainty </li></ul></ul></ul><ul><ul><ul><li>Break in status-quo </li></ul></ul></ul>
  50. 50. Management Issues Change Strategies <ul><li>Force Change Strategy </li></ul><ul><li>Educative Change Strategy </li></ul><ul><li>Rational or Self-Interest Change Strategy </li></ul>
  51. 51. Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment
  52. 52. Management Issues Natural Environment -- Wide appreciation for firms that “mend” rather than “harm” the environment
  53. 53. Management Issues Natural Environment – Environmental Strategies <ul><li>Develop/acquire “green” businesses </li></ul><ul><li>Divesting environmental-damaging business </li></ul><ul><li>Low-cost producer through waste minimization & energy conservation </li></ul>
  54. 54. Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment
  55. 55. Management Issues Strategy-Supportive Culture -- Preserve, emphasize, & build upon aspects of existing culture that support new strategies
  56. 56. <ul><li>Formal statements of philosophy, charters, etc. used for recruitment and selection, and socialization </li></ul><ul><li>Designing of physical spaces, facades, buildings </li></ul><ul><li>Deliberate role modeling, teaching and coaching </li></ul><ul><li>Explicit reward and status system, promotion criteria </li></ul><ul><li>Stories, legends, myths about key people and events </li></ul>Management Issues Elements linking culture to strategy:
  57. 57. <ul><li>What leaders pay attention to, measure and control </li></ul><ul><li>Leader reactions to critical incidents and crises </li></ul><ul><li>How the organization is designed and structured </li></ul><ul><li>Organizational systems and procedures </li></ul><ul><li>Criteria used for recruitment, selection, promotion, retirement </li></ul>Management Issues Elements linking culture to strategy:
  58. 58. Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment
  59. 59. Management Issues Production/Operations Concerns -- Production processes typically constitute more than 70% of firm’s total assets
  60. 60. Management Issues Production/Operations Decisions <ul><li>Plant size </li></ul><ul><li>Inventory/Inventory control </li></ul><ul><li>Quality control </li></ul><ul><li>Cost control </li></ul><ul><li>Technological innovation </li></ul>
  61. 61. Management Issues (cont’d) Management Issues Supportive Culture Production/Operations Human Resources Resistance to Change Natural Environment
  62. 62. Management Issues Human Resource Concerns -- HR manager position has strategic responsibility & has changed dramatically as companies continue to reorganize, outsource, etc.
  63. 63. Management Issues Human Resource Strategic Responsibilities <ul><li>Assessing staffing needs/costs </li></ul><ul><li>Developing performance incentives </li></ul><ul><li>ESOP’s </li></ul><ul><li>Child-care policies </li></ul><ul><li>Work-life balance issues </li></ul>
  64. 64. Diversity Issues Women CEO’s in U.S. 2004 (examples) 57 yrs old Rite Aid Mary Sammons 47 yrs old Kraft Foods Betsy Holden 54 yrs old Citigroup Marjorie Magner 50 yrs old Xerox Anne Mulcahy 45 yrs old Avon Products Andrea Jung 47 yrs old eBay Meg Whitman 49 yrs old Hewlett-Packard Carly Fiorina
  65. 65. <ul><li>Key Terms & Concepts </li></ul>For Review (Chapter 7) Annual Objectives Conflict Avoidance Confrontation Benchmarking Culture Bonus System Defusion
  66. 66. <ul><li>Key Terms & Concepts </li></ul>For Review (Chapter 7) Delayering Educative Change Strategy De-centralized Structure Employee Stock Ownership Plans (ESOP’s) Divisional Structure Establishing Annual Objectives Downsizing Force Change Strategy
  67. 67. <ul><li>Key Terms & Concepts </li></ul>For Review (Chapter 7) Functional Structure Just in Time (JIT) Gain Sharing Matrix Structure Glass Ceiling Policy Horizontal Consistency of Objectives Profit Sharing
  68. 68. <ul><li>Key Terms & Concepts </li></ul>For Review (Chapter 7) Rational Change Strategy Restructuring Reengineering Rightsizing Resistance to Change Self-Interest Change Strategy Resource Allocation Strategic Business Unit (SBU)
  69. 69. <ul><li>Key Terms & Concepts </li></ul>For Review (Chapter 7) Vertical Consistency of Objectives Triangulation

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