This document discusses strategy implementation and the key management issues involved. It outlines various management concerns for implementing strategies, such as establishing annual objectives, devising policies, allocating resources, altering organizational structure, restructuring and reengineering, revising reward and incentive programs, managing resistance to change, and developing a strategy-supportive culture. Successful strategy implementation requires motivation, discipline, support and hard work to drive change within an organization.

1. © 2001 Prentice Hall
Ch.7-1
Strategic Management
Concepts & Cases
8th edition
Fred R. David
Chapter 7:
Implementing Strategies:
Management Issues
PowerPoint Slides By:
Anthony F. Chelte
Western New England College

2. Comprehensive Strategic MMaannaaggeemmeenntt MMooddeell
© 2001 Prentice Hall
Ch.7-2
Vision
&
Mission
Statements
Chapter 2
External
Audit
Chapter 3
Strategies
In
Action
Chapter 5
Internal
Audit
Chapter 4
Strategy
Analysis
&
Choice
Chapter 6
Implement
Strategies:
Marketing,
Fin/Acct,
R&D, CIS
Chapter 8
Measure &
Evaluate
Performance
Chapter 9
Strategy
Implementation:
Management
Issues
Chapter 7

3. MMaannaaggeemmeenntt IIssssuueess
“You want your people to run the business
as if it were their own.”
© 2001 Prentice Hall
Ch.7-3
—William Fulmer —

4. MMaannaaggeemmeenntt IIssssuueess
“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.”
© 2001 Prentice Hall
Ch.7-4
—Dale McConkey—

5. MMaannaaggeemmeenntt IIssssuueess
“In most organizations, the top performers
are paid too little and the worst
performers too much.”
© 2001 Prentice Hall
Ch.7-5
—Cass Bettinger—

6. MMaannaaggeemmeenntt IIssssuueess
Successful strategy formulation
© 2001 Prentice Hall
Ch.7-6
does NOT guarantee
successful strategy implementation!

7. MMaannaaggeemmeenntt IIssssuueess
© 2001 Prentice Hall
Ch.7-7
Strategy Implementation
—more difficult to “do” something
Strategy Formulation
—easier to say “going to do it”

8. MMaannaaggeemmeenntt IIssssuueess
Strategy Formulation Strategy Implementation
Focuses on effectiveness Focuses on efficiency
Requires coordination among
many persons
© 2001 Prentice Hall
Ch.7-8
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
Managing forces during the
action
Positioning forces before the
action

9. MMaannaaggeemmeenntt IIssssuueess
Transition to Strategy Implementation
 Shift in responsibility from strategists to
divisional and functional managers
Implementation problems may arise
© 2001 Prentice Hall
Ch.7-9

10. MMaannaaggeemmeenntt IIssssuueess
Important Implementation Concerns
• Managers & employees motivated more
by self-interests than organizational
interests
© 2001 Prentice Hall
Ch.7-10
• Need to involve divisional and
functional managers in strategy
formulation

11. Management Issues & Strategy Implementation
© 2001 Prentice Hall
Ch.7-11
Establishing
Annual
Objectives
Devising
Policies Allocating
Resources
Altering
Existing
Organizational
Structure
Restructuring
&
Reengineering

12. Management Issues & Strategy Implementation
© 2001 Prentice Hall
Ch.7-12
Revising
Reward &
Incentive
Programs
Minimizing
Resistance
to
Change
Managing
the
Natural
Environment
Developing a
Strategy
Supportive
Culture
Adapting
Production/
Operations
Processes
Developing
HR
Function
If Necessary
Downsizing

13. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-13
Implementation
• Basis for allocating
resources
• Mechanism for evaluating
managers
• Monitor progress toward
long-term objectives
• Establish organizational,
divisional, and
departmental priorities
Establishing
Annual
Objectives

14. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-14
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
Devising
Policies

15. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-15
Implementation
• Allows for strategy execution
• Sets allocation plan based on
annual objectives
• Allocation based on four
types of resources: financial,
physical, human, and
technological
Allocating
Resources

16. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-16
Implementation
• Function
• Divisional
• SBU Structure
• Matrix Structure
Altering
Existing
Organizational
Structure

17. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-17
Implementation
• Reducing size of firm
 Employees
 Divisions or units
 Hierarchical levels
• Benchmarking against
competitors
 Ratios out of line
• Primary benefit = cost
reduction
Restructuring

18. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-18
Implementation
• Employee/customer
well-being
 Redesign work
 Redesign jobs
 Redesign processes
• Improvement in:
 Costs
 Quality
 Service
 Speed
Reengineering

19. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-19
Implementation
• Pay-for-performance plans
• Flexibility in compensation
systems is necessary
• Dual bonus system
 Annual objectives
 Long-term objectives
• Profit Sharing
Revising
Reward &
Incentive
Programs

20. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-20
Implementation
• Raises anxiety/fear
• Force change strategy
• Educative change strategy
• Rational or self-interest
change strategy
 Most desirable
Managing
Resistance
To
Change

21. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-21
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
Managing
the
Natural
Environment

22. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-22
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 a
Strategy-
Supportive
Culture

23. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-23
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/
Operations
Concerns

24. Management Issues & Strategy
© 2001 Prentice Hall
Ch.7-24
Implementation
• Assessing staffing needs
and costs
• Develop performance
incentives
• ESOPs
• Child-care policies
• Work-life balance
Human
Resources
Concerns

25. MMaannaaggeemmeenntt IIssssuueess
Important Implementation Concerns
© 2001 Prentice Hall
Ch.7-25
• Strategy implementation means
change
• Successful implementation requires:
Support
Discipline
Motivation
Hard work

26. KKeeyy TTeerrmmss && CCoonncceeppttss
© 2001 Prentice Hall
Ch.7-26
• Annual objectives
• Avoidance
• Benchmarking
• Bonus system
• Conflict
• Confrontation
• Culture
• Defusion
• Delayering
• Decentralized
structure
• Divisional structure
• Downsizing
• Educative change
strategy
• Employee Stock
Ownership Plan
(ESOP)

27. KKeeyy TTeerrmmss && CCoonncceeppttss
© 2001 Prentice Hall
Ch.7-27
• 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