David Sm13 Ppt 07

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Ch 7 -1

Chapter 7Implementing Strategies: Management & Operations Issues

Strategic Management: Concepts & Cases

13th Edition

Fred David


Ch 7 -2


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


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


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


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)


Ch 7 -7

Resource Allocation

1. Financial resources

2. Physical resources

3. Human resources

4. Technological resources

Four Types of Resources


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


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.


Ch 7 -10


Ch 7 -11

Basic Forms of Structure

Functional Structure

Divisional Structure

Strategic Business Unit Structure (SBU)

Matrix Structure


Ch 7 -12


Groups tasks and activities by business function (e.g., production, finance, marketing, R&D, HR, IT, etc.).


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Ch 7 -14


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 -16

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.


Ch 7 -17

Matrix Structure

The most complex of all structures because it depends upon both vertical and horizontal flows of authority and communication.


Ch 7 -18

Matrix Structure


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.


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


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


Ch 7 -22

Production/Operations Decision ExamplesPlant size

Inventory / Inventory control

Quality control

Cost control

Technological innovation


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.

David Sm13 Ppt 07

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