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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 7 -1
Chapter 7Implementing Strategies: Management & Operations Issues
Strategic Management: Concepts & Cases
13th EditionFred David
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 7 -2
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 7 -3
Strategy Formulation vs. Implementation
Strategy Formulation Positioning forces
before the action Focus on effectiveness Primarily intellectual Requires good intuitive
and analytical skills
Requires coordination among a few people
Strategy Implementation Managing forces during
the action Focus on efficiency Primarily operational Requires special
motivation and leadership skills
Requires coordination among many people
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 7 -4
Shift in responsibility
Nature of Strategy Implementation
Management Perspectives
Divisional or FunctionalManagers
Strategists
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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
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 7 -6
Purpose of Annual Objectives
Basis for resource allocationMechanism for management evaluationMajor instrument for monitoring progress toward achieving long-term objectivesEstablish priorities (organizational, divisional, and departmental)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 7 -7
Annual Objectives
Horizontal consistency of objectives
Vertical consistency of objectives
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Ch 7 -8
Policies
Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior
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Ch 7 -9
Resource Allocation
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
Four Types of Resources
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Ch 7 -10
Managing Conflict
Conflict not always “bad” Lack of conflict may signal apathy Can energize opposing groups to action May help managers identify problems
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Ch 7 -11
Managing Conflict
Approaches for managing and resolving conflict Avoidance Defusion Confrontation
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Ch 7 -12
Matching Structure with Strategy
Structure dictates how objectives and policies will be established
Structure dictates how resources will be allocated
Changes in strategy often lead to changes in organizational structure
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Ch 7 -13
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Ch 7 -14
Basic Forms of Structure
Functional Structure Divisional Structure Strategic Business Unit Structure
(SBU) Matrix Structure
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Ch 7 -15
Functional Structure
Group tasks and activities by business function
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Ch 7 -16
Functional Structure
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Ch 7 -17
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 -18
Divisional Structure
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Ch 7 -19
Strategic Business Unit Structure (SBU) Group similar divisions into
strategic business units and delegate authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer
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Ch 7 -20
Matrix Structure
The most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication
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Ch 7 -21
Matrix Structure
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Ch 7 -22
Restructuring, Reengineering, and E-engineering
Restructuring is calledDownsizingRightsizingDelayering
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Ch 7 -23
Restructuring, Reengineering, and E-engineering
Cornerstones of ReengineeringDecentralizationReciprocal interdependenceInformation sharing
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Ch 7 -24
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?
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 7 -25
Managing Resistance to Change
Force change strategy Educative change strategy Rational or self-interest change
strategy
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Ch 7 -26
Creating a Strategy-Supportive Culture
1. Formal statements of organizational philosophy
2. Design of physical spaces3. Deliberate role modeling, teaching,
and coaching4. Explicit reward and status system5. Stories, legends, myths, and parables
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Ch 7 -27
Creating a Strategy-Supportive Culture
6. What leaders pay attention to7. Leader reactions to critical incidents and
crises8. Organizational design and structure9. Organizational systems and procedures10. Criteria for recruitment, selection,
promotion, leveling off, retirement, and “excommunication” of people
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Ch 7 -28
Production/Operations Concerns
Production processes typically constitute more than 70% of a firm’s total assets
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Ch 7 -29
Production/Operations Decision ExamplesPlant sizeInventory / Inventory controlQuality controlCost controlTechnological innovation
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Ch 7 -30
Human Resource ConcernsAssessing staffing needs/costsFurloughsDeveloping performance incentivesESOPsWork–life balance issuesMatching managers with strategy
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Ch 7 -31
Corporate Wellness Programs
Wellness of employees has become a strategic issue for many firms
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 7 -32
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