Chapter 7

Implementing Strategies: Management &

Chapter Outline
Operations Issues
The Nature of Strategy Implementation
Strategic Management:
Concepts & Cases
10th Edition Annual Objectives
Fred David

PowerPoint Slides by
Anthony F. Chelte Policies
Western New England College

Ch 7-1 Ch 7-2
Copyright 2005 Prentice Hall Copyright 2005 Prentice Hall

Chapter Outline (contd) Chapter Outline (contd)

Resource Allocation Restructuring, Reengineering & E-Engineering

Managing Conflict Linking Performance & Pay to Strategies

Matching Structure with Strategy Managing Resistance to Change

Ch 7-3 Ch 7-4
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 Chapter Outline (contd) Chapter Outline (contd)

Managing the Natural Environment

Human Resource Concerns When
Implementing Strategies

Creating a Strategy-Supportive Culture

Production/Operations Concerns When

Implementing Strategies

Ch 7-5 Ch 7-6
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Implementing Strategies The Nature of Strategy

Implementation

Pretend that every single person you meet

has a sign around his or her neck that says, -- Successful strategy formulation does not
Make me feel important guarantee successful strategy implementation
Mary Kay Ash, CEO of Mary Kay, Inc.

Ch 7-7 Ch 7-8
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 Nature of Strategy Nature of Strategy
Implementation Implementation
Formulation vs. Implementation Formulation vs. Implementation

Formulation positions forces before the action Formulation focuses on effectiveness

Implementation manages forces during the Implementation focuses on efficiency

action

Ch 7-9 Ch 7-10
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Nature of Strategy Nature of Strategy

Implementation Implementation
Formulation vs. Implementation Formulation vs. Implementation

Formulation primarily an intellectual process Formulation requires good intuitive & analytical
skills

Implementation primarily an operational Implementation requires special motivational &

process leadership skills

Ch 7-11 Ch 7-12
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 Nature of Strategy Nature of Strategy
Implementation Implementation
Formulation vs. Implementation Strategy Implementation

Formulation requires coordination among a Varies among different types & sizes of
few individuals organizations

Implementation requires coordination among

many individuals

Ch 7-13 Ch 7-14
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Nature of Strategy Nature of Strategy

Implementation Implementation
Implementation Activities Management Perspectives
Altering sales territories Shift in responsibility
Adding new departments
Closing facilities Division or
Hiring new employees Strategists Functional
Managers
Cost-control procedures
Modifying advertising strategies
Building new facilities

Ch 7-15 Ch 7-16
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 Management Issues Management Issues (contd)

Annual Objectives Resistance to Change

Policies Natural Environment

Resources Supportive Culture

Management Management
Issues Organizational structure Issues Production/Operations

Restructuring Human Resources

Rewards/Incentives

Ch 7-17 Ch 7-18
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Management Issues Management Issues

Purpose of Annual Objectives --
Annual Objectives --
Basis for resource allocation
-- Decentralized activity Mechanism for management evaluation
Metric for gauging progress on long-term
-- Directly involve all managers in the
objectives
organization
Establish priorities (organizational, division,
& departmental)

Ch 7-19 Ch 7-20
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 Management Issues Management Issues
Consistency of Annual Objectives -- Requirements of Annual Objectives

Measurable
Across hierarchical levels Consistent

Horizontally consistent Reasonable

Challenging
Vertically consistent
Clear
Understood
Timely
Ch 7-21 Ch 7-22
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Management Issues Management Issues

Annual Objectives Should State

Annual Objectives

Quantity Policies

Quality Resources
Management
Cost Issues Organizational structure
Time
Restructuring
Be Verifiable
Rewards/Incentives

Ch 7-23 Ch 7-24
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 Management Issues Management Issues

Policies -- Policies Establish --

-- Facilitate the solving or recurring Boundaries

problems & guide implementation of
Constraints
strategy
Limits

Ch 7-25 Ch 7-26
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Management Issues Management Issues

Annual Objectives
Resource Allocation

Policies

Resources
-- Central management activity that
Management allows for the execution of strategy
Issues Organizational structure

Restructuring

Rewards/Incentives

Ch 7-27 Ch 7-28
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 Management Issues Management Issues

4 Types of Resources Managing Conflict

1. Financial resources
-- Disagreement between two more
2. Physical resources parties on one or more issues
3. Human resources
4. Technological resources

Ch 7-29 Ch 7-30
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Management Issues Management Issues

Managing Conflict Conflict Management & Resolution

Conflict not always bad

Avoidance
No conflict may signal apathy
Diffusion
Can energize opposing groups to
action Confrontation
May help managers identify problems

Ch 7-31 Ch 7-32
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 Management Issues Management Issues

Annual Objectives
Matching Structure w/ Strategy

Policies

Resources
-- Changes in strategy = Changes in
Management structure
Issues Organizational structure

Restructuring

Rewards/Incentives

Ch 7-33 Ch 7-34
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Management Issues Chandlers Strategy-Structure

Relationship
Structure & Strategy
Organizational
New strategy New administrative
performance
Structure dictates how objectives & Is formulated problems emerge
declines
policies will be established
Structure dictates how resources will
be allocated Organizational
New organizational
performance
structure is established
improves

Ch 7-35 Ch 7-36
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 Management Issues Management Issues

Basic Forms of Structure Annual Objectives

Policies
Functional Structure
Resources
Divisional Structure Management
Issues Organizational structure
Strategic Business Unit Structure (SBU)
Restructuring
Matrix Structure
Rewards/Incentives

Ch 7-37 Ch 7-38
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Management Issues Management Issues

Restructuring Restructuring

-- Reducing the size of the firm # of Downsizing

employees, divisions, and/or units, # of
Rightsizing
hierarchical levels
Delayering

Ch 7-39 Ch 7-40
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 Management Issues Management Issues

Reengineering Reengineering

-- Reconfiguring or redesigning work, Process management

jobs, & processes to improve cost,
Process innovation
quality, service, & speed.
Process redesign

Ch 7-41 Ch 7-42
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Management Issues Management Issues

Linking Pay/Performance to Strategies

Annual Objectives

Policies

Resources
-- Pay for performance systems
Management
Issues Organizational structure

Restructuring

Rewards/Incentives

Ch 7-43 Ch 7-44
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 Management Issues Tests for Performance-Pay Plans
Does the plan capture attention?
Linking Pay/Performance to Strategies
Do employees understand the plan?

Dual bonus systems

Is the plan improving communication?

Profit sharing systems

Gain Sharing systems Does the plan pay out when it should?

Is the company or unit performing better?

Ch 7-45 Ch 7-46
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Management Issues (contd) Management Issues

Resistance to Change
Resistance to Change

Natural Environment

Supportive Culture
-- Single greatest threat to successful
Management strategy implementation
Issues Production/Operations

Human Resources

Ch 7-47 Ch 7-48
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 Management Issues Management Issues

Resistance to Change Change Strategies

-- Raises anxiety; fear concerning

Force Change Strategy
Economic loss
Inconvenience Educative Change Strategy
Uncertainty Rational or Self-Interest Change
Strategy
Break in status-quo

Ch 7-49 Ch 7-50
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Management Issues (contd) Management Issues

Natural Environment
Resistance to Change

Natural Environment

Supportive Culture
-- Wide appreciation for firms that
Management mend rather than harm the
Issues Production/Operations
environment
Human Resources

Ch 7-51 Ch 7-52
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 Management Issues Management Issues (contd)

Natural Environment Environmental

Resistance to Change
Strategies
Natural Environment

Develop/acquire green businesses

Supportive Culture
Management
Divesting environmental-damaging Issues Production/Operations
business
Human Resources
Low-cost producer through waste
minimization & energy conservation

Ch 7-53 Ch 7-54
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Management Issues Management Issues

Elements linking culture to strategy:
Strategy-Supportive Culture

Formal statements of philosophy, charters, etc. used

-- Preserve, emphasize, & build upon
aspects of existing culture that support
new strategies
for recruitment and selection, and socialization
Designing of physical spaces, facades, buildings
Deliberate role modeling, teaching and coaching
Explicit reward and status system, promotion criteria
Stories, legends, myths about key people and events

Ch 7-55 Ch 7-56
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Management Issues Management Issues (contd)
Elements linking culture to strategy:

Resistance to Change

What leaders pay attention to, measure and control Natural Environment
Leader reactions to critical incidents and crises
How the organization is designed and structured Supportive Culture
Organizational systems and procedures Management
Criteria used for recruitment, selection, promotion, Issues Production/Operations
retirement
Human Resources

Ch 7-57 Ch 7-58
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Management Issues Management Issues

Production/Operations Decisions
Production/Operations Concerns

Plant size
-- Production processes typically Inventory/Inventory control
constitute more than 70% of firms total
assets Quality control
Cost control
Technological innovation
Ch 7-59 Ch 7-60
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 Management Issues (contd) Management Issues

Human Resource Concerns

Resistance to Change

Natural Environment

Supportive Culture
-- HR manager position has strategic
Management responsibility & has changed
Issues Production/Operations
dramatically as companies continue to
Human Resources reorganize, outsource, etc.

Ch 7-61 Ch 7-62
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Management Issues Diversity Issues

Human Resource Strategic Responsibilities Women CEOs in U.S. 2004 (examples)

Carly Fiorina Hewlett-Packard 49 yrs old

Assessing staffing needs/costs Meg Whitman eBay 47 yrs old
Andrea Jung Avon Products 45 yrs old
Developing performance incentives
Anne Mulcahy Xerox 50 yrs old
ESOPs Marjorie Magner Citigroup 54 yrs old
Child-care policies Betsy Holden Kraft Foods 47 yrs old
Mary Sammons Rite Aid 57 yrs old
Work-life balance issues
Ch 7-63 Ch 7-64
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 For Review (Chapter 7) For Review (Chapter 7)

Key Terms & Concepts Key Terms & Concepts

Educative Change
Annual Objectives Conflict Delayering
Strategy

Employee Stock Ownership

Avoidance Confrontation De-centralized Structure
Plans (ESOPs)

Establishing Annual
Benchmarking Culture Divisional Structure
Objectives

Bonus System Defusion Downsizing Force Change Strategy

Ch 7-65 Ch 7-66
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For Review (Chapter 7) For Review (Chapter 7)

Key Terms & Concepts Key Terms & Concepts

Rational Change
Functional Structure Just in Time (JIT) Restructuring
Strategy

Gain Sharing Matrix Structure Reengineering Rightsizing

Self-Interest Change
Glass Ceiling Policy Resistance to Change
Strategy

Horizontal Consistency Strategic Business Unit

Profit Sharing Resource Allocation
of Objectives (SBU)

Ch 7-67 Ch 7-68
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 For Review (Chapter 7)

Key Terms & Concepts

Vertical Consistency
Triangulation
of Objectives

Ch 7-69
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