Chapter 7

Implementing Strategies: Management &

Operations Issues
Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Ch 7 -1

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Ch 7 -2

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

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Ch 7 -3

Nature of Strategy Implementation

Management Perspectives

Shift in responsibility

Strategists

Divisional or
Functional
Managers

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Ch 7 -4

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 strategysupportive culture
Adapt production/operations
processes
Develop an effective human
resources function
Downsize & furlough as
needed
Link performance & pay to
strategies

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Ch 7 -5

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)

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Ch 7 -6

Annual Objectives

Horizontal consistency of objectives

Vertical consistency of objectives

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Ch 7 -7

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 -8

Resource Allocation
Four Types of Resources
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources

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Ch 7 -9

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 -10

Managing Conflict

Approaches for managing and resolving

conflict
Avoidance
Defusion
Confrontation

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Ch 7 -11

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 -12

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Ch 7 -13

Basic Forms of Structure

Functional Structure

Divisional Structure

Strategic Business Unit Structure

(SBU)

Matrix Structure

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Ch 7 -14

Functional Structure

Group tasks and activities by

business function

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Ch 7 -15

Functional Structure

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Ch 7 -16

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 -17

Divisional Structure

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Ch 7 -18

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 -19

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 -20

Matrix Structure

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Ch 7 -21

Restructuring, Reengineering, and

E-engineering
Restructuring

is called

Downsizing

Rightsizing

Delayering

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Ch 7 -22

Restructuring, Reengineering, and

E-engineering

Cornerstones

of Reengineering

Decentralization

Reciprocal interdependence

Information sharing

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Ch 7 -23

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?
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Ch 7 -24

Managing Resistance to Change

Force change strategy
Educative change strategy
Rational or self-interest change
strategy

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Ch 7 -25

Creating a Strategy-Supportive Culture

1.

2.
3.

4.
5.

Formal statements of organizational

philosophy
Design of physical spaces
Deliberate role modeling, teaching,
and coaching
Explicit reward and status system
Stories, legends, myths, and parables
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Ch 7 -26

Creating a Strategy-Supportive Culture

6.
7.

8.
9.
10.

What leaders pay attention to

Leader reactions to critical incidents and
crises
Organizational design and structure
Organizational systems and procedures
Criteria for recruitment, selection,
promotion, leveling off, retirement, and
excommunication of people
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Ch 7 -27

Production/Operations Concerns

Production

processes typically
constitute more than 70% of a
firms total assets

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Ch 7 -28

Production/Operations Decision
Examples
Plant

size

Inventory
Quality
Cost

/ Inventory control

control

control

Technological

innovation

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Ch 7 -29

Human Resource Concerns

Assessing

staffing needs/costs

Furloughs
Developing

performance incentives

ESOPs
Worklife

balance issues

Matching

managers with strategy

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Ch 7 -30

Corporate Wellness Programs

Wellness of employees has

become a strategic issue for many
firms

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Ch 7 -31

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Ch 7 -32