Chapter 7
Implementing Strategies: Management &
Operations Issues
Strategic
Management:
Concepts & Cases
11th Edition
Fred David
Copyright 2007 Prentice Hall
Ch 7-1
Objectives
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1.Explain why strategy implementation is more difficult than strategy
formulation.
2.Discuss the importance of annual objectives and policies in achieving
organizational commitment for strategies to be implemented.
3.Explain why organizational structure is so important in strategy
implementation.
4.Compare and contrast restructuring and reengineering.
5.Describe the relationships between production/operations and
strategy implementation.
6.Explain how a firm can effectively link performance and pay to
strategies.
7.Discuss employee stock ownership plans (ESOPs) as a strategicmanagement concept.
8.Describe how to modify an organizational culture to support new
strategies.
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Ch 7-2
Nature of Strategy
Implementation
Formulation vs. Implementation
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Formulation focuses on effectiveness
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Implementation focuses on efficiency
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Ch 7-3
Nature of Strategy
Implementation
Management Perspectives
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Shift in responsibility
Strategists
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Division or
Functional
Managers
Ch 7-4
Management Issues
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives
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Ch 7-5
Management Issues (cont’d)
Resistance to Change
Natural Environment
Management
Issues
Supportive Culture
Production/Operations
Human Resources
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Ch 7-6
Management Issues
Purpose of Annual Objectives -Basis for resource allocation
Mechanism for management evaluation
Metric for gauging progress on long-term
objectives
Establish priorities (organizational, division,
& departmental)
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Ch 7-7
Management Issues
4 Types of Resources
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
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Ch 7-8
Management Issues
Managing Conflict
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 Conflict not always “bad”
 No conflict may signal apathy
 Can energize opposing
groups to action
 May help managers identify
problems
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Conflict
Management
and
Resolution
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Avoidance
Defusion
Confrontation
Ch 7-9
Managing
Conflict
Conflict
Management and
Resolution
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Avoidance
Defusion
Confrontation
Copyright 2007 Prentice Hall
Avoidance includes such actions as
ignoring the problem in hopes that the
conflict will resolve itself or physically
separating the conflicting individuals (or
groups).
Defusion can include playing down
differences between conflicting parties
while accentuating similarities and
common interests, compromising so
that there is neither a clear winner nor
loser, resorting to majority rule,
appealing to a higher authority, or
redesigning present positions.
Confrontation is exemplified by exchanging
members of conflicting parties so that
each can gain an appreciation of the
other’s point of view, or holding a
meeting at which conflicting parties
present their views and work through
Ch 7-10
their differences.
Chandler’s Strategy-Structure
Relationship
New strategy
Is formulated
Organizational
performance
improves
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New administrative
problems emerge
Organizational
performance
declines
New organizational
structure is established
Ch 7-11
Management Issues
Basic Forms of Structure
 Functional Structure
 Divisional Structure
 Strategic Business Unit Structure (SBU)
 Matrix Structure
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Ch 7-12
Management Issues
Restructuring
Downsizing
Rightsizing
Delayering
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Ch 7-13
Management Issues
Reengineering
Process management
Process innovation
Process redesign
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Ch 7-14
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 7-15
Management Issues
Production/Operations Concerns
-- Production processes typically
constitute more than 70% of the firm’s
total assets
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Ch 7-16
Management Issues
Production/Operations Decisions
Plant size
Inventory/Inventory control
Quality control
Cost control
Technological innovation
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Ch 7-17
Management Issues
Human Resource Strategic Responsibilities
Assessing staffing needs/costs
Developing performance incentives
ESOP’s
Child-care policies
Work-life balance issues
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Ch 7-18
Diversity Issues
Women CEO’s in U.S. 2005 (examples)
CEO
Company
Age
Meg Whitman
eBay
49
Andrea Jung
Avon Products
47
Anne Mulcahy
Xerox
52
Marjorie Magner
Citigroup
56
Betsy Holden
Kraft Foods
49
Ann Moore
AOL Time Warner
57
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Ch 7-19
Benefits of a Diverse Workforce
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Improves corporate culture
Improves employee morale
Leads to a higher retention of employees
Leads to easier recruitment of employees
Decreases complaints and litigation
Increases creativity
Decreases interpersonal conflict
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Ch 7-20
Benefits of a Diverse Workforce
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Enables the organization to move into
emerging markets
Improves client relations
Increases productivity
Improves the bottom line
Maximizes brand identity
Reduces training costs
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Ch 7-21