Chapter 7
Implementing Strategies: Management &
Operations Issues
Strategic Management:
Concepts & Cases
10th Edition
Fred David
PowerPoint Slides by
Anthony F. Chelte
Western New England College
Copyright 2005 Prentice Hall
Ch 7-1
Chapter Outline
The Nature of Strategy Implementation
Annual Objectives
Policies
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Ch 7-2
Chapter Outline (contd)
Resource Allocation
Managing Conflict
Matching Structure with Strategy
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Ch 7-3
Chapter Outline (contd)
Restructuring, Reengineering & E-Engineering
Linking Performance & Pay to Strategies
Managing Resistance to Change
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Ch 7-4
Chapter Outline (contd)
Managing the Natural Environment
Creating a Strategy-Supportive Culture
Production/Operations Concerns When
Implementing Strategies
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Ch 7-5
Chapter Outline (contd)
Human Resource Concerns When
Implementing Strategies
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Ch 7-6
Implementing Strategies
Pretend that every single person you meet
has a sign around his or her neck that says,
Make me feel important
Mary Kay Ash, CEO of Mary Kay, Inc.
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Ch 7-7
The Nature of Strategy
Implementation
-- Successful strategy formulation does not
guarantee successful strategy implementation
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Ch 7-8
Nature of Strategy
Implementation
Formulation vs. Implementation
Formulation positions forces before the action
Implementation manages forces during the
action
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Ch 7-9
Nature of Strategy
Implementation
Formulation vs. Implementation
Formulation focuses on effectiveness
Implementation focuses on efficiency
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Ch 7-10
Nature of Strategy
Implementation
Formulation vs. Implementation
Formulation primarily an intellectual process
Implementation primarily an operational
process
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Ch 7-11
Nature of Strategy
Implementation
Formulation vs. Implementation
Formulation requires good intuitive & analytical
skills
Implementation requires special motivational &
leadership skills
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Ch 7-12
Nature of Strategy
Implementation
Formulation vs. Implementation
Formulation requires coordination among a
few individuals
Implementation requires coordination among
many individuals
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Ch 7-13
Nature of Strategy
Implementation
Strategy Implementation
Varies among different types & sizes of
organizations
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Ch 7-14
Nature of Strategy
Implementation
Implementation Activities
Altering sales territories
Adding new departments
Closing facilities
Hiring new employees
Cost-control procedures
Modifying advertising strategies
Building new facilities
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Ch 7-15
Nature of Strategy
Implementation
Management Perspectives
Shift in responsibility
Strategists
Division or
Functional
Managers
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Ch 7-16
Management Issues
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives
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Ch 7-17
Management Issues (contd)
Resistance to Change
Natural Environment
Management
Issues
Supportive Culture
Production/Operations
Human Resources
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Ch 7-18
Management Issues
Annual Objectives --- Decentralized activity
-- Directly involve all managers in the
organization
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Ch 7-19
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 7-20
Management Issues
Consistency of Annual Objectives -Across hierarchical levels
Horizontally consistent
Vertically consistent
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Ch 7-21
Management Issues
Requirements of Annual Objectives
Measurable
Consistent
Reasonable
Challenging
Clear
Understood
Timely
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Ch 7-22
Management Issues
Annual Objectives Should State
Quantity
Quality
Cost
Time
Be Verifiable
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Ch 7-23
Management Issues
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives
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Ch 7-24
Management Issues
Policies --- Facilitate the solving or recurring
problems & guide implementation of
strategy
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Ch 7-25
Management Issues
Policies Establish --
Boundaries
Constraints
Limits
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Ch 7-26
Management Issues
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives
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Ch 7-27
Management Issues
Resource Allocation
-- Central management activity that
allows for the execution of strategy
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Ch 7-28
Management Issues
4 Types of Resources
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
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Ch 7-29
Management Issues
Managing Conflict
-- Disagreement between two more
parties on one or more issues
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Ch 7-30
Management Issues
Managing Conflict
Conflict not always bad
No conflict may signal apathy
Can energize opposing groups to
action
May help managers identify problems
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Ch 7-31
Management Issues
Conflict Management & Resolution
Avoidance
Diffusion
Confrontation
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Ch 7-32
Management Issues
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives
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Ch 7-33
Management Issues
Matching Structure w/ Strategy
-- Changes in strategy = Changes in
structure
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Ch 7-34
Management Issues
Structure & Strategy
Structure dictates how objectives &
policies will be established
Structure dictates how resources will
be allocated
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Ch 7-35
Chandlers Strategy-Structure
Relationship
New strategy
Is formulated
New administrative
problems emerge
Organizational
performance
improves
Organizational
performance
declines
New organizational
structure is established
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Ch 7-36
Management Issues
Basic Forms of Structure
Functional Structure
Divisional Structure
Strategic Business Unit Structure (SBU)
Matrix Structure
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Ch 7-37
Management Issues
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives
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Ch 7-38
Management Issues
Restructuring
-- Reducing the size of the firm # of
employees, divisions, and/or units, # of
hierarchical levels
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Ch 7-39
Management Issues
Restructuring
Downsizing
Rightsizing
Delayering
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Ch 7-40
Management Issues
Reengineering
-- Reconfiguring or redesigning work,
jobs, & processes to improve cost,
quality, service, & speed.
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Ch 7-41
Management Issues
Reengineering
Process management
Process innovation
Process redesign
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Ch 7-42
Management Issues
Annual Objectives
Policies
Management
Issues
Resources
Organizational structure
Restructuring
Rewards/Incentives
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Ch 7-43
Management Issues
Linking Pay/Performance to Strategies
-- Pay for performance systems
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Ch 7-44
Management Issues
Linking Pay/Performance to Strategies
Dual bonus systems
Profit sharing systems
Gain Sharing systems
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Ch 7-45
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 7-46
Management Issues (contd)
Resistance to Change
Natural Environment
Management
Issues
Supportive Culture
Production/Operations
Human Resources
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Ch 7-47
Management Issues
Resistance to Change
-- Single greatest threat to successful
strategy implementation
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Ch 7-48
Management Issues
Resistance to Change
-- Raises anxiety; fear concerning
Economic loss
Inconvenience
Uncertainty
Break in status-quo
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Ch 7-49
Management Issues
Change Strategies
Force Change Strategy
Educative Change Strategy
Rational or Self-Interest Change
Strategy
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Ch 7-50
Management Issues (contd)
Resistance to Change
Natural Environment
Management
Issues
Supportive Culture
Production/Operations
Human Resources
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Ch 7-51
Management Issues
Natural Environment
-- Wide appreciation for firms that
mend rather than harm the
environment
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Ch 7-52
Management Issues
Natural Environment Environmental
Strategies
Develop/acquire green businesses
Divesting environmental-damaging
business
Low-cost producer through waste
minimization & energy conservation
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Ch 7-53
Management Issues (contd)
Resistance to Change
Natural Environment
Management
Issues
Supportive Culture
Production/Operations
Human Resources
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Ch 7-54
Management Issues
Strategy-Supportive Culture
-- Preserve, emphasize, & build upon
aspects of existing culture that support
new strategies
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Ch 7-55
Management Issues
Elements linking culture to strategy:
Formal statements of philosophy, charters, etc. used
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
Copyright 2005 Prentice Hall
Ch 7-56
Management Issues
Elements linking culture to strategy:
What leaders pay attention to, measure and control
Leader reactions to critical incidents and crises
How the organization is designed and structured
Organizational systems and procedures
Criteria used for recruitment, selection, promotion,
retirement
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Ch 7-57
Management Issues (contd)
Resistance to Change
Natural Environment
Management
Issues
Supportive Culture
Production/Operations
Human Resources
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Ch 7-58
Management Issues
Production/Operations Concerns
-- Production processes typically
constitute more than 70% of firms total
assets
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Ch 7-59
Management Issues
Production/Operations Decisions
Plant size
Inventory/Inventory control
Quality control
Cost control
Technological innovation
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Ch 7-60
Management Issues (contd)
Resistance to Change
Natural Environment
Management
Issues
Supportive Culture
Production/Operations
Human Resources
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Ch 7-61
Management Issues
Human Resource Concerns
-- HR manager position has strategic
responsibility & has changed
dramatically as companies continue to
reorganize, outsource, etc.
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Ch 7-62
Management Issues
Human Resource Strategic Responsibilities
Assessing staffing needs/costs
Developing performance incentives
ESOPs
Child-care policies
Work-life balance issues
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Ch 7-63
Diversity Issues
Women CEOs in U.S. 2004 (examples)
Carly Fiorina
Hewlett-Packard 49 yrs old
Meg Whitman
eBay
47 yrs old
Andrea Jung
Avon Products
45 yrs old
Anne Mulcahy
Xerox
50 yrs old
Marjorie Magner
Citigroup
54 yrs old
Betsy Holden
Kraft Foods
47 yrs old
Mary Sammons
Rite Aid
57 yrs old
Copyright 2005 Prentice Hall
Ch 7-64
For Review (Chapter 7)
Key Terms & Concepts
Annual Objectives
Conflict
Avoidance
Confrontation
Benchmarking
Culture
Bonus System
Defusion
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Ch 7-65
For Review (Chapter 7)
Key Terms & Concepts
Delayering
Educative Change
Strategy
De-centralized Structure
Employee Stock Ownership
Plans (ESOPs)
Divisional Structure
Establishing Annual
Objectives
Downsizing
Force Change Strategy
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Ch 7-66
For Review (Chapter 7)
Key Terms & Concepts
Functional Structure
Just in Time (JIT)
Gain Sharing
Matrix Structure
Glass Ceiling
Policy
Horizontal Consistency
of Objectives
Profit Sharing
Copyright 2005 Prentice Hall
Ch 7-67
For Review (Chapter 7)
Key Terms & Concepts
Rational Change
Strategy
Restructuring
Reengineering
Rightsizing
Resistance to Change
Self-Interest Change
Strategy
Resource Allocation
Strategic Business Unit
(SBU)
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Ch 7-68
For Review (Chapter 7)
Key Terms & Concepts
Triangulation
Vertical Consistency
of Objectives
Copyright 2005 Prentice Hall
Ch 7-69
