Implementing Strategies:

Management Issues

Post Mid
Hammad Raza Sahoo.
 Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and strategy implementation

 Formulation is positioning forces before the action

 Implementation is managing forces during the action

 Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and strategy implementation

 Formulation focuses on effectiveness

 Implementation focuses on efficiency

 Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and strategy implementation

 Formulation is primarily an intellectual process

 Implementation is primarily an operational process

 Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and strategy implementation

 Formulation requires good intuitive and analytical skills

 Implementation requires special motivation and

leadership skills
 Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Contrasting strategy formulation and strategy implementation

 Formulation requires coordination among a few

individuals

 Implementation requires coordination among many

persons
 Implementing Strategies:
Strategy Analysis & Choice
Management Issues

Strategy implementation –

Varies among different types and sizes of

organizations
 Implementing Strategies:
Strategy Analysis & Choice
Management Issues
Strategy implementation Actions –

 Altering sales territories

 Adding new departments
 Closing facilities
 Hiring new employees
 Cost-control procedures
 Changing advertising strategies
 Building new facilities
 Management Perspectives

Formulation to Implementation transition

–

Shift in responsibility
From strategists to division and functional
managers
Management Issues

Annual Objectives

Policies

Resources
Management
Issues Organizational structure

Restructuring

Rewards/Incentives
Management Issues (continued)

Resistance to Change

Managers & strategy

Supportive culture
Management
Issues Production/operations

Human resources

Downsizing
Annual Objectives

 Decentralized activity
 Involves all managers in the firm
 Annual Objectives

1. Basis for allocating resources

2. Primary mechanism for evaluating managers
3. Major instrument for monitoring progress toward long-term objectives
4. Establish organizational, divisional, and departmental priorities
Annual Objectives

Objectives should state –

 Quantity
 Quality
 Cost
 Time
Policies

Policies facilitate solving recurring problems and guide the implementation

of strategy
Policies

Policies set –

 Boundaries
 Constraints
 limits
Policies

Example Issues requiring management policy --

 To offer extensive or limited management development

workshops and seminars
 To centralize or decentralize employee-training
activities
 To recruit through employment agencies, college
campuses, and/or newspapers
 To promote from within or hire from the outside
 To establish a high- or low-safety stock of inventory
 To buy lease, or rent new production equipment
Resource Allocation

Resource Allocation –

A central management activity that allows for strategy execution

Resource Allocation

Four types of resources –

1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
Managing Conflict

Conflict –

Disagreement between two or more parties on one or more issues

Managing Conflict

 Conflict is not always “bad”

 Absence of conflict
 Signal indifference or apathy
 Can energize opposing groups to action
 May help managers identify problems
Managing Conflict

Conflict Management and Resolution

 Avoidance
 Defusion
 Confrontation
Matching Structure with Strategy

Changes in Strategy Changes in Structure

1. Structure largely dictates how objectives and

policies will be established.

2. Structure dictates how resources will be allocated

Chandler’s Strategy-Structure
Relationship

Organizational
New strategy New administrative
performance
Is formulated problems emerge
declines

Organizational
New organizational
performance
structure is established
improves
Basic Forms of Structure

1. Functional Structure
 Groups tasks and activities by business function

2. Divisional Structure
 Decentralized and organized by geography, product, customer, or process
Basic Forms of Structure

3. Strategic Business Unit Structure (SBU)

 Groups similar divisions; delegates authority and responsibility to SBU
executive

4. Matrix Structure
 Most complex of all designs. Depends upon both vertical and horizontal flows
of authority and communication
 Restructuring

Restructuring –

Reducing the size of the firm in terms of number of employees, divisions, or

units, and the number of hierarchical levels in the firm’s
organizational structure
 Restructuring

Also called –

 Downsizing
 Rightsizing
 Delayering
 Restructuring

 Employed when ratios out of line with benchmarked competitors

 Primary benefit sought is cost reduction

 Reengineering

Reengineering –

Involves reconfiguring or redesigning work, jobs, and processes to improve

cost, quality, service and speed.
 Reengineering

Also called –

 Process management
 Process innovation
 Process redesign
 Reengineering

Reengineering –

Concerned more with employee and customer well-being than shareholder

well-being
Linking Performance and Pay
to Strategies

Most companies practicing pay-for-performance

Linking Performance and Pay
to Strategies
 Dual bonus system becoming more common
 Based on both annual objectives and long-term objectives

 Profit Sharing
 Incentive compensation used by 30% of companies

 Gain Sharing
 Performance targets set for employees or departments
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?

Managing Resistance to Change

Change raises anxiety over fear of:

 Economic loss
 Inconvenience
 Uncertainty
 Break in status-quo
Managing Resistance to Change

Resistance to change –

 Single greatest threat to successful strategy implementation

Creating a Strategy-Supportive Culture

Strategists should strive to preserve, emphasize, and build upon aspects of

existing culture that support new strategies.
Creating a Strategy-Supportive Culture

Elements linking culture to strategy:

1. Formal statements of philosophy, charters, etc. used for recruitment and

selection, and socialization
2. Designing of physical spaces, buildings
3. Deliberate role modeling, teaching and coaching
4. Explicit reward and status system, promotion criteria
5. Stories, legends, myths about key people and events
6. What leaders pay attention to, measure and control
7. Leader reactions to critical incidents and crises
8. How the organization is designed and structured
9. Organizational systems and procedures
10. Criteria used for recruitment, selection, promotion, retirement
Production/Operations Concerns

 Production processes typically constitute more than 70% of firm’s

total assets
 Decisions on:
 Plant size
 Inventory/inventory control
 Quality control
 Cost control
 Technological innovation
Human Resource Concerns

 Assessing staffing needs and costs

 Develop performance incentives
 ESOPs
 Child-care policies
 Work-life balance