Strategic Management

Concepts & Cases

8th edition
Fred R. David
Chapter 7:
Implementing Strategies:
Management Issues
Presented by:
Mwalimu D.G Ngwalo
MBA, Pg.DMS, B.Ed

Ch.7-1
© 2001 Prentice Hall
 Comprehensive Strategic Management Model

External
Audit

Chapter 3

Vision Strategies Strategy Strategy Implement Measure &

& Implementation: Strategies:
In Analysis Evaluate
Mission Management Marketing, Performance
Statements Action & Issues Fin/Acct,
Choice R&D, CIS
Chapter 2 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9

Internal
Audit

Chapter 4

Ch.7-2
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 Management Issues

“You want your people to run the business

as if it were their own.”

—William Fulmer —

Ch.7-3
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 Management Issues

“A management truism says structure

follows strategy. However, this truism is
often ignored. Too many organizations
attempt to carry out a new strategy with
an old structure.”

—Dale McConkey—

Ch.7-4
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 Management Issues

“In most organizations, the top performers

are paid too little and the worst
performers too much.”

—Cass Bettinger—

Ch.7-5
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 Management Issues

Successful strategy formulation

does NOT guarantee
successful strategy implementation!

Ch.7-6
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 Management Issues

Strategy Implementation
—more difficult to “do” something

Strategy Formulation
—easier to say “going to do it”

Ch.7-7
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 Management Issues
Strategy Formulation Strategy Implementation
Positioning forces before the Managing forces during the
action action

Focuses on effectiveness Focuses on efficiency

Primarily an intellectual Primarily an operational

process process
Requires good intuitive and Requires motivation and
analytical skills leadership skills
Requires coordination among Requires coordination among
a few individuals many persons
Ch.7-8
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 Management Issues
Transition to Strategy Implementation

 Shift in responsibility from strategists to

divisional and functional managers

 Implementation problems may arise

Ch.7-9
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 Management Issues

Important Implementation Concerns

• Managers & employees motivated more

by self-interests than organizational
interests
• Need to involve divisional and
functional managers in strategy
formulation
Ch.7-10
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 Management Issues & Strategy Implementation

Altering
Establishing Existing Restructuring
Devising
Annual Allocating Organizational &
Policies Structure Reengineering
Objectives Resources

Ch.7-11
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 Management Issues & Strategy Implementation

Revising Minimizing Managing Developing a

Adapting
Strategy
Reward & Resistance the Production/
Supportive
Incentive to Natural Culture
Operations
Programs Change Environment Processes

Developing
If Necessary
HR
Downsizing
Function

Ch.7-12
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 Management Issues & Strategy
Implementation

• Basis for allocating

resources
• Mechanism for evaluating
Establishing managers
Annual • Monitor progress toward
Objectives long-term objectives
• Establish organizational,
divisional, and
departmental priorities
Ch.7-13
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 Management Issues & Strategy
Implementation

• Basis for solving recurring

problems
• Sets boundaries,
Devising constraints, and limits on
administrative actions
Policies
• Sets expectations for
managers and employees
• Basis for management
control and coordination
Ch.7-14
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 Management Issues & Strategy
Implementation

• Allows for strategy execution

• Sets allocation plan based on
annual objectives
Allocating
• Allocation based on four types
Resources
of resources: financial,
physical, human, and
technological

Ch.7-15
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 Management Issues & Strategy
Implementation

• Function
Altering
• Divisional
Existing
• SBU Structure
Organizational
• Matrix Structure
Structure

Ch.7-16
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 Management Issues & Strategy
Implementation

• Reducing size of firm

 Employees
 Divisions or units
 Hierarchical levels
Restructuring
• Benchmarking against
competitors
 Ratios out of line
• Primary benefit = cost
reduction
Ch.7-17
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 Management Issues & Strategy
Implementation

• Employee/customer
well-being
 Redesign work
 Redesign jobs

Reengineering  Redesign processes

• Improvement in:
 Costs
 Quality
 Service
 Speed
Ch.7-18
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 Management Issues & Strategy
Implementation

• Pay-for-performance plans
• Flexibility in compensation
Revising
systems is necessary
Reward &
• Dual bonus system
Incentive  Annual objectives
Programs  Long-term objectives

• Profit Sharing

Ch.7-19
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 Management Issues & Strategy
Implementation

• Raises anxiety/fear
Managing • Force change strategy
Resistance • Educative change strategy
To • Rational or self-interest
Change change strategy
 Most desirable

Ch.7-20
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 Management Issues & Strategy
Implementation

• Customer & employee

sensitivity to environment
Managing • Legal requirements
the • Earth has become a
Natural stakeholder for all firms
Environment • Preserve and conserve
natural resources
• Emphasis on developing
environmental perspective
Ch.7-21
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 Management Issues & Strategy
Implementation

• Triangulation as method to
determine changes in a
Creating a firm’s culture that could
Strategy- benefit strategy
Supportive • Weak linkages between
Culture strategic management and
organizational culture can
jeopardize performance
and success
Ch.7-22
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 Management Issues & Strategy
Implementation

• Production processes
typically constitute more
than 70% of firm’s total
assets
Production/
• Decisions on:
Operations  Plant size
Concerns  Inventory/inventory control
 Quality control
 Cost control
 Technological innovation
Ch.7-23
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 Management Issues & Strategy
Implementation

• Assessing staffing needs

and costs
Human • Develop performance
Resources incentives
Concerns • ESOPs
• Child-care policies
• Work-life balance

Ch.7-24
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 Management Issues

Important Implementation Concerns

• Strategy implementation means

change
• Successful implementation requires:
 Support
 Discipline
 Motivation
 Hard work
Ch.7-25
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 Key Terms & Concepts
• Annual objectives • Decentralized
• Avoidance structure
• Benchmarking • Divisional structure
• Bonus system • Downsizing
• Conflict • Educative change
• Confrontation strategy
• Culture • Employee Stock
• Defusion Ownership Plan
• Delayering (ESOP)

Ch.7-26
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 Key Terms & Concepts
• Establishing annual • Rational change
objectives strategy
• Force change strategy • Reengineering
• Functional structure • Resistance to change
• Gain sharing • Resource allocation
• Horizontal consistency • Restructuring
of objectives • Rightsizing
• Just in time • Self-interest change
• Matrix structure • Triangulation
• Policy • Vertical consistency of
• Profit sharing objectives

Ch.7-27
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