Chap#7
Implementing strategies Management and operational issues
The nature of strategy implementation
Successful strategy formulation does not guarantee successful strategy implementation. Its always difficult to do something then to say you are going to do it. Strategy formulation and implementation can be contrasted in the following ways Sf is positioning before the action. SI is managing forces during the action. SF focuses on effectiveness. SI focuses on efficiency SF is primarily an intellectual process. SI is primarily an operational process.
SF requires good intuitive and analytical skills. SI requires special motivation and leadership skills. SF requires coordination among few individuals. SI requires coordination among many individuals. SF tools does not differ greatly for small, large, for profit or non-profit organizations. SI tools varies substantially for small, large, for profit or non-profit organizations.
Management perspective
The transition from SF to SI requires a shift from strategist to divisional and functional managers. Implementation problems can arise due to shift in responsibility especially if SF decisions come as a surprise for middle or lower level mangers. Managing issues central to SI include establishing annual objectives, devising policies, allocating resources, altering an existing culture, restructuring, revising rewards and incentive plans, minimizing resistant to change, developing a strategy supporting culture, developing an effective human resource function, and if necessary, downsizing. Top-down flow of communication is essential for developing bottom-up support.
Annual objectives
Annual objectives are decentralized activity that involve all managers in an organization. Annual objectives are essential for SI because they are: 1. Represent the basis for allocating resources 2. Are a primary basis for evaluating managers 3. Are major instruments for pursuing progress towards achieving long term objectives. 4. Establish organizational, functional and divisional priorities.
Annual objectives are stated in terms of profitability, growth and market share by business firms. Terms and phrases such as maximize, minimize, as soon as possible, and adequate should be avoided.
Policies
Policy refer to a specific guidelines, methods, procedures, rules, forms and administrative practices establish to support work towards stated goals. Policies sat boundaries, constraints and limits on the kind of administrative actions that can be taken to reward and sanction behavior; they clarify what can and cannot be done in pursuit of an organizations objectives. They provide a basis for management control, allow coordination among organizational units and reduce the time managers spend in making decisions. Examples in book.
Resource allocation
RA is a central management activity that allow for strategy execution. In organizations that do not use strategic management for resource allocation are often based on political or personal factors. Strategic management enables resources to be allocated according to priorities established in annual objectives, All organizations have atleast four type of resources to be allocated Financial, human , physical and technological resources. Effective resource allocation does not guarantee successful SI because programs, personal, controls and commitment must breathe life into resource provided.
Managing conflict
Interdependency of objectives and competition for resources often leads to conflict. Conflict can be defined as disagreement between two or more parties on one or more issues. Conflict is not always bad. Conflict can act to energize opposing groups into actions and may help managers identify problems. Managing conflict can be categorized into three types. 1. Avoidance include such actions as ignoring the problems in hopes that the conflict will resolve itself or physically separating the conflicting groups or individuals. 2. 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. 3. Confrontation is exemplified by exchanging members of conflicting parties so that each can gain appreciation of the other point of view or holding a meeting at which conflicting parties present their views and work through their differences.
Matching strategy with structure
Changes in strategy leads to changes in organizational structure. Structure should be designed to facilitatae the strategic pursuit of a firm and, therefore follow strategy. Without a strategy or reason for being, companies find it difficult to design effective structure. Chandler found a particular structure sequence to be repeated often as organizations grow and change strategy over time. What is appropriate for one organization may not appropriate for similar firm. As organizations grow their structure changes from simple to complex one as a result of linking together of several basic strategies.
Symptoms of an ineffective organizational structure include too many level of managements, too many meetings attended to too many people, too much attention towards solving interdepartmental conflicts and too many unachieved objectives. Changes in structure can facilitate SI efforts, but changes in structure should not be expected to make bad strategy good, to make bad managers good or to make bad products sell. We will examine seven basic organizational structures. The most widely used structured is the functional or centralized type because this is the most simplest and least expensive of the seven alternatives. A FS groups activities and tasks by business functions such as, production, management, marketing, finance research and development and management information system.
It encourages efficient use of managerial and technical talent, minimize the need for complicated control system and allows rapid decision making. Disadvantages are it forces accountability to the top, low employee morale, line/staff conflicts, poor delegation of authority and inadequate planning for products and markets. The divisional and decentralized is the second most common type of structure. The divisional can be grouped into one of the four categories; by geographic area, by product or service, by customer type and by process. A divisional structure by geographic is appropriate for organizations whose strategies need to be tailored to fit the needs and characteristics of customers in different geographic areas. Hershey foods is an example of a company organized using this structure.
The divisional structure by product is most effective for implementing strategies when specific products needs special emphasis. Is widely used when an organization offers few products or services. The structure allows strict control over and attention to product lines, but it also require more skilled management force and reduced top management control. Procter and gamble is an example. When the few major customers are paramount importance and many different services are provided to these customers, then a divisional structure by customer can be most effective to implement strategies. This structure allows to cater effectively to the requirements of clearly defined customer groups. Book publishing companies organize their activities around customer groups such as college, secondary schools and private commercial schools.
The divisional structure by process is similar to functional because activities are organized according to the way the work is actually performed. Functional departments are not accountable for profits and revenues whereas, process departments are evaluated on theses criteria's. The SBU groups similar groups into strategic business unit and delegates authority and control for each unit to a senior executive who reports directly to the chief executive officer. The matrix structure is the most complex . Because it allows vertical and horizontal flow of information or communication. A matrix structure results in higher overhead expense because it creates more management positions.
Restructuring and Re-engineering
Restructuring also called downsizing, rightsizing or delayeringinvolve reducing the size of the firm in terms of number of employees, divisions, number of hierarchical level. The reduction is intended to improve booth efficiency and effectiveness. Restructuring is concerned with shareholders well being rather than employees well being. Reengineering is more concerned with employees and customer well being. Also called process management, process innovation, or process redesign- involves redesigning work, jobs and processses for the purpose of improving cost, quality, service and speed. The focus of reengineering is changing the way work is actually done.
