Strategic Management
STM301
BBA
Ali Rasheed
Unit 7: Implementing Strategies:
Management and Operations Issues
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.
Strategic Management Model
The Nature of Strategy Implementation
Strategy
Strategy Formulation
Implementation
• positioning forces • managing forces
before the action during the action
• focuses on • focuses on efficiency
effectiveness • primarily an
• primarily an operational process
intellectual process • requires special
• requires good intuitive motivation and
and analytical skills leadership skills
Some Management Issues Central
to Strategy Implementation
Annual Objectives
1. represent the basis for allocating resources
2. are a primary mechanism for evaluating
managers
3. are the major instrument for monitoring
progress toward achieving long-term objectives
4. establish organizational, divisional, and
departmental priorities
XYZ Company’s Hierarchy of Aims
Policies
• specific guidelines, methods, procedures,
rules, forms, and administrative practices
established to support and encourage
work toward stated goals
• instruments for strategy implementation
• set boundaries, constraints, and limits on
the kinds of administrative actions that
can be taken to reward and sanction
behavior
• clarify what can and cannot be done in
pursuit of an organization’s objectives
A Hierarchy of Policies
Resource Allocation
• Resource allocation
central management activity that allows for
strategy execution
often based on political or personal factors
• Strategic management enables resources to be
allocated according to priorities established by
annual objectives
Types of Resources
Financial Physical
Human Technological
Managing Conflict
• Conflict
disagreement between two or more parties
on one or more issues
• Establishing annual objectives can lead to
conflict because individuals have different
expectations and perceptions, schedules
create pressure, personalities are
incompatible, and misunderstandings occur
between line managers and staff managers
Managing Conflict
• Avoidance
includes such actions as ignoring the
problem in hopes that the conflict will resolve
itself or physically separating the conflicting
individuals
• Diffusion
includes playing down differences between
conflicting parties while accentuating
similarities and common interests
Managing Conflict
• Confrontation
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 their
differences
Some Management Trade-Off Decisions
Required in Strategy Implementation
Matching Structure With Strategy
• Structure largely dictates how objectives
and policies will be established
• Structure dictates how resources will be
allocated
Symptoms of an Ineffective
Organizational Structure
Types of Organisational Structure
• Functional structure
• Divisional structure
• SBU structure
• Matrix structure
Restructuring
• Restructuring
involves reducing the size of the firm in terms
of number of employees, number of divisions
or units, and number of hierarchical levels in
the firm’s organizational structure
also called downsizing, rightsizing, or
delayering
Reengineering
• Reengineering
involves reconfiguring or redesigning work,
jobs, and processes for the purpose of
improving cost, quality, service, and speed
also called process management, process
innovation, or process redesign
Linking Performance and
Pay to Strategies
1. Provide full transparency to all stakeholders
2. Reward long-term performance with long-term
pay, rather than annual incentives
3. Base executive compensation on actual
company performance, rather than on stock
price
4. Extend the time-horizon for bonuses. Replace
short-term with long-term incentives
5. Increase equity between workers and
executives. Delete many special perks and
benefits for executives
Managing Resistance to Change
• Force change strategy
involves giving orders and enforcing those
orders
• Educative change strategy
one that presents information to convince
people of the need for change
• Self-interest change strategy
one that attempts to convince individuals that
the change is to their personal advantage
END
