Chapter 7

Implementing Strategies: Management &

Operations Issues

Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Strategy Formulation vs.
Implementation
Strategy Formulation Strategy Implementation
 Positioning forces  Managing forces during

before the action the action

 Focus on effectiveness  Focus on efficiency

 Primarily intellectual  Primarily operational

 Requires good intuitive  Requires special

and analytical skills motivation and

leadership skills
 Requires coordination
 Requires coordination
among a few people among many people

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Nature of Strategy Implementation
Management Perspectives

 Shift in responsibility

Divisional or
Strategists Functional
Managers

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 Management Issues Central to
Strategy Implementation
 Establish annual  Match managers to strategy
objectives  Develop a strategy-
 Formulate policies supportive culture
 Allocate resources  Adapt production/operations
 Alter existing processes
organizational structure  Develop an effective human
 Restructure & Reengineer resources function
 Revise reward & incentive  Downsize as needed
plans  Link performance & pay to
 Minimize resistance to strategies
change
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Purpose of Annual Objectives

Basis for resource allocation

Mechanism for management evaluation
Major instrument for monitoring progress
toward achieving long-term objectives
Establishpriorities (organizational, divisional,
and departmental)

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Annual Objectives

 Horizontal consistency of objectives

 Vertical consistency of objectives

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Policies

 Policies set boundaries,

constraints, and limits on the kinds
of administrative actions that can
be taken to reward and sanction
behavior

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Resource Allocation

Four Types of Resources

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

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Managing Conflict

 Conflict not always “bad”

 Lack of conflict may signal lack of
concern
 Can energize opposing groups to action
 May help managers identify problems

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Managing Conflict
 Approaches for managing and resolving
conflict
 Avoidance

 Defusing

 Confrontation

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Matching Structure with Strategy

 Structure dictates how objectives

and policies will be established
 Structure dictates how resources

will be allocated
 Changes in strategy often lead to

changes in organizational structure

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Copyright © 2011 Pearson Education, Inc. Ch 7 -12
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Basic Forms of Structure

 Functional Structure
 Divisional Structure
 Strategic Business Unit Structure
(SBU)
 Matrix Structure

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Functional Structure

 Group tasks and activities by

business function

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Functional Structure

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Divisional Structure

 Canbe organized in one of four

ways:
 By geographic area
 By product or service

 By customer

 By process

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Divisional Structure

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Strategic Business Unit Structure
(SBU)
 Group similar divisions into
strategic business units and
delegate authority and
responsibility for each unit to a
senior executive who reports
directly to the chief executive
officer
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Matrix Structure

 The most complex of all designs

because it depends upon both
vertical and horizontal flows of
authority and communication

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Matrix Structure

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Restructuring, Reengineering, and
E-engineering

Restructuring is called
Downsizing
Rightsizing
Delayering
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Restructuring, Reengineering, and
E-engineering

Cornerstones of Reengineering
Decentralization
Mutual interdependence
Information sharing

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Managing Resistance to Change

 Force change strategy

 Educative change strategy

 Rational or self-interest change

strategy

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Creating a Strategy-Supportive Culture

1. Formal statements of organizational

philosophy
2. Design of physical spaces
3. Deliberate role modeling, teaching,
and coaching
4. Clear reward and status system
5. Stories, legends and myths.
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Creating a Strategy-Supportive Culture

6. What leaders pay attention to

7. Leader reactions to critical incidents and
crises
8. Organizational design and structure
9. Organizational systems and procedures
10. Criteria for recruitment, selection,
promotion, retirement of people

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Production/Operations Concerns

Production processes typically

constitute more than 70% of a
firm’s total assets

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Production/Operations Decision
Examples
Plant size
Inventory / Inventory control
Quality control
Cost control
Technological innovation
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Human Resource Concerns
Assessing staffing needs/costs
Vacations

Developing performance incentives

ESOP: Employees Stock Ownership
Program.
Work–life balance issues
Matching managers with strategy
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Corporate Wellness Programs

 Wellness of employees has

become a strategic issue for many
firms

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