Chapter 6
Implementing Strategies:
Management & Operations Issues
By Dr. Bogale A. Ch 7 -1
Ch 7 -2
The Nature of Strategy Implementation
The greatest strategy is doomed if it’s
implemented badly.
Successful strategy formulation does not
guarantee successful strategy implementation.
Less than 10 % of strategies formulated are
successfully implemented!
• Strategy Implementation may fail due to:
– Disruption of social and political structures,
– Failure to match individuals’ aptitudes with
implementation tasks, and
– Inadequate top management support for
implementation activities
By Dr. Bogale A. Ch 7 -3
Strategy Formulation vs. Implementation
Strategy Formulation Strategy Implementation
Positioning forces Managing forces
before the action during the action
Focus on effectiveness Focus on efficiency
Primarily intellectual Primarily operational
Requires good Requires special
intuitive and analytical motivation and
skills leadership skills
Requires coordination Requires coordination
among a few people among many people
By Dr. Bogale A. Ch 7 -4
Nature of Strategy Implementation
Management Perspectives
Shift in responsibility
Divisional or
Strategists Functional
Managers
By Dr. Bogale A. Ch 7 -5
Management Issues Central to
Strategy Implementation
Establish annual objectives Match managers to strategy
Devise policies Develop a strategy-
Allocate resources supportive culture
Alter existing organizational Adapt production/operations
structure processes
Restructure & reengineer Develop an effective human
Revise reward & incentive resources function
plans Downsize & furlough as
Minimize resistance to needed
change Link performance & pay to
strategies
By Dr. Bogale A. Ch 7 -6
Purpose of Annual Objectives
Annual objectives are essential for strategy implementation
because they;
Represent the basis for resource
allocation
Mechanism for management evaluation
Major instrument for monitoring progress
toward achieving long-term objectives
Establish organizational, divisional, and
departmental priority
By Dr. Bogale A. Ch 7 -7
Policies
• Policies are needed to make a strategy work.
• Policies facilitate solving recurring problems and
guide the implementation of strategy.
• Broadly defined, policy refers to specific guidelines,
methods, procedures, rules, forms, and
administrative practices established to support and
encourage work toward stated goals.
• Policies are instruments for strategy implementation.
Policies set boundaries, constraints, and limits on the
kinds of administrative actions that can be taken to
reward and sanction behavior; they clarify what can
and cannot be done in pursuit of an organization’s
objectives. By Dr. Bogale A. Ch 7 -8
Cont’d…
Policies let both employees and managers know what
is expected of them, thereby increasing the
likelihood that strategies will be implemented
successfully.
They provide a basis for;
Management control,
Allow coordination across organizational units, and
Reduce the amount of time managers spend making
decisions.
Policies also clarify what work is to be done and by
whom.
By Dr. Bogale A. Ch 7 -9
Resource Allocation
All organizations have at least four types of
resources that can be used to achieve desired
objectives:
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
By Dr. Bogale A. Ch 7 -10
Managing Conflict
Interdependency of objectives and competition for limited
resources often leads to conflict.
Conflict can be defined as a disagreement between two or more
parties on one or more issues.
Conflict is unavoidable in organizations, so it is important that
conflict be managed and resolved before dysfunctional
consequences affect organizational performance.
Conflict is not always bad. An absence of conflict can signal
indifference and apathy.
Conflict not always “bad”
Lack of conflict may signal apathy
Can energize opposing groups to action
May help managers identify
By Dr. problems
Bogale A. Ch 7 -11
Cont’d…
There are three approaches for managing and resolving
conflict
Avoidance: includes such actions as ignoring the problem
in hopes that the conflict will resolve itself or physically
separating the conflicting individuals (or groups).
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, resorting to majority rule, appealing
to a higher authority, or redesigning present positions.
By Dr. Bogale A. Ch 7 -12
Cont’d..
Confrontation: is 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.
By Dr. Bogale A. Ch 7 -13
Matching Structure with Strategy
Changes in strategy often require changes in
the way an organization is structured for two
major reasons.
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
By Dr. Bogale A. Ch 7 -14
By Dr. Bogale A. Ch 7 -15
Basic Forms of Structure
Functional Structure
Divisional Structure
Strategic Business Unit Structure
(SBU)
Matrix Structure
By Dr. Bogale A. Ch 7 -16
Cont’d…
A functional / centralized structure
groups tasks and activities by
business function, such as
Production/operations,
Marketing,
Finance/accounting,
Research and development, and
Management information systems.
By Dr. Bogale A. Ch 7 -17
Functional Structure
By Dr. Bogale A. Ch 7 -18
Divisional / decentralized Structure
Some form of divisional structure generally
becomes necessary to motivate employees, control
operations, and compete successfully in diverse
locations.
The divisional structure can be organized in one
of four ways:
By geographic area
By product or service
By customer
By process
By Dr. Bogale A. Ch 7 -19
Divisional Structure
By Dr. Bogale A. Ch 7 -20
Strategic Business Unit Structure (SBU)
As the number, size, and diversity of divisions
in an organization increase, controlling and
evaluating divisional operations become
increasingly difficult for strategists.
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.
By Dr. Bogale A. Ch 7 -21
Matrix Structure
The most complex of all designs
because it depends upon both
vertical and horizontal flows of
authority and communication
(hence the term matrix).
By Dr. Bogale A. Ch 7 -22
Matrix Structure
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By Dr. Bogale A. Ch 7 -23
Restructuring, Reengineering, and E-
engineering
Restructuring is called
Downsizing
Rightsizing
Delayering - 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.
This reduction in size is intended to improve both efficiency and
effectiveness.
Restructuring is concerned primarily with shareholder well-being
rather than employee well-being.
By Dr. Bogale A. Ch 7 -24
Cont’d..
In contrast, reengineering is concerned more with
employee and customer well-being than
shareholder well-being.
Reengineering—also called process management,
process innovation, or process redesign—involves
reconfiguring or redesigning work, jobs, and
processes for the purpose of improving cost,
quality, service, and speed.
By Dr. Bogale A. Ch 7 -25
Cont’d..
Cornerstones of Reengineering
Decentralization
Reciprocal interdependence
Information sharing
By Dr. Bogale A. Ch 7 -26
Managing Resistance to Change
• Resistance to change can be considered the single greatest threat
to successful strategy implementation.
• Resistance regularly occurs in organizations in the form of
sabotaging production machines, absenteeism, filing unfounded
grievances, and an unwillingness to cooperate.
• People often resist strategy implementation because they do not
understand what is happening or why changes are taking place.
Although there are various approaches for implementing
changes, three commonly used strategies are;
Force change strategy
Educative change strategy
Rational or self-interest change strategy
By Dr. Bogale A. Ch 7 -27
Creating a Strategy-Supportive
Culture
1. Formal statements of organizational
philosophy
2. Design of physical spaces
3. Deliberate role modeling, teaching,
and coaching
4. Explicit reward and status system
5. Stories, legends, myths, and parables
By Dr. Bogale A. Ch 7 -28
Can't…
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, leveling off, retirement, and
“excommunication” of people
By Dr. Bogale A. Ch 7 -29
p t e r !
o f t h e c ha
E nd
By Dr. Bogale A. Ch 7 -30
Production/Operations Concerns
Production processes typically
constitute more than 70% of a
firm’s total assets
Ch 7 -31
Production/Operations Decision
Examples
Plant size
Inventory / Inventory control
Quality control
Cost control
Technological innovation
Ch 7 -32
Human Resource Concerns
Assessing staffing needs/costs
Furloughs
Developing performance incentives
ESOPs
Work–life balance issues
Matching managers with strategy
Ch 7 -33
Corporate Wellness Programs
Wellness of employees has
become a strategic issue for many
firms
Ch 7 -34
