Chapter 7
Implementing Strategies: Management &
Operations Issues
Strategic Management:
Concepts & Cases
13th Edition
Fred David
Ch 7 -1
Ch 7 -2
Strategy Formulation Strategy Implementation
Strategy Formulation includes planning and Strategy Implementation involves all those
decision-making involved in developing means related to executing the strategic
organization’s strategic goals and plans. plans.
In short, Strategy Formulation is placing In short, Strategy Implementation
the Forces before the action. is managing forces during the action.
Strategy Formulation is an Entrepreneurial Strategic Implementation is mainly
Activity based on strategic decision- an Administrative Taskbased on strategic
making. and operational decisions.
Strategy Formulation emphasizes Strategy Implementation emphasizes
on effectiveness. on efficiency.
Strategy Formulation is a rational Strategy Implementation is basically
process. an operational process.
Strategy Formulation requires co-ordination Strategy Implementation requires co-
among few individuals. ordination among many individuals.
Strategy Formulation requires a great deal Strategy Implementation requires
of initiative and logical skills. specific motivational and leadership
traits.
Strategic Formulation precedes Strategy Strategy Implementation follows Strategy
Implementation Formulation.
Ch 7 -3
Nature of Strategy Implementation
SI problems can arise because of the shift in responsibility,
especially if SF decisions come as a surprise to middle- and
lower-level managers. Therefore, it is essential to involve
divisional and functional managers in SF.
Shift in responsibility
Divisional or
Strategists Functional
Managers
Ch 7 -4
Management Issues Central to
Strategy Implementation
Establish annual Match managers to strategy
objectives Develop a strategy-
Revise 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 & furlough as
plans needed
Minimize resistance to Link performance & pay to
change strategies
Ch 7 -5
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)
Ch 7 -6
Resource Allocation
Four Types of Resources
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
Ch 7 -7
Managing Conflict
Conflict – a disagreement between two or more
parties. Interdependency of objectives and
competition for limited resources can cause
conflict.
Conflict not always “bad”
Lack of conflict may signal apathy
Can energize opposing groups to action
May help managers identify problems
Ch 7 -8
MATCHING STRUCTURE WITH STRATEGY
Changes in strategy often require changes in the way an
organization is structured because: (1) structure largely
dictates how objectives and policies will be established
(e.g., objectives and policies established under a
geographic organizational structure are couched in
geographic terms) and (2) structure dictates how
resources will be allocated (e.g., if an organization’s
structure is based on customer groups, then resources
will be allocated in that manner).
Structure should be designed to facilitate the strategic
pursuit of a firm and, therefore, follow strategy.
When a firm changes its strategy, the existing
organizational structure may become ineffective. For
example, new strategies to reduce payroll costs may
require a change in span of control.
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Ch 7 -10
Basic Forms of Structure
Functional Structure
Divisional Structure
Strategic Business Unit Structure
(SBU)
Matrix Structure
Ch 7 -11
Functional Structure
Groups tasks and activities by business
function (e.g., production, finance,
marketing, R&D, HR, IT, etc.).
Ch 7 -12
Functional Structure
Ch 7 -13
Divisional Structure
Canbe organized in one of four
ways:
By geographic area
By product or service
By customer
By process
Ch 7 -14
Divisional Structure
Ch 7 -15
Strategic Business Unit Structure
(SBU)
Groups similar divisions into
strategic business units and
delegates authority and
responsibility for each unit to a
senior executive who reports
directly to the chief executive
officer.
Ch 7 -16
Matrix Structure
The most complex of all structures
because it depends upon both
vertical and horizontal flows of
authority and communication.
Ch 7 -17
Matrix Structure
Ch 7 -18
Restructuring
Restructuring - reducing the size of an organization.
Also called:
Downsizing
Rightsizing
Delayering
These methods involve, respectively, reducing the
number of employees, number of divisions, and number
of hierarchical levels in a firm’s organizational structure.
Reducing the size of an organization is intended to
improve its efficiency and effectiveness.
Ch 7 -19
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
Ch 7 -20
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, leveling off, retirement, and
“excommunication” of people
Ch 7 -21
Production/Operations Decision
Examples
Plant size
Inventory / Inventory control
Quality control
Cost control
Technological innovation
Ch 7 -22
Human Resource Concerns
Assessing staffing needs and costs.
Selection Methods.
Employee Training.
Motivating Employees – Developing
Performance Incentives; Work-Life
Balance Issues; etc.
Selecting Appropriate Leadership
Styles.
Ch 7 -23