Bequilla, El Frances

Lucman, Anna Reham

Reponte, Jay Mark
Torayno, Angela

Strategy Implementation
The strategic management process does not end up upon deciding what strategy or strategies to
use. There must be a translation of strategic thoughts into strategic actions. This translation
process would be much easier if the managers and the employees of the organization:
1. Understand the business
2. Feel a part of the company or organization
3. Because they are involved in the formulation of strategies (strategic formulation) they
have become committed to helping the organization succeed.
There must therefore be understanding and commitment. Implementation of strategies affects
an organization from top to bottom. It involves all functional and divisional areas of the
organization.
Even the most technically perfect strategic plan serve little purpose if it is not
implemented
A technically imperfect plan that is well implemented will achieve more than a perfect
plan that never gets off the paper on which it is planned.
This means that no matter how perfect strategies are being planned or formulated, if they are
not implemented well, then these strategies serve little purpose or have no meaning. Many
organizations spend a lot of money, energy and time trying to develop strategies, and only think
of the means and circumstances of implementing these strategies as afterthoughts.
Change comes from implementation, not through the plan.
Nature of strategy implementation
Successful strategy formulation does not guarantee successful strategy implementation
It is easier to say something (strategy formulation) than to do it (strategy implementation).
Strategy formulation and strategy implementation are fundamentally different and they can be
contrasted as follows:

Strategy formulation Strategy implementation

Involves positioning the forces before Involves managing the forces during
the action the action
Focuses on effectiveness Focuses on efficiency
Primarily an intellectual process Primarily an operational process
Requires good intuitive and analytical Requires special motivation and
thinking leadership skills
Requires coordination among few Requires coordination among many
individuals individuals

Strategy formulation concepts are the same for all types of organizations, whether they are
small, large, profit or non-profit organizations. However, strategy implementation varies or differs
substantially among different types and sizes of organizations. Activities under the strategy
implementation such as the ff:
1. Altering sales territories 8. Establishing cost-control
2. Adding new departments procedures
3. Closing facilities 9. Changing advertising strategies
4. Hiring new employees 10.Transferring managers among
5. Changing an organizations pricing divisions
strategy 11.Building new facilities
6. Developing financial budgets 12. Transfer new employees
7. Developing new employee benefits 13.Building a better management
information system (MIS)
14.Obviously, these activities differ among manufacturing, service or governmental
organizations.
15.
16.Management perspectives
17.Usually for small organizations, the people who formulates the strategies are also the
same ones that implement the same strategies. However, for many companies that
arent small organizations, the transition from strategy formulation to strategy
implementation requires the shifting of responsibilities from the strategists (who are
involved in the formulation process) to the divisional and functional managers (who are
primarily responsible for the implementation process). This shifting of responsibilities
usually causes many problems to arise, especially if the decisions made during the
formulation process comes as a surprise to the middle or lower level managers.
18. Managers and employees are motivated more by perceived self-interest than by
organizational interest, unless the two coincide.
19.This means that managers and employees are more inclined in achieving their own
objectives for their own interests rather than for the interest of the organization, unless
their interest and that of the organization are aligned. This is the reason why divisional
and functional managers must be involved in the strategy formulation process, not just
the strategists. In the same way, the strategists must also be involved in the strategy
implementation process as much as possible.
20. Management changes are necessarily more extensive when strategies to be
implemented move a firm in a new direction.
21.If the strategists also have genuine personal commitment to the implementation
process, then this also motivates the employees and managers. But most of the times,
strategists are too busy to actively support the strategy implementation process and
their lack of interest can be detrimental to the success of the organization.
22. The rationale for objectives and strategies should be clearly communicated
throughout an organization.

The firm should develop competitor focus at all hierarchical levels by gathering and
widely distributing competitive intelligence.
All members of the organization should be well informed about the competitors
accomplishments, products, plans, actions and performance.
Employees should be able to benchmark their efforts against best-in-class
competitors so that the challenge becomes personal.
Major external opportunities and threats should become clear to members of the
organization
Managers and employees questions should be answered
 There must be top down flow of communication which is essential for bottom up
support
23.Annual Objectives
24.Establishing annual objectives is a decentralized activity that directly involves all
managers in the organization. There must be active participation in this activity for
there to be acceptance and commitment.
25.Annual objectives are essential for strategy implementation because they:
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
26.Considerable time and effort should be devoted to ensure that annual objectives are:
1. Well conceived
2. Consistent with long term objectives
3. Supportive of strategies to be implemented
27.
28.The purpose of annual objectives can be summarized as follows:
1. They serve as guidelines for action
2. They direct and channel efforts and activities of organization members
3. They provide a source of legitimacy in an organization by justifying activities to the
stakeholders
4. They serve as standards of performance
5. They serve as important source of employee motivation and identification
6. They give incentives for managers and employees to perform
7. They provide a basis for organizational design
29.It is common for annual objectives to be stated in terms of profitability, growth and
market share by

Business segment Customer groups

Geographic area Products

Annual objectives can be established based on long term objectives. A hierarchy of

annual objectives can also be established based on an organizations structure.

Objectives should be consistent across hierarchical levels and should form a

network of supportive aims

Horizontal consistency of objectives is as important as vertical consistency

of objectives.

For example, even if the manufacturing division was able to achieve its objective of
producing more units, this would be useless or not effective if the marketing
department would not be able to sell the additional units produced.

Annual objectives should be:

1. Measurable 3. Reasonable
2. Consistent 4. Challenging
 5. Clear 7. Characterized by appropriate time
6. Communicated throughout the dimension
organization 8. Accompanied by commensurate
rewards and sanctions.
9. Most of the time, objectives are usually stated in generalities, with little operational
usefulness.
10. Objectives should state quantity, quality, cost and time and should also be
verifiable.
11.Annual objectives should be compatible with employees and managers values and
should be supported by clearly stated policies.
12. More of something is not always better.
13.For example, improved quality or reduced cost may be more important than quantity.
14. Accompanied by commensurate rewards and sanctions:
15.So that the employees and the managers could understand that achieving the
objectives is critical or important to a successful strategy implementation.
16. Clear annual objectives:
17.These do not guarantee a successful strategy implementation but they do increase the
likelihood that personal and organizational aims can be achieved. However, managers
should be aware that overemphasis of objectives can result to undesirable conducts of
the employees, such as faking the numbers, distorting the records, letting the
objectives become ends in themselves.
18.
19.Policies
20. Policies serve as a mechanism for implementing strategies and achieving objectives.
21.Policies are needed to make a strategy work. Policies refer to the specific guidelines,
methods, procedures, rules, forms, and administrative practices that were established
to support and encourage work toward stated goals. On a day to day basis, policies:

Facilitate in solving recurring problems

They also guide the implementation of strategy.
They set the 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
They let both the employees and the managers know what is expected of them (thus
policies increase the likelihood that strategies will be implemented successfully.)
They provide basis for management control
They allow coordination across organizational units
They reduce the amount of time managers have to spend to make decisions
They clarify what work is to be done and by whom
They promote the delegation of decision making to appropriate managerial levels where
various problems arise
22.Policies can apply to all departments. They can also apply to single department. For
example, a department may require that all of its employees or workers should have at
least one training and development course each year.
 23.Policies should be stated in writing as much as possible. Many organizations have
policy manuals to guide and direct behavior.
24.Resource allocation
- A Central management activity
- Strategic management allows resources to be allocated based on priorities established by
the annual objectives (unlike those without strategic management in which resources are
allocated based on political or personal reasons)
- Types of resources used to achieve desired objectives:
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
- Allocation of resources to particular divisions or departments does not necessarily mean
that strategies will be implemented successfully since there are still some factors that
prohibit successful implementation of strategies such as:
1. Overprotection of resources
2. Placing too much emphasis on short run financial criteria
3. Organizational politics
4. Strategy targets that are vague
5. Reluctance to take risks
6. Lack of sufficient knowledge
25.Effective resource allocation does not guarantee a successful strategy implementation
because programs, personnel, controls and commitment must breathe life into the
resources allocated.
26.
27.
28.Managing conflict
- Often occurs when there is interdependency(when they are dependent on each other) of
objectives and the competition for limited resources
- Unavoidable in organizations, this is why it must be managed and resolved before
dysfunctional consequences affect the organizations performance
- Ways to manage and resolve conflicts:
1. Avoidance
- Ignoring the problem hoping that the conflict will resolve itself
- Physically separating the conflicting individuals or groups
2. Defusion
- Playing down the differences between the conflicting parties while
accentuating(make more noticeable or prominent) similarities and common
interests
- Compromising so that there is neither a winner or a loser
- Resorting to a majority rule
- Appealing to higher authorities
- Redesigning present positions
3. Confrontation
- Exchanging the members of the conflicting parties so that each of them can
gain an appreciation of the other partys point of view
- Holding a meeting in which the conflicting parties can present their views and
then work through the differences
29.
30.Conflict is not always bad.
- This is because an absence of conflict can signal indifference and apathy (lack of interest,
enthusiasm or concern). Conflict rather energizes opposing groups into taking actions and
may help managers identify problems
- Disagreement between two or more parties on one or more issues
- Establishing objectives can lead to conflict because:
Individuals have different expectations and perceptions
Schedules create pressure
Personalities are incompatible
Misunderstandings between line managers and staff managers occur (for example,
a collection managers objective to reduce bad debts by 50% may conflict with the
divisional objective to increase sales by 20%).
31.Matching structure with strategy
32.Structures can shape the choice of strategies
33.When there are changes in strategies, this usually would require the way an
organization is structured to also change for two reasons:
1. Structures dictate how objectives and policies will be established.
34.For example, if the organization is organized based on geographic structure, then the
objectives and policies are also established in geographic terms. If the organizations
structure is based on product groups, then the objectives and policies are also stated in
terms of products. Because of this, the objectives and policies structural format can
impact all other strategy implementation processes.
2. Structure dictate how resources will be allocated
35.For example, if the organization is structured based on customer groups, then the
resources will also be allocated based on customer groups. If the organization is
structured based on functional business lines, then the resources will also be allocated
based on functional areas.
36.An organizations structure should be designed to facilitate the strategic pursuit of the
organization. It must therefore follow strategy. If the firm does not have strategies or
mission(reason for being or existence), then it would be difficult to design an effective
structure.
37.There is no one optimal design or structure for a given strategy or type of
organization.
38.What is appropriate for one organization may not be appropriate for a similar firm.
However successful firms in a given industry tend to organize themselves in a similar
way. Consumer goods companies tend to be organized in a divisional structure by
product form.
39.Small firms tend to be functionally structured (centralized). Large firms tend to use
strategic business unit (SBU) or matrix structure. As an organization grows, their
structure becomes more complex due to the concatenation or the linking together of
several basic strategies.
40.No firm could change its structure in response to every external or internal forces
affecting it, because to do so would cause chaos.
41.However, when an organization changes its strategy, its existing structure may no
longer be effective. The following are the symptoms of ineffective organizational
structure:
1. Too many levels of management
2. Too many meetings attended by too many people
3. Too much attention being directed towards solving interdepartmental conflicts
4. Too large span of control
5. Too many unachieved objectives
6. Declining corporate or business performance
7. Losing ground to rival firms
8. Revenue and/or earnings divided by the number of employees and/or number of managers
is low compared to rival firms.

42.Changes in structure can facilitate the implementation of strategies. However, changes

in structure should not create an expectation that bad strategies will improve, bad
managers become good, or bad products will sell solely because of this.
43.This is why strategies formulated must be workable, because a strategy that would
require massive structural changes would not be an attractive choice. Thus,
44.Types of organizational structure:
1. Functional structure (centralized)
- Groups tasks and activities by business function, such as
Productions/operations
Marketing
Finance/accounting
Research and development
Management information systems

45. For example, a university may be structured according to its major functions,
such as the academic affairs, student services, alumni relations, athletics,
maintenance, and accounting.
46. Advantages:
1. Simple and inexpensive
- This is why it is the most widely used structure of all the seven structures
2. Promotes the specialization of labor and capitalizes on the specialization of business
activities such as marketing and finance
3. Encourages efficient use of managerial and technical talent
4. Minimizes the need for an elaborate control system
5. Allows rapid decision making
47.Disadvantages:
1. It forces accountability to the top
2. Minimizes career development opportunities
3. Sometimes characterized by low employee/manager morale, line/staff conflicts
4. Poor delegation of authority (delegation of authority and responsibility is not
encouraged)
5. Inadequate planning for products and markets
6. Leads to short term and narrow thinking that may undermine what is best for the firm
as a whole.
- For example, the R&D department may strive to overdesign products and components
to achieve technical elegance, while the manufacturing dept. may argue that low frills
products is better since it can be mass produced easily.
7. Leads to communication problems
 48.Most large companies have abandoned the functional structure in favor of
decentralization and improved accountability.
49.
2. Divisional structure (decentralized structure)
- as organizations grow, it becomes more difficult to manage different products and services
in different markets. This is why it becomes necessary to employ divisional structures to
motivate the employees, control the operations, and compete successfully in diverse
locations.
- Functional activities are performed both centrally and in each separate division
50. Advantages:
1. Accountability is clear
- This means that divisional managers can be held responsible for the sales and profit
levels
2. Promotes delegation of authority
- Because divisional structure is based on extensive delegation of authority, both the
managers and employees can easily see the results of their performance. Thus,
employee morale is generally higher
3. Creates career development opportunities for managers
4. Allows local control of situations
5. Leads to a competitive climate within an organization
6. Allows new businesses and products to be added easily
7. Allows strict control and attention to products, customers and regions
51. Disadvantages:
1. Can be costly, because
- Each division requires functional specialists who must be paid
- There is duplication of staff, services, facilities and personnel. (for example, a functional
specialist is also needed centrally or at headquarters to coordinate divisional activities)
- The managers must be well qualified because this structure requires delegation of
authority, and better qualified individuals require higher salaries
- This structure requires an elaborate, headquarters driven control system
2. Duplication of functional activities
3. Requires skilled management forces
4. Requires an elaborate control system
5. Competitions among divisions may become so intense that it is dysfunctional and leads
to limited sharing of ideas and resources for the common good of the firm
6. Some regions/products/customers may receive special treatment, thus making it
difficult to maintain consistent, company-wide practices.
52. However the disadvantages of this structure is offset by its advantages.
53. Divisional structure divides. It fragments the companys resources. It also creates
vertical communication channels that insulate (isolate or cut off) business units and thus
prevents them from sharing their strengths with one another. Thus, the whole of the
organization becomes less than the sum of its parts. (no synergy)
a. Divisional structure by geographic area
- Appropriate for organizations:
Whose strategies need to be tailored to fit the particular needs and
characteristics of customers in different geographic areas
That have similar branch facilities located in widely dispersed areas
- Allows local participation in decision making and improved coordination within a
region
b. Divisional structure by product or services
 - Most effective when specific products or services need special emphasis
- Used when the organization offers only a few products or services
- Used when an organizations products or services differ substantially
- Allows strict control over and attention to product lines
- Require more skilled management force and reduced top management control
c. Divisional structure by customer
- Effective when few major customers are of great importance and many different
services are provided to these customers
- Allows organizations to effectively cater to the requirements of clearly defined
customer groups
d. Divisional structure by process
- Similar to functional structure, because activities are organized according to the way
work is actually performed. The difference however, is that functional departments are
not accountable for profits or revenues, whereas divisional process departments are
evaluated on these criteria
- Each process division would be responsible for generating revenues and profits
3. Strategic business unit (SBU) structure
- It becomes more difficult to control and evaluate the divisional operations of an organization
when the number, size, and diversity of divisions in the organization increase. Increase in
sales are often not accompanied by similar increase in profitability. The span of control
becomes too large at the top levels of the firm
- This is why SBU is necessary to facilitate strategy implementation efforts by improving
coordination between similar divisions and channeling accountability to distinct business
units
- Groups similar divisions into SBUs according to certain common characteristics, such as:
Competing in the same industry
Being located in the same area
Having the same customers
54.
- delegates authority and responsibility for each SBU to a senior executive who reports
directly to the CEO
- makes the tasks of planning and control by the corporate officer more manageable
- disadvantages:
1. it requires additional layer of management which increases salary expenses
2. the role of the group vice president is often ambiguous
4. Matrix structure
- Widely used in many industries, including construction, health care, research and defense
- Most complex because it depends upon both vertical and horizontal flows of authority and
communication (thus, matrix). Functional and divisional structures on the other hand
depend primarily on vertical flows of authority and communication
- The most effective structural form when several variables, such as product, customer,
technology, geography, functional area, and line of business have equal strategic
priorities. Thus firms usually are using this structure when thy pursue strategies that add
new products, customer groups, and technology to their range of activities, resulting to
addition of new product managers, functional managers, and geographic managers. All of
whom have important strategic responsibilities
55. Advantages:
1. Project objectives are clear
2. There are many channels of communication
3. Workers can clearly see the visible results of their work
4. Shutting down a project can be easily accomplished
5. It facilitates the use of specialized personnel, equipment, and facilities
6. Functional resources are shared, rather than duplicated as in a divisional structure
 7. Individuals with a high degree of expertise can divide their time as needed among
projects, and they in turn develop their own skills and competencies more than in other
structures
56. Disadvantages:
1. Requires excellent vertical and horizontal flows of communication (a need for extensive
and effective communication system)
2. Results to higher overhead (more costly) because it creates more management
positions
3. Dual lines of budget authority (violation of unity-of-command principle)
4. Dual sources of reward and punishment
5. Shared authority
6. Dual reporting channels
7. Requires mutual trust and understanding
- To be effective, there must be
participative planning
clear mutual understanding of roles and responsibilities
excellent internal communication, mutual trust and confidence

57.Some Dos and Donts in Developing Organizational Charts

Reserve the title CEO for the top executive of the firm
Do not use the title president for the top person, use it for the division top managers if
there are divisions within the firm
Do not use the title president for functional business executives. They should have the title
chief, or vice president or manager or officer such as chief information officer or VP of
Human resources.
Do not recommend a dual title(such as CEO and president) for just one executive
Directly below the CEO, it is best to have a COO (chief operating officer) with any division
presidents reporting directly to the COO
On the same level as the COO and also reporting directly to the CEO should be the
functional business executives such as the CFO(Chief Financial officer), VP of Human
Resources, CSO(Chief strategy Officer), CIO(Chief Information Officer), CMO(Chief
Marketing Officer), VP pf Research and Development, VP of Legal Affairs, investment
relations officer, MO (maintenance officer), etc.
Controller and treasurer normally report to the CFO
Avoid having a particular person reporting to more than one person in the chain of
command, to avoid violating the unity of command principle (every employee should
have just one boss)
58.Restructuring and Reengineering
59.Restructuring
- Aka downsizing, rightsizing, or delayering
- Involves reducing the size of the firm in terms of the number of employees, number of
divisions or units, and the number of hierarchical levels in the firms organizational
structure
- This reduction in size is intended to improve both efficiency and effectiveness
- concerned primarily with the shareholder well-being rather than the employee well-being
- involves laying off managers and employees
- concerned with eliminating or establishing, shrinking or enlarging, and moving
organizational departments and divisions
- to streamline operations, increase efficiency and compete effectively
 - firms often employ this when various ratios (such as headcount-to-sales volume, corporate
staff to operating employees, span of control figures) appear out of line with their
competitors as determined through benchmarking exercises (comparing a firm against the
best firms in the industry on a wide variety of performance related criteria)
- primary benefit sought is cost reduction
60.
- Downsides:
can however cause reduced employee commitment, creativity and innovation due
to the uncertainty and trauma associated with the pending and actual employee
layoffs
61.
62. Reengineering
- aka process management, process innovation, or process redesign
- is concerned more with employee and customer well-being, than shareholder well-being
- involve reconfiguring or redesigning work, jobs, and processes for the purpose of
improving cost, quality, service and speed
- One of its benefit is that it allows employees to see more clearly how their particular jobs
affect the final product or service being marketed by the firm.
- However, just like restructuring, this can also raise manager and employee anxiety, which,
unless calmed, can lead to corporate trauma
- does not usually affect the organizational structure or chart
- does not imply job loss or employee lay-offs
- its focus is changing the way work is actually carried out
- its cornerstones are:
decentralization
reciprocal interdependence
information sharing (for example, employees may be given weekly income
statement of the firm and extensive information on other companies performance.)
63.Restructuring:
concerned with eliminating or establishing, shrinking or enlarging, and moving
organizational departments and divisions
Characterized by strategic decisions ( long term, affecting all business functions)

64. Reengineering

Concerned with changing the way work is actually carried out

Characterized by many tactical decisions (short term, business function specific)

65.Six sigma
- Quality-boosting process improvement technique developed by Motorola and made
famous by CEO Jack Welch of General Electric
- Entails training several key persons in the firm in the techniques to monitor, measure, and
improve processes and eliminate defects
- Aims to improve work processes and eliminate waste by training select employees
66.Thus information technology is used in reengineering to break down functional barriers
and create a work system based on business processes, products, or outputs rather
than on functions or inputs.
67.Reengineering must not only knock down internal walls that keep parts of the company
from cooperating effectively. It must also knock down external walls that prohibit or
discourage the company from cooperating with other companies, even competitors.
(for example, HP shares all its forecasts with all of its supply chain partners and shares
other critical information with its distributors and other stakeholders. It also does all the
 buying of resin for its manufacturers, giving it a volume discount of 5 percent. It has
also established many alliances and cooperative agreement.

68. Linking Performance and Pay to Strategies

69.Companies should install the following policies to improve compensation practices:
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 (sales growth, etc.) , rather
than on stock price
4. Extend the tome-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. Be more consistent across levels, although employees with greater
responsibility must receive greater compensation.
70.There are differences in the average executive pays among different countries. As firms
acquire other firms in other firms in other countries, these pay differences can cause
resentment and even turmoil. Countries have different key factor in determining pay,
some of seniority (japan), others of performance. Japan also emphasize harmony
among managers rather than individual excellence. However, in an effort to cut costs
and increase productivity, more and more Japanese companies are switching from
seniority based to performance based approaches (merit pay systems). This switching
has hurt the morale of many Japanese companies, which have trained workers for
many years to cooperate rather than to compete and to work in groups rather than
individually.
71.Dual bonus system based on both annual objectives and long-term objectives is
becoming more common. The percentage of a managers annual bonus must be
attributable to both short term and long term results. It is important that bonuses
should be based not solely on short term results because such a system ignores the
long term company strategies and objectives. The percentage attributable to short
term versus long term may vary across hierarchical levels in the organization.
72.Companies should have an appraisal system that gives genuine feedback and
differentiates performance. Concise, constructive feedback is the fuel workers use to
get better. A company that does not differentiates performance risks losing its best
people.
73.Profits sharing is another widely used incentive compensation. But many argue that
profits is affected by too many factors (taxes, pricing, or an acquisition reduces profits;
firm also try to minimize their profits to reduce taxes) for this to be a good criterion.
74.Gain sharing on the other hand, requires employees or departments to establish
performance targets. If the actual results exceed the objectives then all the members
get bonuses.
75.The following criteria could serve as bases for an effective bonus system:

Sales Quality
Profits Safety
Production efficiency

Bonus system can be an effective tool for motivating individuals to support strategy
implementation efforts. This makes the workers responsible for meeting their goals.

Five tests to determine whether the performance pay-plan will benefit an organization:
1. Does the plan capture attention?
- People are talking more about their activities and taking pride in the early successes
under the plan
2. Do employees understand the plan?
- The participants can explain how it works and what they need to do to earn the
incentive
3. Is the plan improving communication?
- The employees know more than they used to about the companys mission, plans, and
objectives
4. Does the plan pay out when it should?
- The incentives are being paid for the desired results or withheld when objectives are not
met
5. Is the company or unit performing better?
- The profits increase, market share has grown, gains have resulted in part from the
incentives

Aside from dual bonus system, combinations of following reward strategy incentives can
be used to encourage the managers and employees to push hard for successful strategic
implementation:

Salary raises Praise Increased job

Stock options Recognition autonomy
Fringe benefits Criticism Awards
Promotions Fear

Managing resistance to change

Change raises anxieties because people fear economic loss, inconvenience, uncertainty,
and a break in normal social patterns. Change has the potential to disrupt comfortable
interaction patterns. This is why people resist change.

Resistance to change

- Considered the single greatest threat to successful strategy implementation

- Occurs in the form of sabotaging production machines, absenteeism, filing unfounded
grievances, and an unwillingness to cooperate
- People resist strategy implementation because they do not understand what is happening
or why changes are taking place. This is why employees need accurate information.
- In order for strategy implementation to be successful, managers must have the ability to
develop an organizational climate conducive to change.
Change must be viewed as an opportunity rather than a threat by both managers and
employees.
- Can emerge at any stage or level of the strategy implementation process
- Commonly used strategies for implementing changes:
1. Force change strategy
- Involves giving orders and enforcing those orders
- Has the advantage of being fast, but causes low commitment and high resistance
2. Educative change strategy
- Presents information to convince people the need for change
- Implementation, however, becomes slow and difficult
3. Rational or self-interest change strategy
- Attempts to convince individuals that the change is to their personal advantage
- If successful, strategy implementation can be a relatively easy task
- However, implementation changes are seldom to everyones advantage.
- Most desirable
 - Consists of four steps (Jack Duncan)
1. Employees are invited to participate in the process of change and in the details
of transition
- This allows everyone to give opinions, to feel a part of the change process,
and to identify their own self-interests regarding the recommended change
2. Some motivation or incentive to change is required
- Self-interest can be the most important motivator
3. There should be communication so that people can understand the purpose of
the changes.
4. There should be giving and receiving of feedback.
- So that everyone knows how things are going and how much progress is being
made

The rate, speed, magnitude, and direction of changes vary over time according to the
industry and organization. Strategists should strive to create a work environment in which
change is recognized as necessary and beneficial so that individuals can more easily adapt
to change.

Managers can improve the likelihood of successfully implementing change by carefully

designing change efforts. It is not enough to simply react to changes. Managers must
anticipate change, and if possible, be the creator of change themselves.

Organizational changes is a continuous process. The most successful organizations today

continuously adapt to changes in the competitive environment. They also continuously
change their competitive environment at an accelerating rate. This philosophy mirrors the
idea continuous quality improvement philosophy.

Creating a strategy-supportive culture

Aspects of an existing culture that support proposed new strategy should be preserved,
emphasized and built by strategists. Those aspects that are antagonistic to the proposed
new strategy should be identified and changed.

The following are the techniques to alter an organizations culture:

Recruitment Positive reinforcement

Training Mentoring
Transfer Revising the Vision and/or Mission
Promotion Redesigning physical spaces/facades
Restructuring Altering reward systems
Reengineering Altering organizational
Role modeling policies/procedures/practices

The following elements are useful in linking culture to strategy:

1. Formal statements of organizational philosophy, charters, creeds, materials used for

recruitment and selection, and socialization
2. Designing of physical spaces, facades, buildings
3. Deliberate role modeling, teaching, and coaching by leaders
4. Explicit reward and status system, promotion criteria
5. Stories, legends, myths, and parables about key people and events
6. What leaders pay attention to, measure, and control
7. Leader reactions to critical incidents and organizational crises
8. How the organization is designed and structured
9. Organizational systems and procedures
10.Criteria used for recruitment, selection, promotion, leveling off, retirement, and
excommunication of people

People form strong attachments to heroes, legends, the rituals of daily life and all the
symbols of the workplace. When attachments to a culture are severed in an organizations
attempt to change direction, employees and managers often were left confused, insecure,
and often angry. This usually occurs when external conditions dictate the need for new
strategy.

Usually, new strategies are market-driven and dictated by competitive forces. This is why
changing a firms culture to fit a new strategy is usually more effective than changing the
strategy itself to fit an existing culture.

Weak linkages between strategic management and organizational culture can jeopardize
performance and success. Unless something can be done to provide support for transitions
from old to new, the force of a culture can neutralize and emasculate (weakens and makes
less effective) strategy changes.

Production/Operations concerns when implementing strategies

Production related decisions on the following can have dramatic effect on the success or
failure of strategy-implementation efforts:

Plant size Inventory control Equipment and

Plant location Quality control resource
Product design Cost control utilization
Choice of Use of standards Shipping and
equipment Job specialization packaging
Kind of tooling Employee training Technological
Size of inventory innovation

Just-in-time (JIT)

- Significantly reduces the costs of implementing strategies

- Parts and materials are delivered to a production site just as they are needed, rather than
being stockpiled as a hedge against later deliveries
- Frees money tied up in inventory and greatly reduces the reorder lead time

Factors that should be considered before locating the production facilities:

1. Availability of resources
2. The prevailing wage rates in the area
3. Transportation costs related to shipping and receiving
4. Location of major markets
5. Political risks in the area or country
6. Availability of trainable employees

For high-tech companies, production flexibility may be more important than production
costs because major product changes can be needed often. Production system must be
flexible enough to allow frequent changes and the rapid introduction of new products

The problem with many organizations is that they realize too slowly that whenever
there is a change in product strategy, production system must also be altered. As
strategies shift over time, so must the production policies covering the location and
scale of manufacturing facilities, the choice of manufacturing process, the degree of
vertical integration of each manufacturing facility, the use of R&D units, and others.
 Cost, product flexibility, volume flexibility, and product performance and product
consistency determines the manufacturing policies that are appropriate.

Cross-training of employees can facilitate strategy implementation. Through this,

employees gain better understanding of the whole business and can contribute better
ideas in planning sessions. This, however, can cause managers into roles that
emphasize counseling and coaching over directing and enforcing. It may also require
substantial investments in training and incentives.

Human resource concerns when implementing strategies

Furloughs

- Alternative to laying-off employees to cut costs

- Temporary lay-offs, may be applied both to white-collared to blue-collared jobs

However, most organizations are still using temporary and part-time workers rather
than hiring full-time employees. Harley Davidson, for instance, used casual workers
with no benefits and no minimum number of hours, allowing the company to call up
workers only as needed.

The following are ways to reduce labor costs to stay financially sound:

1. Salary freeze 9. Hire temporary instead of full-time

2. Hiring freeze employees
3. Salary reductions 10.Hire contract employees instead of
4. Reduce employee benefits full-time employees
5. Raise employee contribution to health- 11.Volunteer buyouts
care premiums 12.Halt production for 3 days a week
6. Reduce employee workweek (Toyota did this)
7. Mandatory furlough 13.Layoffs
8. Voluntary furlough 14.Early retirement
15.Reducing/eliminating bonuses
16.As companies continue to downsize and reorganize, the human resource managers job
also changes in a rapid pace. Strategic responsibilities of the HR manager now include:

Assessing the staffing needs and the costs for alternative strategies that are proposed
during strategy formulation
Developing a staffing plan for effectively implementing strategies.
- Such staffing plan must consider how to best manage health care insurance costs.
Before, it was only the employer who pays such costs, but many companies are now
also requiring the employees to pay part of their health insurance premiums
- Such staffing plan must also include how to motivate the employees and managers
during a time when layoffs are common and workloads are high
Developing performance incentives that clearly link performance and pay to strategies
Empowering managers and employees through their involvement in strategic
management activities
- This process yields the greatest benefits when all organizational members understand
clearly how they will benefit personally if the firm does well. Therefore, company
benefit must be linked to the personal benefits of the members
Linking company and personal benefits
Establishing and administering an Employee Stock Ownership Plan (ESOP)
Instituting an effective child-care policy
 Providing leadership for managers and employees in a way that allows them to balance
work and family
17.Even if the strategic management system is well designed, it can still fail if insufficient
attention is given to the human resource dimension. HR problems usually arise during
implementation of strategies due to the following causes:
1. Disruption of social and political structures
- Strategy implementation poses a threat to many managers and employees due to the new
power and status relationships that are anticipated and realized. Managers and employees
may engage in resistance behavior as their roles, prerogative (right or privilege exclusive
to a particular individual or class), and power in the firm change.
- This must therefore be anticipated and considered during strategy formulation process
and managed during strategy implementation process
2. Failure to match individuals aptitudes with implementation tasks
- There must be a matching of managers with strategy through the following methods:

Transferring managers Promotions

Developing leadership Job enlargement
workshops Job enrichment
Offering career development
activities

Usually, individual values, skills and abilities that are needed for successful strategy
implementation are not always considered during the strategy formulation process.
Firms that select new strategies or significantly alter existing strategies usually do
not possess the right line and staff personnel in the right position.
3. Inadequate top management support for implementation activities
- Strategists (such as the CEO, small business owners, and government agency heads) often
have inadequate support in the implementation activities. They must therefore be
personally committed to strategy implementation and they must express this commitment
in the most visible ways possible.
- Strategists formal statements about the importance of strategic management must be
consistent with their actual support and the rewards they give for activities completed and
objectives reached.

It is important to ensure that human relationships facilitate rather than disrupt

strategy implementation efforts. Managers can do a lot of chatting and informal
questioning to stay abreast or up to date with how things are progressing and to
know when to intervene.

Managers can also build support for the strategy-implementation process by giving
orders, announcing few decisions that depend primarily on informal questioning and
seeking to probe and clarify until a consensus is achieved. Efforts should be
rewarded generously and visibly.

The best method for overcoming and preventing human resource problems is to
actively involve as many managers and employees as possible during the strategic
management process. Although this is time consuming, this approach builds
understanding, trust, commitment and ownership and reduces resentment and
hostility.

The true potential of strategy formulation and implementation resides in people.

 Employee Stock Ownership Plans (ESOPs)
- Tax qualified, defined contribution, employee benefit plan whereby employees purchase
stock of the company through borrowed money or cash contributions
- Empower employees to work as owners
- Reduce worker alienation and stimulate productivity
- Has many benefits for the firm such as: substantial tax savings (principal, interest, and
dividend payments in ESOPs are tax deductible; banks lend money to ESOPs at below
prime rate, and others)
- Not, however for every firm due to the costs associated (such as initial legal, accounting,
appraisal, and actuarial fees to set up ESOP, annual administration expenses)
- Do not work well in firms that have fluctuating payrolls and profits.
- Human resource managers should therefore conduct a preliminary research to determine
the desirability of an ESOP. If the benefits outweigh the costs, then they should also
facilitate its establishment and administration

Balancing Work Life and Home Life

Wage disparities between men and women still exists.

Work/family topic is now being made part of the agenda of the meetings and thus is being
discussed in many organizations. Work/family strategies have become so popular among
companies nowadays that strategies now represent a competitive advantage for those firms
that offer benefits such as:

Eldercare assistance Establishing country clubs

Flexible scheduling Creating family/work interaction
Job sharing opportunities
Adoption benefits Family days where family members
On-site summer camp are invited into the workplace,
Employee help lines taken on plant or office tours, dined
Pet care by management, and given a
Lawn service referrals chance to see exactly what the
Providing spouse relocation other family members do each day.
assistance as an employee benefit This method is inexpensive and
Providing company resources as a increases the employees pride in
family recreational and educational working for the organization
use
 HR managers need to foster a more effective balancing of professional and private lives.

A good home life contributes immensely to a good work life.

Glass ceiling is the invisible barrier in many firms that bars or prevents women and
minorities from the top-level management positions. This glass ceiling must be removed, to
promote women and minorities into the mid- and top-level management positions.

There has been an increasing awareness of extramarital affairs due to office romances.
According to research, more men than women are engaged in these extramarital affairs at
work, but the percentage of women also having extramarital affairs are increasing steadily,
compared to the percentage of men which is holding steadily. Only few of the companies have
written guidelines on office dating. Most of the employers usually turn a blind eye to marital
cheating. Some employers even explicitly allow office relationships.

If an affair is disrupting work of an employee, then the first step is to go to the offending
person privately and try to resolve the matter. If that fails, then the next step is to go to the
HR manager to seek for assistance. Filing a discrimination lawsuit cased on the affair is only
used a last resort because the court generally rule that co-workers injuries are not pervasive
enough to warrant any damages.

Benefits of a Diverse Workforce

Many industries are now shifting being a culturally specialized agencies to becoming
multicultural, generalist agencies as many companies are now starting to embrace
multicultural marketing using multicultural ad agencies in their efforts to reinforce the
multicultural component of their overall strategies.

For an organization to be effective, its workforce must mirror the diversity of its
customers. This means that just as its customers are diverse, so must its workforce.

Corporate Wellness Programs

Studies show that companies that have comprehensive, well-run employee wellness
programs have impressive returns on investments. This is because such programs
reduce the employees healthcare insurance premiums. These programs can also
reduce the voluntary turn-over of employees. Practices such as the following are
becoming common at companies to promote corporate wellness culture:

Providing abundant bicycle racks

Conducting walking meetings
Offering five minute stress breaks

Employee wellness has now become a strategic issue for many firms. Many of the firms
today would require a health examination as part of an employment application as
healthiness now becomes a hiring factor. Companies cannot afford to let individuals to
drive up their costs just because these individuals are not willing to address their own
health problems.