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 (SF) Strategy Implementation
Positioning forces (SI)
before the action Managing forces during

Focus on effectiveness the action

Primarily intellectual Focus on efficiency

Requires good intuitive Primarily operational

and analytical skills Requires special

motivation and
Requires coordination leadership skills
among a few people Requires coordination
among many people
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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

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 Management Issues Central to
Strategy Implementation
Establish annual Match managers to strategy
objectives Develop a strategy-
Devise 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
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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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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 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

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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 organizations 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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Basic Forms of Structure

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

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Functional Structure

Groups tasks and activities by business

function (e.g., production, finance,
marketing, R&D, HR, IT, etc.).

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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)
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.
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Matrix Structure

The most complex of all structures

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

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Matrix Structure

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 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 firms organizational structure.
Reducing the size of an organization is intended to
improve its efficiency and effectiveness.

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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. Explicit reward and status system
5. Stories, legends, myths, and parables
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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, leveling off, retirement, and
excommunication of people
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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 and costs.
Selection Methods.
Employee Training.
Motivating Employees Developing
Performance Incentives; Work-Life
Balance Issues; etc.
Selecting Appropriate Leadership
Styles.
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