CHAPTER 9 Strategy

Implementation:
Organizing for Action

STRATEGIC MANAGEMENT & BUSINESS POLICY

10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER

Prentice Hall, Inc. © 2006 9-1

 Strategy Implementation

Strategy Implementation
--Sum total of activities & choices
required for strategic plan execution
through programs, budgets, and
procedures

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 Strategy Implementation

Key Implementation Questions –

–Who carries out strategic plan?

–What needs to be done for alignment w/strategy?
–How is work coordinated?

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 Strategy Implementation

10 Top Implementation Problems (i.e. excuses)

– Took longer than planned
• (Problem or result?)
– Unanticipated major problems
– Uncontrollable external factors
– Competing activities and crises
• (It’s Not My Fault!)
– Employees not capable
• (Duh!)
– Lack of training
– Ineffective coordination
– Inadequate leadership
– Tasks/activities poorly defined
• (Those incompetent middle managers…)
– Inadequate information systems
• (Those incompetent IT Guys…)

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 Strategy Implementation

Who carries out strategic plan?

Everyone!

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 Strategy Implementation

Programs – Budgets – Procedures

Make a strategy Action oriented

–Matrix of change – Program Evaluation

1. Compares Existing versus Target Practices
2. Identifies Practices as complementary or interfering
a) Between existing and target
b) Among existing or target
3. Evaluates each Practice based on relative importance
in accomplishing the strategy
4. Identify problem areas and conflicts

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 Programs, Budgets and Procedures

Budget
Detailed costs associated with each Program

Procedures
Activities that must be carried out to complete
the Programs
Standard Operating Procedures (SOP)

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 Strategy Implementation

Synergy
The ROI of each division is greater than if they were
independent separate companies

Achieving Synergy – (6 forms)

–Shared know-how
–Coordinated strategies
–Shared tangible resources
–Economies of scale or scope
–Pooled negotiating power
–New business creation

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 Strategy Implementation

STRUCTURE FOLLOWS STRATEGY (Chandler)

–New strategy is created

–New administrative problems emerge
–Economic performance declines
–New appropriate structure is invented
–Profit returns to previous level

Centralization Decentralization
(Control) (Autonomy)

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 Strategy Implementation

Stages of Corporate Development –

–Stage I: Simple structure

Entrepreneur
–Stage II: Functional structure
Team of functional specialists
–Stage III: Divisional structure
Many products/industries
–Stage IV: Beyond SBU’s
Matrix/Network based on projects

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 Strategy Implementation

Blocks to Changing Stages –

Entrepreneur tendencies
–Loyalty to comrades
–Task oriented
–Single-mindedness
–Working in isolation

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 Organizational Life Cycle

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 Changing Structural Characteristics of Modern Organizations

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 Strategy Implementation

Advanced Types of Organizational

Structures –

–Matrix
•Temporary cross-functional task forces (J&J)
•Product/brand management (P&G)
•Mature matrix (Aerospace)
–Network structure (virtual organization)
•Supply Chain Management & Communications
–Cellular organization
•Self managed teams

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 Network Structure

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 Strategy Implementation

Business Process Reengineering (BPR)

Principles (Hammer)
– Organize around outcomes
– Those that use the output perform the process
– Integrate information processing into real work
– Treat geographically dispersed resources as
centralized
– Link parallel activities
– Put decision point where work is performed
– Capture information once at it’s source

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 Strategy Implementation

Six Sigma – Sigma Performance Levels -- One To Six Sigma

Defects Per Million Opportunities

Sigma Level
DMAIC Methodology (DPMO)

–Define 1 690,000

2 308,537
–Measure 3 66,807

–Analyze 4 6,210

–Improve 5 233

–Control 6 3.4

Real-World Performance Levels

In 1 Sigma In 3 Sigma In 6 Sigma

Situation/Example
World World World

Pieces of your mail lost per year [1,600 per year] 1,106 107 <1

Number of empty coffee pots at work (who didn't fill the coffee pot again?) [680 per year] 470 45 <1

Number of telephone disconnections [7,000 talk minutes] 4,839 467 0.02

Erroneous business orders [250,000 per year] 172,924 16,694 0.9

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 Strategy Implementation

Job design to implement strategy –

–Job enlargement
–Job rotation
–Job enrichment
–Job characteristics model
•Combine tasks to increase variety
•Form natural work units - make workers responsible
•Establish client relationships
•Vertically load the job – authority & responsibility
•Open feedback channels

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 Strategy Implementation

International Issues
–Multi-National Corporation’s
Multi-Domestic versus Global

International Development Stages–

–Domestic company
–Domestic company w/export division
–Domestic company w/int’l division
–MNC w/multi-domestic emphasis
–MNC w/global emphasis

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 Geographic Area Structure

Centralization vs. Decentralization–

–Product-group structure
–Geographic-area structure

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 CHAPTER 9 Strategy
Implementation:
Organizing for Action

STRATEGIC MANAGEMENT & BUSINESS POLICY

10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER

Prentice Hall, Inc. © 2006 9-21