Chapter 7

Implementing Strategies: Management &

Operations Issues
Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Ch 7 -1

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Ch 7 -2

Strategy Formulation vs.

Implementation
Strategy Formulation (SF)
Positioning forces
before the action
Focus on effectiveness
Primarily intellectual
Requires good intuitive
and analytical skills

Requires coordination
among a few people

Strategy Implementation
(SI)
Managing forces during
the action
Focus on efficiency
Primarily operational
Requires special
motivation and
leadership skills
Requires coordination
among many people

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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

Strategists

Divisional or
Functional
Managers

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Ch 7 -4

Management Issues Central to

Strategy Implementation

Establish annual objectives

Devise policies
Allocate resources
Alter existing
organizational structure
Restructure & reengineer
Revise reward & incentive
plans
Minimize resistance to
change

Match managers to strategy

Develop a strategysupportive culture
Adapt production/operations
processes
Develop an effective human
resources function
Downsize & furlough as
needed
Link performance & pay to
strategies

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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
Establish

priorities (organizational, divisional,

and departmental)

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Ch 7 -6

Resource Allocation
Four Types of Resources
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources

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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

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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 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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Ch 7 -9

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Ch 7 -10

Basic Forms of Structure

Functional Structure

Divisional Structure

Strategic Business Unit Structure

(SBU)

Matrix Structure

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Ch 7 -11

Functional Structure

Groups tasks and activities by business

function (e.g., production, finance,

marketing, R&D, HR, IT, etc.).

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Ch 7 -12

Functional Structure

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Ch 7 -13

Divisional Structure
Can

be organized in one of four

ways:
By geographic area
By product or service
By customer
By process

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Ch 7 -14

Divisional Structure

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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.
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Ch 7 -16

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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Ch 7 -17

Matrix Structure

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

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Ch 7 -19

Creating a Strategy-Supportive Culture

1.

2.
3.

4.
5.

Formal statements of organizational

philosophy
Design of physical spaces
Deliberate role modeling, teaching,
and coaching
Explicit reward and status system
Stories, legends, myths, and parables
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Ch 7 -20

Creating a Strategy-Supportive Culture

6.
7.

8.
9.
10.

What leaders pay attention to

Leader reactions to critical incidents and
crises
Organizational design and structure
Organizational systems and procedures
Criteria for recruitment, selection,
promotion, leveling off, retirement, and
excommunication of people
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Ch 7 -21

Production/Operations Decision
Examples
Plant

size

Inventory
Quality
Cost

/ Inventory control

control

control

Technological

innovation

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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.
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Ch 7 -23