Session 8

Strategy Implementation
Management Issues

Session 8

Some Quotes
“A management truism says structure follows strategy. However, the truism is
often ignored. Too many organizations attempt to carry out new strategy with an
old structure.”
Dale McConkey
“The ideal organizational structure is a place where ideas filter up as well as
down, where the merit of ideas carries more weight than their source, and where
participation and shared objectives are valued more than executive orders.”
Edson Spencer

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Annual Objectives
1. Basis for allocating resources
2. Primary basis for evaluating managers
3. Major instrument for monitoring short-term progress toward meeting long term goals
4. Establish organizational, divisional and departmental objectives.
Measurable, Consistent, Reasonable, Challenging, Clear, Communicated throughout the organization,
time dimension, reward and sanctions.
Words like maximize, minimize, as soon as possible etc. should be avoided.
Side-effects of over-emphasis : faking numbers, distorting records etc.

Session 8

Annual Objectives

Horizontal vs. Vertical alignment of objectives.

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Policies
• Specific guidelines, methods, procedures, rules, forms and administrative
practices established to support and encourage towards achieving goals.
• Policies set boundaries, constraints and limits on the kind of administrative
actions that can be taken to reward and sanction behavior.
About 40% of companies today do not have a formal policy preventing employees
from surfing the Internet, but software is being marketed now that allows firms to
monitor how, when, where, and how long various employees use Internet at work.

Session 8

Policies
Some typical examples of policies:
• To buy, lease or rent new equipment.
• To recruit through employment agencies.
• To negotiate directly with labor unions.
• Not allow overtimes.
• To promote from with or hire from outside.
• To centralize or decentralize training activities.

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Policies

Class Discussion
Can policies help a firm achieving the set objectives or it creates limitation for
generating new ideas.

Session 8

Resource Allocation
• Financial, physical, human resource and technological.
Factors prohibiting resource allocations are:
• Overprotection of resources.
• Too much emphasis on short-run financial criteria.
• Organizational politics.
• Vague targets.
• Reluctance to take risks.
• Lack of sufficient knowledge.

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Managing Conflict
Disagreement between one or more issues.
• Setting up objective can invite conflict.
• Conflict should be unavoidable and should be managed before it produces dysfunctional
consequences.
• Conflict is not always bad. It can energize or bring new ideas.
Resolving conflict through:
• Avoidance: Separate people so that it automatically gets resolved.
• Diffusion: Playing down differences and accentuating similarities viz. majority, appealing to
higher authority etc.
• Confrontation: Conflicting parties present their views and sorting out the differences.

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Matching Structure with Strategy

Functional Structure
• Group task and activities by business function e.g. production/operation, marketing,
finance/accounting, R&D etc.
Simple and least expensive but can be disadvantageous due to top down approach, lack of
career development, conflicts, inadequate planning etc.
Divisional Structure
• Complete and decentralized structure based on geographic considerations, products /
services, customers or processes.
It can bring clarity in accountability, high employee morale, career development opportunity,
competitive climate etc. But it can be costly, duplication, Need to better quality employees
(costly).

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McDonald’s reorganized its operation in 2001, going from thirty seven geographic locations in
the United States to twenty-one divisions. This streamlining eliminated 700 managerial jobs.
Kodak reduced its number of business units from seven by-customer divisions to four by-
product divisions. As consumption patterns become increasingly similar worldwide, a by-
product structure is becoming more effective than by-customer or by-geographic type division
structure. In the restructuring, Kodak eliminated its global operations division and distributed
those responsibilities across the new by-product divisions.

Session 8

Matching Structure with Strategy

Strategic Business Unit
• It groups similar divisions into one Strategic Groups and delegate authority and
responsibility to head of each of them. This is mainly used when there are many divisions
and span becomes too big.
Easy to control large conglomerates. However, it can be very costly, ambiguous and
bureaucratic.
Matrix Structure
• Complex structure of vertical and horizontal grouping and controls.
It requires proper planning, training, understanding of roles and responsibilities, good
communication, trust and confidence.

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Restructuring and Reengineering

Restructuring
Reduction in size and therefore sometimes viewed to be more in favor of shareholders
rather than employees.
• Benchmarking against the best – Cost to Income, headcount to sales, management
staff vs, operating staff span of control etc.
Cost reduction is the major benefit but it can lower employee morale
Restructuring is making manager’s role invisible and thankless job.

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Restructuring and Reengineering

Reengineering
As routine becomes entrenched, turf becomes delineated and defended, and politics
takes precedence over performance.
• In reengineering, a firm uses technology to break down functional barriers and
create a work system based on business processes, products, or outputs rather than
functions or inputs.
It helps people to see clearly that how a particular job effects the final product. But, it
can can create anxiety amongst people.

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Performance and Pay and Strategies

Bonus system based on long-term and short-term achievements are becoming common.
• Profit sharing or gain sharing mechanisms
“You have to start with an appraisal system that gives genuine feedback and differentiates
performance. Some call it ranking people. That seems little harsh. But you cant have a
manager checking a box that says you are either stupendous, magnificent, very good, good or
average. Concise, constructive feedback is the fuel workers use to get better. A company that
does not differentiate performance risks losing its best people.” – Richard Brown, CEO of
Electronic Data System.
What are the constraints of performance based pay system in Nepal? – Class discussion

Session 8

Managing Resistance to Change

Resistance in the form of sabotaging production machines, absenteeism, filing unfounded
grievances, and unwillingness too cooperate regularly.
• Force change: Giving orders and enforcing orders. Fast but lack of commitment or
cooperation
• Educative change: Convince people to change. Buy in but time taking and slow.
• Rational or self-interest change: Change can bring personal advantage. Again buy-in but
change cannot bring advantage to everyone.
Change management is a continuous process as opposed to project or event

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Managing Resistance to Change

“Observation of the historical transitions from one orientation to another shows that, if left
unmanaged, the process becomes conflict-laden, prolonged, and costly in both human and
financial terms. Management of resistance involves anticipating the focus of resistance and its
intensity. Second, it involves eliminating unnecessary resistance caused by misperceptions and
insecurities. Third, it involves mustering the power base necessary to assure support for the
change. Fourth, it involves planning the process of change. Finally, it involves monitoring and
controlling resistance during the process of change.” – Igor Ansoff

Session 8

Managing Natural Environment

Managing as if the earth matters requires an understanding of how international trade,
competitiveness, and global resources and connected. Managing environmental affairs can
no longer be simply a technical function performed by specialists in a firm; more emphasis
must be placed on developing an environmental perspective among all employees and
managers of a firm.

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Creating a Strategy Supportive Culture

Substantial research indicate that new strategies are often market-driven and dictated by
competitive forces. For this reason, changing a firm’s culture to fit new strategy is usually
more effective than changing a strategy to fir existing culture.
• Mexican, Russian and Japanese Culture – class discussion.

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Production / Operations Concerns While Implementing Strategies

Why some organizations get into trouble:
“They too slowly realize that a change in product strategy alters the tasks of a production
system. These tasks, which can be stated in terms of requirements for costs, product flexibility,
volume flexibility, product performance, and product consistency, determine which
manufacturing policies are appropriate. As strategies shift over time, so must 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,
the control of the production system, and the licensing of technology.” – Harvard Business
Review

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Human Resource Concerns While Implementing Strategies

• Assessing staffing needs and cost of Alternative Strategies during formulation.
• Developing staffing plan for effective implementation of strategies.
Causes of HR problems when implementing strategies:
• Disruption of social and political structures.
• Failure to match individual aptitudes with implementation of tasks.
• Inadequate top management support to implement activities.

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Human Resource Concerns While Implementing Strategies

• Staff benefits and incentives
• Balancing Work and Home Life
“Research indicates that employees who are dissatisfied with childcare arrangements are
most likely to be absent or unproductive” – Richard Levine “Childcare: Inching up the
Corporate Agenda”
• Diverse Workforce
An organization can perhaps be most effective when its workforce mirrors the diversity of its
customers.

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THANK YOU

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