Chapter 7

1. Discuss five differences between strategy formulation and strategy

implementation.

Strategy formulation

- The stage of strategic management that involves the planning and decision
making that lead to the establishment of the organization’s goal and of a
specific strategic plan.

Strategy Implementation

- The stage of strategic management that involves the use of management

that involves the use of managerial and organizational tools to direct
resources toward achieving strategic outcomes.

Strategy Formulation Strategy Implementation

Action Positioning forces before the Managing forces during the
action. action.
Focuses Focuses on effectiveness. Focuses on efficiency.
Process Primarily on intellectual Primarily on operational process
process.
Requires Good intuitive and analytical Special motivation and
skill. leadership.
Coordinatio Among few individuals. Among many individuals.
n

Strategy-formulation concept and tools do not differ greatly for small,

large, for profit, or nonprofit organization. However, strategy
implementation varies substantially among different types and sizes of
organizations.
3. Compare and construct restructuring and reengineering.
Restructuring
Action Reduce the size of the firm in
terms of number of
employees, number of
divisions or units, and
number of hierarchical levels
in an organization.
Purpose To improve both efficiency
and effectiveness.
Main concerned Shareholder well-being
rather than employee well-
being.
Focused Eliminating or establishing,
shrinking or enlarging, and
moving organizational
departments and divisions.
Characterized Strategic decisions. ( long-
term, affecting all business
function)
Benefit Cost reduction and rescue the
firm from global competition
and demise.
Downside Reduced employee
commitment, creativity and
innovation that accompany
the uncertainty and trauma
associated with pending and
actual employee layoffs.
Example Hershey Company,
headquartered in Hershey,
announced a 3 year
restructuring plan that
included, 1500 job cuts,
closing certain production
lines, outsourcing more
activities, and building a
production plant in Mexico.
Reengineering
Reconfigure or redesign
work, jobs and processes.
To improve cost, quality,
service, and speed.
Employee and customer
well-being than shareholder
well-being.
Changing the way work is
actually carried out.
Tactical decisions. (short-
term, business-function-
specific)
Offers employees the
opportunity to see more
clearly how their particular
jobs affect the final product
or service being marketed by
the firm.
Can also raise manager and
employee anxiety which
unless calmed, can lead to
corporate trauma.
HP has knocked down the
external barriers to
cooperation and practices
modern reengineering. The
HP of today shares its
forecasts with all of its
supply chain partners and
shares other critical
information with its
distributors and other
stakeholders.
2. Discuss four major reasons annual objective essential for strategy
implementation.

1. As a basis for allocating resources

Enable resources such as financial resources, human resources, physical

resources and technology resources to be allocated according to priorities and
avoid waste of resources.

2. As a primary mechanism evaluating managers

To evaluate how good a manager able to organize and distribute work to their
departmental employees to implement strategy according to the annual
objective manager has set. Therefore, the performance of managers towards
the annual objectives is good can be given incentives as reward.

3. As instruments for monitoring process towards achieving long-term

objectives.

To ensure that hierarchy of annual objectives can be established based on

organization’s structure and consistent across the levels to have a good
strategy implementation without mess and duplication.

4. Establish organizational, divisional and departmental priorities

Annual objectives provide a basis for organizational design and serve as

guidelines for action, directing and channeling efforts and activities of all level
of organization members. Each division would have their own priorities to do
a job and avoid duplication job with other division.