Chapter 6

Implementing Strategies: Management

& Operations Issues
 Nature of Strategy Implementation
•Implementation of strategies is concerned with
the design and management of systems to
achieve the best integration of people, structures,
processes and resources in reaching
organizational purpose.
 Contd…

• Strategy implementation problems can arise

because of the shift in responsibility, especially if
strategy formulation decisions come as a surprise
to middle- and lower-level managers. Therefore, it
is essential to involve divisional and functional
managers in Strategy formulation.
Shift in responsibility

Divisional or
Functional
Strategists Managers
Management Issues Central to Strategy
Implementation
Purpose of Annual Objectives
 Resource Allocation

Four Types of Resources

1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
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(unconcern)
 Can energize opposing groups to action
 May help managers identify problems
Approaches of conflict
 MATCHING STRUCTURE WITH STRATEGY
• Changes in strategy often require changes in
the way an organization is structured because:
 Structure largely dictates how objectives and
policies will be established
 Structure dictates how resources will be
allocated (e.g., if an organization’s structure is
based on customer groups, then resources will
be allocated in that manner).
 Contd..

• 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.
Basic Forms of Structure
 Functional Structure
 Divisional Structure
 Strategic Business Unit Structure (SBU)
 Matrix Structure
Functional Structure
Divisional Structure
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.
 Matrix Structure
• The most complex of all structures
because it depends upon both vertical
and horizontal flows of authority and
communication.
 Restructuring

• These methods involve, respectively, reducing

the number of employees, number of
divisions, and number of hierarchical levels in
a firm’s organizational structure.

• Reducing the size of an organization is

intended to improve its efficiency and
effectiveness.
 Reengineering
• In contrast, reengineering is concerned more
with employee and customer well-being than
shareholder well-being.

• Reengineering—also called process

management, process innovation, or process
redesign—involves reconfiguring or redesigning
work, jobs, and processes for the purpose of
improving cost, quality, service, and speed.
 Contd,..
• Reengineering does not usually affect the
organizational structure or chart, nor does it imply
job loss or employee layoffs.

• Whereas restructuring is concerned with

eliminating or establishing, shrinking or enlarging,
and moving organizational departments and
divisions, the focus of reengineering is changing
the way work is actually carried out.
 Managing Resistance to Change
• No organization or individual can escape change.
But the thought of change raises anxieties because
people fear economic loss, inconvenience,
uncertainty, and a break in normal social patterns.

• Almost any change in structure, technology, people,

or strategies has the potential to disrupt
comfortable interaction patterns. For this reason,
people resist change.
 Contd..
• People often resist strategy implementation
because they do not understand what is happening
or why changes are taking place. In that case,
employees may simply need accurate information.

• Successful strategy implementation hinges upon

managers’ ability to develop an organizational
climate conducive to change. Change must be
viewed as an opportunity rather than as a threat by
managers and employees.
Creating a Strategy-Supportive Culture
Contd…
Production/Operations Decision
Examples
Plant size
Inventory / Inventory control
Quality control
Cost control
Technological innovation
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.