Chapter 7

Implementing Strategies: Management &

Operations Issues

Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Strategy Formulation vs.
Implementation
Strategy Formulation (SF)
 Positioning forces
before the action
Strategy Implementation
(SI)
 Managing forces during

 Focus on effectiveness the action

 Primarily intellectual  Focus on efficiency

 Requires good intuitive  Primarily operational

and analytical skills  Requires special

motivation and
 Requires coordination leadership skills
 Requires coordination
among a few people
among many people
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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

Divisional or
Strategists Functional
Managers

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 Management Issues Central to
Strategy Implementation
 Establish annual objectives  Match managers to strategy
 Devise/Plan policies  Develop a strategy-
 Allocate resources supportive culture
 Alter existing  Adapt production/operations
organizational structure processes
 Restructure & reengineer  Develop an effective human
 Revise reward & incentive resources function
plans  Downsize & furlough as
 Minimize resistance to needed
change  Link performance & pay to
strategies
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Purpose of Annual Objectives

Basis for resource allocation

Mechanism for management evaluation
Major instrument for monitoring progress
toward achieving long-term objectives
Establishpriorities (organizational, divisional,
and departmental)

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Resource Allocation

Four Types of Resources

1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources

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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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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 organization’s 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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Basic Forms of Structure

 Functional Structure
 Divisional Structure
 Strategic Business Unit Structure
(SBU)
 Matrix Structure

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Functional Structure

 Groups tasks and activities by business

function (e.g., production, finance,
marketing, R&D, HR, IT, etc.).

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Functional Structure

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Divisional Structure

 Canbe organized in one of four

ways:
 By geographic area
 By product or service

 By customer

 By process

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Divisional Structure

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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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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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Matrix Structure

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

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Creating a Strategy-Supportive Culture

1. Formal statements of organizational

philosophy
2. Design of physical spaces
3. Deliberate role modeling, teaching,
and coaching
4. Explicit reward and status system
5. Stories, legends, myths, and parables
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Creating a Strategy-Supportive Culture

6. What leaders pay attention to

7. Leader reactions to critical incidents and
crises
8. Organizational design and structure
9. Organizational systems and procedures
10. Criteria for recruitment, selection,
promotion, leveling off, retirement, and
“excommunication” of people
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Production/Operations Decision
Examples
Plant size
Inventory / Inventory control
Quality control
Cost control
Technological innovation
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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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