IMPLEMENTING STRATEGIES: MANAGEMENT ISSUES

REPORTERS:
LYRA P. RAMOS
HANNAH R. MARIANO
JESSIELYN TABARES
 I. DIFFERENCE BETWEEN STRATEGY IMPLEMENTATION
AND
STRATEGY FORMULATION

Strategy Implementation:
 requires special motivation and leadership skills
 requires coordination among many persons
 Varies among different types and sizes of organizations

Strategy Formulation:
 is positioning forces before the action
 focuses on effectiveness
 is primarily an intellectual process
 requires good intuitive and analytical skills
 requires coordination among a few individuals
The strategic management process does not end when the firm decides which

strategy or strategies to pursue. If managers and employees of the firm

understand the business, feel a part of the company, and, through involvement

in strategy-formulation activities, have become committed to helping the

organization succeed. Without understanding and commitment, strategy-

implementation efforts face major problems.

Management Perspectives
 the transition from strategy formulation to strategy
implementation requires a shift in responsibility from strategists to
divisional and functional managers.

 Management issues central to strategy implementation include

establishing annual objectives, devising policies, allocating
resources, altering an existing organizational structure, restructuring
and reengineering, revising reward and incentive plans, minimizing
resistance to change, matching managers with strategy, developing
a strategy-supportive culture, adapting production/ operations
processes, developing an effective human resource function, and
downsizing.

 Managers and employees throughout an organization should

participate early and directly in strategy-implementation.
 II. ANNUAL OBJECTIVES
Establishing annual objectives is a decentralized activity that directly involves all managers in
an organization.

 Annual objectives should be measurable, consistent, reasonable, challenging, clear,

communicated throughout the organization, characterized by an appropriate time dimension, and
accompanied by commensurate rewards and sanctions.

 It should be compatible with employees’ and managers’ values and should be supported by
clearly stated policies.

The essentials for strategy implementation:

1.Represent the basis for allocating resources.
2.Are a primary mechanism for evaluating managers.
3.Are the major instrument for monitoring progress towards achieving long-term objectives.
4.Establish organizational, divisional and departmental priorities.
III. POLICIES

 refers to specific guidelines, methods, procedures, rules, forms, and

administrative practices established to support and encourage work toward stated
goals.

 let both employees and managers know what is expected of them, thereby
increasing the likelihood that strategies will be implemented successfully.

IV. RESOURCE ALLOCATION

 is a central management activity that allows for strategy execution.
1.In an organizations that do not use a strategic-management approach to decision-
making, resource allocation is often based on political or personal factors.
2.Strategic management enables resources to be allocated according to priorities
established by annual objectives.

 There are four types of resources that can be used to achieve desired objectives:
1.Financial resources
2. Physical resources
3. Human resources, and
4. Technological resources

V. MANAGING CONFLICT
 Conflict can be defined as a disagreement between two or more parties on
one or more issues.

Various approaches for managing and resolving conflict:

1.Avoidance- includes such actions as ignoring the problem in hopes that the
conflict will resolve itself or physically separating the conflicting individuals or
groups.
2. Defusion- include playing down differences between conflicting parties while
accentuating similarities and common interests, compromising so that there is
neither a clear winner nor loser, resorting to majority rule, appealing to a higher
authority, redesigning present positions.
3.Confrontation – exemplified by exchanging members of conflicting parties so
that each can gain an appreciation of the other’s point of view.
VI.MATCHING STRATEGY WITH STRUCTURE
A. Changes in strategy often require changes in the way an organization is
structures for 2 major reasons:

a.1. structure largely dictates how objectives and policies will be established.
a.2. structure dictates how resources will be allocated.
 Changes in strategy lead to changes in organizational structure.

B. The Functional Structure

b.1. functional or centralized structure is the simplest and least expensive of the
seven alternatives.
b.2. it groups tasks and activities by business function such as product/
operations, marketing, finance/accounting, and computer information
systems.

C. The Divisional Structure (also known as decentralized structure)

 It can be organized in one of four ways: by geographic area, product or
service, customer, or process.
 functional activities are performed both centrally and in each separate division.
 a divisional structure by geographic area- is appropriate for organizations
whose strategies need to be tailored to fit the particular needs and characteristics
of customers in different geographic regions.
 a division structure by product - is most effective for implementing strategies
when specific products or services need special emphasis.
 a division structure by process- is similar to a functional structure, because
activities are organized according to the way work is actually performed.

D. THE STRATEGIC BUSINESS UNIT STRUCTURE (SBU)

 the SBU structure groups similar divisions into strategic business units and
delegates authority and responsibility for each unit to a senior executive who
reports directly to the CEO.

VII.RESTRUCTURING, REENGINEERING, AND E-ENGINEERING

A. Reshaping Corporate Landscape
a.1 restructuring, also called downsizing, rightsizing, or delayering, involves
reducing the size of the firm in terms of number of employees, divisions or units,
and hierarchical levels in the firm’s organizational structure.
a.2. the Internet is ushering in a new wave of business transformations.
a.3. reengineering is concerned more with employee and customer well-being
than with shareholder well-being.
a.4. 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.

 In restructuring, the primary benefit is cost reduction. The downside of

restructuring can be reduced employee commitment, creativity, and innovation
that accompanies the uncertainty and trauma associated with pending and actual
employee benefits.
 In reengineering, a firm uses information technology to break down functional
barriers and crate a work system based on business processes, products, or
outputs rather than on functions or inputs.

 a benefit of reengineering is that it offers employees the opportunity to see more

clearly how their particular jobs impact the final product or service being marketed by
the firm.
VIII. LINKING PERFORMANCE AND PAY TO STRATEGIES
A. Pay-for-Performance
a.1. Profit sharing- is a widely used form of incentive compensation.
a.2. Gain sharing- requires employees or departments to establish performance
targets
a.3. Criteria- such as sales, profit, production efficiency, quality, and safety could
also serve as bases for an effective bonus system.

B. Steps to determine whether a performance-pay plan will benefit an

organization:

b.1. Does the plan captures attention?

b.2. Do employees understand the plan?
b.3. Is the plan improving communication?
b.4. Does the plan pay out when it should?
b.5. Is the company or unit performing better?
IX. MANAGING RESISTANCE TO CHANGE
A. Resistance to Change
 can be considered the single greatest threat to successful strategy
implementation.
 It may take on such forms as sabotaging production machines,
absenteeism, filing unfounded grievances, and an unwillingness to
cooperate.
 It can emerge at any stage or level of the strategy-implementation
process.

 Strategy used for implementing change:

- Force change strategy
- Educative change strategy
- Self-interest change strategy
X. MANAGING THE NATURAL ENVIRONMENT
A. All business functions are affected by natural environment considerations or
striving to make a profit. People of today are especially appreciative of forms that
conduct operations in a way that mends rather than harms the environment.
B. The ecological challenge the facing all organizations requires to formulate
strategies that preserve and conserve natural resources and control pollution.
C. Managing as if the earth matters requires an understanding of how international
trade, competitiveness, and global resources are connected.
D. Firms should formulate and implement strategies from an environmental
perspective.

XI. CREATING A STRATEGY-SUPPORTIVE CULTURE

A.Strategists should strive to preserve, emphasize, and build on aspects of an
existing culture that support proposed new strategies.

A. Jack Duncan described triangulation as an effective, multi method technique for

studying and altering a firm’s culture.
B. The Mexican Culture
 Mexico- is an authoritarian society in terms of schools, churches, business,
and families.
 Employers seek workers who are agreeable, respectful, and obedient, rather
than innovative, creative, and independent. They tend to be activity oriented
rather than problem solvers.
 Employers are paternalistic, providing workers with more than a paycheck,
but in return, they expect allegiance.

C. The Russian Culture

 Russian people are best known for their drive, boundless energy, tenacity,
hard work, and perseverance in spite of immense obstacles.
 Russia has historically been an autocratic state. Russian managers generally
exercise power without ever being challenged by subordinates.

D. The Japanese Culture

 The Japanese place a great importance on group loyalty and consensus, a
concept called “wa”.
 “Wa” requires that all members of the group agree and cooperate.
 Most Japanese managers are reserved, quiet, distant, introspective, and other
oriented, unlike the U.S managers are talkative, insensitive, impulsive, direct, and
individual oriented.

XII. PRODUCTION/OPERATIONS CONCERNS WHEN IMPLEMENTING STRATEGIES

 Production/operations capabilities, limitations, and policies can significantly
enhance or inhibit attainment of objectives.

XIII. HUMAN RESOURCE CONCERNS WHEN IMPLEMENTING STRATEGIES

A.Human Resource problems that arise when businesses implement strategies

can usually be traced to one of three causes:
a.1 disruption of social and political structures.
a.2. failure to match individuals’ aptitudes with implementation tasks.
a.3. inadequate top management support for implementation
activities.

B. Employee Stock Ownership Plans (ESOPs)

b.1. An ESOP is a tax-qualified, defined-contribution, employee benefit
plan whereby employees purchase stock of the company through borrowed
money or cash contributions.
 b.2. Research confirms the ESOPs ca have a dramatic positive effect on
employee motivation and corporate performance, especially if ownership is
coupled with expanded employee participation and involvement in decision
making.

C. Balancing Work Life and Home Life

c.1. Balancing/family strategies have become so popular among

companies in the 1990s that the strategies now represent a competitive
advantage for those firms that offer such benefits as elder care assistance,
flexible scheduling. Job sharing, and so on.