Strategic Management lecture # 12
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This document outlines a lecture on strategic management and strategy execution. It discusses the transition from strategy formulation to implementation, explaining that implementation requires operational changes and coordination. Clear annual objectives and policies are essential for effective implementation, as they guide resource allocation, evaluation, and coordination. The lecture also covers managing conflicts that can arise during implementation and aligning organizational structure with strategy. Finally, it identifies strategic production, operations, and human resource issues that are vital to successful strategy execution.
Strategic Management lecture # 12
- 1. JahanUniversity BachelorofBusinessAdministration Departmentof BusinessAdministration Subject: Strategic Management Lecture# 10th Strategy Execution Lecturer: Hijratullah Tahir 1
- 2. Objectives of the lecture After completion of this lecture students will be able to know: 1. Describe the transition from formulating to implementing strategies 2. Why annual objectives are essential for effective strategy implementation. 3. Six reasons why policies are essential for effective strategy implementation. 4. Role of resource allocation and managing conflict in strategy implementation. 5. Discuss the need to match a firm’s structure with its strategy. 2
- 3. Outline of the lecture Topic 1 : Describe the transition from formulating to implementing strategies Topic 2 : Why annual objectives are essential for effective strategy implementation. Topic 3 : Why policies are essential for effective strategy implementation. Topic 4 : Role of resource allocation and managing conflict in strategy implementation. Topic 5 : Discuss the need to match a firm’s structure with its strategy. Topic 6 : Identify, diagram, and discuss seven different types of organizational structure. Topic 7 : Identify and discuss fifteen dos and don’ts in constructing organizational charts. Topic 8 : Four strategic productions issues vital for successful strategy implementation. 3
- 4. Transitioning from Formulation Implementation • Successful strategy formulation does not guarantee successful strategy implementation. • Strategy implementation is difficult than strategy formulation • linked, strategy implementation is fundamentally different from strategy formulation. • Implementing strategies requires such actions as altering sales territories, adding new departments, closing facilities, hiring new, etc. 4
- 5. Formulation Vs. Implementation 5 Formulation Implementation Position forces before the action Manage forces during the action Focus is on effectiveness Focus is on efficiency Primarily an intellectual process Primarily an operational process Requires good intuitive and analytical skills Requires special motivation and leadership skills Requires coordination among a few individuals Requires coordination among many individuals A science with tools and techniques An art to energize people
- 6. The Need for Clear Annual Objectives Annual objectives are essential for strategy implementation for reasons; 1. They represent the basis for allocating resources. 2. They are a primary mechanism for evaluating managers. 3. They enable effective monitoring of progress toward achieving long- term objectives. 4. They establish organizational, divisional, and departmental priorities. 5. They are essential for keeping a strategic plan on track. 6
- 7. The Need for Clear Policies 1. Policies set boundaries, constraints, and limits on the kinds of administration. 2. Policies let both employees and managers know what is expected of them, 3. Policies provide a basis for management control and allow coordination across organizational units. 4. Policies reduce the amount of time managers spend making decisions. 5. Policies promote delegation of decision making to appropriate managerial levels where various problems usually arise. 6. Policies clarify what can and cannot be done. 7
- 8. Allocation of Resources Types of Resources; 1. financial resources, 2. Physical resources, 3. Human resources, and 4. Technological resources. Distributing an organization’s “assets” across products, regions, and segments according to priorities established by annual objectives. 8
- 9. Managing Conflict 9 • Differences of opinion, turf protection, and competition for limited resources can inevitably lead to conflict. • Disagreement between two or more parties on one or more issues. • Establishing annual objectives can lead to conflict because individuals have different expectations, perceptions, schedules, pressures, obligations, and personalities. • Avoidance, Diffusion and Confrontation
- 10. Match Structure with Strategy Strategy often require changes in the way an organization is structured, for two major reasons. 1. Structure largely dictates how objectives and policies will be established. 2. Structure dictates how resources will be allocated. If an organization’s structure is based on customer groups, then resources will be allocated in that manner. Strategic Business Unit 10
- 11. Types of Organizational Structure There are seven basic types of organizational structure: • Functional, • Divisional by geographic area, Divisional by product, Divisional by customer, Divisional by process, • Strategic business unit (SBU), and Matrix. • Companies, strive to be better organized/structured than rivals 11
- 12. Strategic Production/ operations Issues • Production/operations capabilities, limitations, and policies have contribution in objectives achievement. • Thus, a major part of the strategy-implementation process takes place at the production site. • SP Decisions; Plant size, plant location, product design, choice of equipment, kind of tooling, size of inventory, inventory control, quality control, cost control, use of standards, job specialization, etc 12
- 13. Strategic Production/ operations Issues Four production/operations issues; 1. Restructuring/reengineering, 2. Managing resistance to change, 3. Deciding where/how to produce goods, and 4. Managing an ESOP 13
- 14. Strategic Human Resource Issues • Any organization is only as good as its people! Thus, human resource issues can make or break successful strategy implementation. • HR Issues are; Linking performance and pay to strategy, Balancing work life with home life, Developing a diverse work force, Using caution in hiring a rival’s employees, creating a strategy-supportive culture, Using caution in monitoring employees’ social media, and developing a corporate wellness program 14
- 15. Conclusion • Successful strategy formulation does not at all guarantee successful strategy implementation. • In a single word, strategy implementation means change. • It is widely agreed that the real work begins after strategies are formulated. • Successful strategy implementation requires the support of, as well as discipline and hard work, from motivated managers and employees. • Formulating the right strategies is not enough because managers and employees must be motivated to implement those strategies. 15
- 16. References 1. Strategic Management Concepts and Cases Sixteen Edition by Fred R. David. 2. Fundamental of Business Management Process by Marlon Dumas and Jan Mandelling. 16
Editor's Notes
- #5: Implementing strategies requires such actions as altering sales territories, adding new departments, closing facilities, hiring new employees, changing an organization’s pricing strategy, developing financial budgets, developing new employee benefits, establishing cost-control procedures, changing advertising strategies, building new facilities, training new employees,
- #10: Avoidance includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals (or groups). Defusion can include playing down differences between conflicting par- ties 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, or redesigning present positions. Confrontation is exemplified by exchanging members of conflicting parties so that each can gain an appreciation of the other’s point of view or holding a meeting at which conflicting parties present their views and work through their differences.
- #11: The second major reason why changes in strategy often require changes in structure is that structure dictates how resources will be allocated. If an organization’s structure is based on cus- tomer groups, then resources will be allocated in that manner. Similarly, if an organization’s structure is set up along functional business lines, then resources are allocated by functional areas. Unless new or revised strategies place emphasis in the same areas as old strategies, struc- tural reorientation commonly becomes a part of strategy implementation.