ii. implementation explained (topic 8) strategy implementation is - activities and choices used to...
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II. Implementation Explained (Topic 8)II. Implementation Explained (Topic 8)
Strategy implementationStrategy implementation is - activities and choices used to put is - activities and choices used to put strategies and policies into action.strategies and policies into action.
Implementing requires the development of programs, budgets Implementing requires the development of programs, budgets and procedures. May include important factors that we and procedures. May include important factors that we won’t do.won’t do.
Specific information on how to write up the implementation of Specific information on how to write up the implementation of strategies is found in the individual and team case handout strategies is found in the individual and team case handout in supplement.in supplement.
We’ve covered strategy formulation in which we reviewed the We’ve covered strategy formulation in which we reviewed the development of a mission, objectives, and Internal-External development of a mission, objectives, and Internal-External audit. We are now ready to discuss specifics including audit. We are now ready to discuss specifics including development of annual or program objectives and a step-development of annual or program objectives and a step-by-step method of scheduling and budgeting activities to by-step method of scheduling and budgeting activities to implement strategies.implement strategies.
TM-2
Strategic Management Strategic Management ModelModel
Strategy Formulation
Strategy Implementation
Evaluation and Control
Mission
Objectives
Strategies
Feedback/Learning
Environmental Scanning
Societal Environment
General Forces
Task Environment
Industry Analysis
Structure Chain of Command
Resources Assets, Skills
Competencies, Knowledge
Culture Beliefs, Expectations,
Values
Reason for existence
What results to accomplish by when Plan to
achieve the mission & objectives
Programs
Activities needed to accomplish a plan
Budgets
Cost of the programs Procedures
Sequence of steps needed to do the job
Process to monitor performanceand take corrective action
Performance
External
Internal
Go through decision- making process andDetermine alternative
strategy To select
II. A. ProgramII. A. Program - a Statement of - a Statement of Activities and Steps Needed to Activities and Steps Needed to Accomplish a Single Use Plan. Accomplish a Single Use Plan.
Programs include budgets, procedures Programs include budgets, procedures and policies.and policies.
I.E. - Open new Budweiser plant in Germany - this I.E. - Open new Budweiser plant in Germany - this takes:takes:
A. Construction planA. Construction plan
B. Financial programB. Financial program
C. Hiring/training program etcC. Hiring/training program etc
II. A. BudgetsII. A. Budgets - a Statement - a Statement Detailing Program in $ and Unit Detailing Program in $ and Unit
TermsTerms• Construction budget - $100 million, 2 years Construction budget - $100 million, 2 years
allocated for: ??allocated for: ??• Marketing budget 6% of net sales: to pay for: ??Marketing budget 6% of net sales: to pay for: ??• Human resource budget - $5 million, 3 years to Human resource budget - $5 million, 3 years to
pay for :pay for :• develop job specificationsdevelop job specifications• recruitment adsrecruitment ads• paper workpaper work• interviews and travelinterviews and travel• testingtesting• orientation and trainingorientation and training• compensation compensation
II. A. Procedures II. A. Procedures - the steps - the steps describing in detail how a plan is describing in detail how a plan is
put togetherput together• Sop’s (standard operating procedures)Sop’s (standard operating procedures)• Rop’s (revised operating procedures)Rop’s (revised operating procedures)
• Learn the definitions of programs, budgets and Learn the definitions of programs, budgets and proceduresprocedures
Strategy & ImplementationStrategy & Implementation
Good Strategy Poor Strategy
GoodImplementation
Success(Microsoft)
Rescue(IBM)
PoorImplementation
Trouble(KC Casino)
Failure(KC Hotel)
Implementation QuestionsImplementation Questions
• A. Who will carry out strategic plans?A. Who will carry out strategic plans?• B. What must be done?B. What must be done?• C. When will actions be taken? Start and end.C. When will actions be taken? Start and end.• How are actions going to be performed?How are actions going to be performed?
A. Who Carries Out PlansA. Who Carries Out PlansTop executives involved (6th ed. Page 209)Top executives involved (6th ed. Page 209)• Dynamic Dynamic industry expertindustry expert
• Attractive industry, good companyAttractive industry, good company
• Stability (Stability (cautious profit plannercautious profit planner))• Medium industry attractiveness, good to average companyMedium industry attractiveness, good to average company
• Analytical portfolio managerAnalytical portfolio manager• Poor industry, good companyPoor industry, good company
• Retrenchment Retrenchment turnaround specialistturnaround specialist• Medium to good industry, poor companyMedium to good industry, poor company
• Professional liquidatorProfessional liquidator• Bad company, poor industryBad company, poor industry
Matching Chief Executive “Types” With Matching Chief Executive “Types” With StrategyStrategy
Matching Chief Executive “Types” with Strategy
Average
Hig
hL
ow
Business Strength/Competitive Position
Strong
Growth—Concentration
Dynamic Industry Expert
Stability
Cautious Profit Planner
Retrenchment—Close Company
Professional Liquidator
Retrenchment—Save Company
Turnaround Specialist
Ind
us
try
Att
rac
tiv
en
es
s
Source: Thomas L. Wheelen and J. David Hunger, “Matching Proposed Chief Executive ‘Types’ with Corporate Strategy.” Copyright © 1991 by Wheelen and Hunger Associates. Reprinted by permission.
Me
diu
m
Weak
Growth—Diversification
Analytical Portfolio Manager
A. Middle & Lower Level A. Middle & Lower Level ManagersManagers
• Are involved in implementing plans if their Are involved in implementing plans if their functions such as marketing, HRM, POM, etc. are functions such as marketing, HRM, POM, etc. are changed by new strategieschanged by new strategies
• Require the establishment of annual objectives Require the establishment of annual objectives or program goals for there functional area in or program goals for there functional area in marketing, HRM, POM, etc.marketing, HRM, POM, etc.
B.B. What will be changed?What will be changed? Internal Environment in Our Class Is Internal Environment in Our Class Is Functional Resource Approach. Functional Resource Approach. Therefore We Will Implement Strategic Therefore We Will Implement Strategic Plans & Change Structure, Culture, Plans & Change Structure, Culture, Resources on a Need Basis.Resources on a Need Basis.
1. 1. Organizational restructuring Organizational restructuring
2. 2. Organizational culture adaptationsOrganizational culture adaptations
3. 3. Resource changes Resource changes (changing assets, skills (changing assets, skills competencies and knowledge in appropriate competencies and knowledge in appropriate functional resource areas as needed by our functional resource areas as needed by our strategic changes.)strategic changes.)
B. 1. Structure Follows B. 1. Structure Follows StrategyStrategy
a. a. New strategy is createdNew strategy is created
b. b. New administrative problems emergeNew administrative problems emerge
c. c. Economic performance declinesEconomic performance declines
d. d. New appropriate structure is inventedNew appropriate structure is invented
e. e. Profit returns to its previous levelProfit returns to its previous level
B.1. Internal EnvironmentB.1. Internal Environment
1. Organizational structure changes are for 1. Organizational structure changes are for example:example:
a. Change portfolio of sbu’s (add, delete)a. Change portfolio of sbu’s (add, delete)
b. Change functional areasb. Change functional areas• I.E. Add an advertising departmentI.E. Add an advertising department
• Use backward vertical integrationUse backward vertical integration
• Delete a product departmentDelete a product department
• Set up matrix organizational structureSet up matrix organizational structure
TM-14
Internal Environment Internal Environment (Continued)(Continued)
• c. Change overall structure, change from c. Change overall structure, change from functional to divisional depending on what stage functional to divisional depending on what stage of organizational life cycle (see next slide).of organizational life cycle (see next slide).
• d. Centralize or more likely Decentralize your d. Centralize or more likely Decentralize your organizational structure and make your span of organizational structure and make your span of control wider.control wider.
Organizational Life CycleOrganizational Life Cycle
Stage I Stage II Stage III1 Stage IV Stage V
Dominant Issue Birth Growth Maturity Decline Death
Popular Concentration Horizontal Concentric and Profit strategy Liquidation orStrategies in a niche and vertical conglomerate followed by bankruptcy
growth diversification retrenchment
Likely Entrepreneur- Functional Decentralization Structural DismembermentStructure dominated management into profit or surgery of structure
emphasized investment centers
Note: 1. An organization may enter a Revival Phase either during the Maturity or Decline Stages and thus extend the organiza-tion’s life.
Changing Structural Changing Structural Characteristics of Modern Characteristics of Modern
CorporationCorporationOld Organizational Design New Organizational Design
One large corporation Mini-business units & cooperative relationships
Vertical communication Horizontal communication
Centralized top-down decision making Decentralized participative decision making
Vertical integration Outsourcing & virtual organizations
Work/quality teams Autonomous work teams
Functional work teams Cross-functional work teams
Minimal training Extensive training
Specialized job design focused on individual Value-chain team-focused job design
Source: Adapted from B. Macy and H. Izumi, “Organizational Change, Design, and Work Innovation: A Meta-Analysis of 131 North American Field Studies—1961–1991,” Research in Organizational Change and Development, Vol. 7, JAI Press (1993), p. 298. Reprinted with permission.
B.2. Determine What B.2. Determine What Organizational Organizational CultureCulture Changes Should Be Made. Changes Should Be Made.
Choices are:Choices are:• No changeNo change• Integrate (give & take)Integrate (give & take)• SeparationSeparation• Assimilation (domination by one)Assimilation (domination by one)• De-culturation (get rid of culture--no give and De-culturation (get rid of culture--no give and
taketake
Methods of Managing the Culture of an Methods of Managing the Culture of an Acquired FirmAcquired Firm
Methods of Managing the Culture of an Acquired Firm
Not at All
How Much Members of the Acquired Firm Value Preservation of Their Own Culture
Very Much
Integration Assimilation
Separation Deculturation
Per
cep
tio
n o
f th
e A
ttra
ctiv
enes
s o
f th
e A
cqu
irer
Not
at A
ll A
ttrac
tive
Ver
y A
ttrac
tive
Source: A. Nahavardi and A. R. Malekzadeh, “Accultutation in Mergers and Acquisitions,” Academy of Management Review (January 1988), p. 83. Copyright © 1988 by the Academy of Management. Reprinted by permission.
Determine Work Design Determine Work Design Changes:Changes:
Falls under organizational structure culture or HRMFalls under organizational structure culture or HRM
• Re-engineeringRe-engineering• Use job characteristic model to improve Use job characteristic model to improve
performanceperformance• Use downsizing (rightsizing)Use downsizing (rightsizing)• Use lean Six Sigma for TQM modelUse lean Six Sigma for TQM model
Principles for Re-Principles for Re-engineeringengineering
• Organize around outcomes, not tasksOrganize around outcomes, not tasks
• Have those who use the output perform the processHave those who use the output perform the process
• Subsume information-processing work into the real Subsume information-processing work into the real work that produces the informationwork that produces the information
• Treat geographically dispersed resources as though Treat geographically dispersed resources as though they were centralizedthey were centralized
• Put decision point where work is performed and build Put decision point where work is performed and build control into the processcontrol into the process
• Capture information once at the sourceCapture information once at the source
Job Characteristics ModelJob Characteristics Model
• Combine tasksCombine tasks• Form natural work unitsForm natural work units• Vertically load the jobVertically load the job• Establish client relationshipsEstablish client relationships• Open feedback channelsOpen feedback channels
Downsizing Guidelines Downsizing Guidelines more recently Rightsizing more recently Rightsizing has become more popular has become more popular
• Eliminate unnecessary workEliminate unnecessary work• Contract out work that others can do cheaperContract out work that others can do cheaper• Plan for long-run efficienciesPlan for long-run efficiencies• Communicate the reasons for actionsCommunicate the reasons for actions• Invest in the remaining employeesInvest in the remaining employees• Develop value-added jobs to balance out job Develop value-added jobs to balance out job
eliminationelimination• Under RIGHTSIZING new positions may be addedUnder RIGHTSIZING new positions may be added
Use Lean Six Sigma to Use Lean Six Sigma to implement TQM in implement TQM in organizationsorganizations1. Better, less variable quality of product / service 1. Better, less variable quality of product / service
(use Six Sigma).(use Six Sigma).
2. Quicker, less variable response to customers’ 2. Quicker, less variable response to customers’ needs.needs.
3. Greater flexibility in adjusting to customers’ 3. Greater flexibility in adjusting to customers’ shifting requirements.shifting requirements.
4. Lower cost through quality improvements and 4. Lower cost through quality improvements and elimination of non value-adding work (make elimination of non value-adding work (make processes lean)processes lean)
C.1. Resource Program C.1. Resource Program ChangesChanges
This is the 3rd area of the internal environment that This is the 3rd area of the internal environment that may need to be changed after structure and may need to be changed after structure and culture are changed because of the adoption of culture are changed because of the adoption of new strategiesnew strategies
For example, marketing, finance, POM, HRM, IS, For example, marketing, finance, POM, HRM, IS, R&D could be areas in which new implementing R&D could be areas in which new implementing programs may need to be developed..programs may need to be developed..
Determining Staff Changes Determining Staff Changes +/-+/-HRM changes are determined after changes are HRM changes are determined after changes are
made in various areas such as marketing and made in various areas such as marketing and production production
• Organizational structure changes may cause Organizational structure changes may cause changes is staffing needschanges is staffing needs
• New programs in functional areas may require New programs in functional areas may require workersworkers
• I.E. A new R&D department needs 30 employees I.E. A new R&D department needs 30 employees or or
• The production department cuts 100 workers The production department cuts 100 workers and substitutes robot machineryand substitutes robot machinery
III.III. Examples of implementation Examples of implementation program. The Following are program. The Following are
Questions You Need to Answer Questions You Need to Answer
for Each Programfor Each Program..Outline for implementation program.Outline for implementation program.
A. Program Objective (Annual Objectives or longer)A. Program Objective (Annual Objectives or longer)
B. Manager ResponsibleB. Manager Responsible
C.C. Action Plans—Including when activities start or Action Plans—Including when activities start or stopstop
D.D. D. Budgets in $’s/time D. Budgets in $’s/time
E. Results of ProgramE. Results of Program
The following slide is an example of an implementing The following slide is an example of an implementing programprogram
A. A. ProgramProgram: Marketing: Marketing
ObjectiveObjective: Reach new market in Europe with Budweiser : Reach new market in Europe with Budweiser (20% market share in 5 years).(20% market share in 5 years).
Target market changes distribution, product, pricing, and Target market changes distribution, product, pricing, and promotion mixpromotion mix
B. Managers responsible (VP Marketing, Advertising B. Managers responsible (VP Marketing, Advertising Executives) Executives)
C. Set up distribution network in 6 months to 18 months. C. Set up distribution network in 6 months to 18 months. Begin Promotion (advertising) in next 6 months Begin Promotion (advertising) in next 6 months
D. Budget (Distribution - 2% of estimated sales, Promotion - D. Budget (Distribution - 2% of estimated sales, Promotion - $12 Million Dollars)$12 Million Dollars)
E. Results of this marketing program might be brand E. Results of this marketing program might be brand awareness of 80% of public and 20%awareness of 80% of public and 20%
of people willing to try product.of people willing to try product.
Mapping Strategic Groups in the U.S. Mapping Strategic Groups in the U.S. Restaurant Chain IndustryRestaurant Chain Industry
Product Positioning through Mapping of Strategic Groups on Important Product Variables
Product-Line Breadth
High
LowLimited Menu Full Menu
Arby's Wendy's Domino's Dairy Queen
Hardee's Taco Bell Burger King McDonald's
Shoney's Denny's
Country Kitchen
Kentucky Fried Chicken Pizza Hut
Long John Silver's
Ponderosa Bonanza
Perkins International House
of Pancakes
Red Lobster Olive Garden
ChiChi's
Pri
ce
TM-29
The Product Life CycleThe Product Life Cycle
Introduction Growth* Maturity Decline
Time
Sal
es
*The right end of the Growth stage is often called Competitive Turbulence because of price and distribution competition that shakes out the weaker competitors. For further information, see C. R. Wasson, Dynamic Competitive Strategy and Product Life Cycles, 3rd ed. (Austin, Tex.: Austin Press, 1978).
TM-30
C. Marketing Mix VariablesC. Marketing Mix Variables
Product Place Promotion Price
Quality Channels Advertising List price
Features Coverage Personal selling Discounts
Options Locations Sales promotion Allowances
Style Inventory Publicity Payment periods
Brand name Transport Credit terms
Packaging
Sizes
Services
Warranties
Returns
Source: Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1980), p. 89. Copyright © 1980. Reprinted by permission of Prentice-Hall, Inc.
A second example of the bare bones of a A second example of the bare bones of a implementing programimplementing program
A. Program: Financing New FactoryA. Program: Financing New Factory
ObjectiveObjective: Get $400M of loans, $100 corporate bonds. : Get $400M of loans, $100 corporate bonds. 7% cost of money7% cost of money
B. B. Managers ResponsibleManagers Responsible (VP Finance and Controller) (VP Finance and Controller)
C. C. Action PlanAction Plan obtain financing commitment in next six obtain financing commitment in next six months (months (will be detailed in next slidewill be detailed in next slide))
D. D. Determine BudgetDetermine Budget $1M for forecasting and analysis over $1M for forecasting and analysis over next two years.next two years.
E. E. Results Results might be financing received in time, and at or might be financing received in time, and at or below market rates. Improved relations with financing below market rates. Improved relations with financing companies.companies.
Action Planning – Fits under Action Planning – Fits under C. on previous slideC. on previous slide
1. List specific actions.1. List specific actions.2. List dates to begin and end each action.2. List dates to begin and end each action.3. Name person responsible for each action.3. Name person responsible for each action.4. Name person responsible for monitoring 4. Name person responsible for monitoring
timelines and effectiveness of each action.timelines and effectiveness of each action.5. Estimate expected financial and physical 5. Estimate expected financial and physical
consequences of each action.consequences of each action.6. Develop contingency plans.6. Develop contingency plans.
Go to previous slide to end chapter.Go to previous slide to end chapter.