Slide strategic management 6e by harrison chapter 7 strategy implementation

Chapter Strategy Implementation Learning Objectives To understand: • functional strategies and their importance to strategy implementation • various organizational structures, their strengths and weaknesses, and how they are used to support strategy • organizational culture and energy and their importance in bringing about change • tactics used to foster innovation and entrepreneurship Strategic Management Process External and Internal Analysis Strategic Direction Strategy Formulation (corporate and business level) Strategy Implementation and Control Strategic Restructuring Well-Developed Functional Strategies Business-level strategies are implemented at the functional level • Decisions made in each functional area are consistent with each other • Decisions made within one function are consistent with those made in other functions • Decisions within functions are consistent with the strategies of the business Marketing Strategy • The plan for investing marketing efforts and resources (advertising, branding, distribution, etc.) to achieve business goals › To support growth strategies - identify new customers, suggest product opportunities, create advertising and promotional programs, arrange distribution channels, and creates pricing and customer service policies › To support low-cost competitive strategies - develop low cost channels of distribution and low-risk product and market development activities › To support differentiation strategies - identify the attributes of products that customers will value, price and distribute in ways that capitalize on the differentiation, and advertise and promote the image of difference Operations Strategy • The plan for aligning the production and/or service functions of the firm with the intended business strategies › Supply chain management - integration of the interests of the focal company, the company's customers, and the company's suppliers › To support growth strategies - capacity expansions, hiring of new employees, and new sourcing arrangements can put pressure on systems and procedures › To support differentiation strategies - may require flexibility in workforce, special arrangements with suppliers and high levels of training Research and Development Strategy • Defines the priorities for: › new product and service development › long-range innovation › intellectual property protection › new R&D-related alliances and joint ventures • Process R&D is equally or more important than product research in many firms • Fostering an atmosphere that supports innovation is the key to success in many industries Human Resources Strategy • Defines approach to recruitment, selection, training, performance evaluation, performance rewards, and other key HR practices › Effective human resources strategies can be excellent sources of competitive advantage › HR managers serve a coordinating role between the organization’s management and employees, and between the organization and external stakeholder groups › Important to establish effective human resources policies and communicate them to all of the managers in the organization who are involved in carrying them out Financial Strategy • Play a strategic role within organizations because they control the funds that are needed to acquire, develop, and utilize strategic resources › Three sources of funds are needed: ¤ capital to support growth ¤ capital to develop and maintain resources leading to competitive advantage Ô expense budgets to support ongoing activities › Trade-offs carry significant implications – dividends vs reinvestment, long-run or short-run emphasis, which stakeholders are given priority › Ensure compliance – letter and spirit of ethical and regulatory guidelines Information Systems Strategy • Provide the organization with the technology and systems necessary for operating, planning and controlling the business › Well-designed and integrated information systems serve as the foundation for a competitive advantage Ô allow more aggressive cost management than competitors Ô providing more effective use of timely market information Ô allow integrated transactions within the supply chain • Enterprise resource planning (ERP) › manage the flow of information through the organization › supports operations and supply chain management, finance and accounting, human resources, distribution and customer relationship management from a shared data source 10 Organizational Structure • The number and types of departments or groups, formal reporting relationships and lines of communication › Structure is a means, not an end › There is no one best structure › Structure can constrain future strategic choices › Administrative inefficiencies, poor service, communication problems or employee frustrations may indicated a strategy-structure mismatch 11 Functional Structure General Manager Marketing Finance Production HR Organizing Framework • Inputs such as marketing and production Degree of Centralization • High 12 Divisional Structure General Manager Administrative Departments Flight Simulators Design Manufac Design Graphics Design Manufac Organizing Framework • Outputs such as product groups, customers, or geographic regions Degree of Centralization • Low 13 Matrix Structure General Manager Administrative Depts Marketing Production Project A Project B Organizing Framework • Inputs and Outputs Degree of Centralization • Decentralization with Sharing 14 Network Structure Info Center Organizing Framework • Outputs Degree of Centralization • Very Low (High Decentralization) 15 Less Structured Corporate Forms A result of the need for strategic flexibility in a competitive global marketplace • May be called modular, virtual or network (not to be confused with the network structure just presented) • Loosely interconnected organizational components with poorly defined boundaries • Include and extended network with external stakeholders (suppliers, subcontractors, partners) • Production involves many firms simultaneously • Often supplemental to existing firm structure 16 Foreign Subsidiaries • Local implementation – focus on one country, making only minor adjustments to business strategy to meet local needs • Specialized contribution – play a unique role as a member of an interdependent network of subsidiaries, often as the production arm or as a distributor to a particular region • Global mandate – responsible for an entire global business; they craft and execute strategies 17 Organizational Culture An organization’s culture, the system of shared values that guides employee beliefs and behavior, influences the success of strategy implementation • Often reflects the values and leadership styles of top executives • Human resource management practices can influence culture – recruitment, training, performance evaluation • Organizational energy – intensity and extent to which it is directed towards achievement of firm goals 18 Factors that Encourage Innovation and Entrepreneurship •Strategic direction that incorporates innovation and entrepreneurship •Culture that encourages creative thinking and risk taking •Top management support of entrepreneurship •Open communications supported by an integrated information systems •Valuing the ideas of every employee •Large rewards for internal entrepreneurs •Teamwork and collaboration •A flat management hierarchy with decentralized decision making •Organizational champions to gather resources •Focus on learning •Slack resources available to invest in entrepreneurship 19 Factors that Discourage Innovation and Entrepreneurship •Strategic direction that emphasizes financial returns or operating efficiency •Culture that rewards conformance and discourages novel ideas •Top management that encourages maintaining the status quo •Closed door offices and disorganized and ineffective information system •Attention given mostly to researchers or managers •Harsh penalties for failures •Authoritarian leadership • A tall hierarchy - a lot of bureaucratic red tape and many approval levels •Approval process that makes it difficult to gather new resources •Exclusive emphasis on measurable outcomes •Tight finances (high debt, few liquid assets) 20 ... entrepreneurship Strategic Management Process External and Internal Analysis Strategic Direction Strategy Formulation (corporate and business level) Strategy Implementation and Control Strategic Restructuring... strategies and their importance to strategy implementation • various organizational structures, their strengths and weaknesses, and how they are used to support strategy • organizational culture... carrying them out Financial Strategy • Play a strategic role within organizations because they control the funds that are needed to acquire, develop, and utilize strategic resources › Three sources