Slide strategic management 6e by harrison chapter 8 strategic control and restructuring

Chapter Strategic Strategic Control and Restructuring 11 Learning Objectives To To understand: understand:  feedback, feedback, concurrent, concurrent, feedforward feedforward and and comprehensive comprehensive strategic strategic control control systems systems  the the implications implications of of national national cultures cultures for for the the design design of of control control systems systems  characteristics characteristics of of the the most most common common restructuring restructuring tactics tactics  the the concept concept of of business business cycle cycle orientation orientation and and how how itit is is useful useful in in helping helping firms firms deal deal with with economic economic cycles cycles 22 Strategic Management Process External and Internal Analysis Strategic Direction Strategy Formulation (corporate and business level) Strategy Implementation and Control Strategic Restructuring 33 Strategic Control System A A system system to to support support managers managers in in assessing assessing whether whether the the organization’s organization’s strategy strategy is is accomplishing accomplishing goals goals as as intended intended identifying identifying areas areas needing needing attention attention 44 Types of Control • Feedback Feedback Provides Provides managers managers with with performance performance information information so so that that they they can can make make adjustments adjustments ifif necessary necessary • Concurrent Concurrent Provides Provides real-time real-time information information used used to to control control organizational organizational processes processes • Feedforward Feedforward –– Monitoring Monitoring systems systems that that help help managers managers anticipate anticipate changes changes in in their their external external and and internal internal environments environments 55 Stakeholders and Environment Feedback Feedback that that guides guides impressions impressions & & expectations expectations FEEDFORWARD FEEDFORWARD CONTROL CONTROL Missions and Goals Strategies Implementation (including targets & time Performance concurrent controls) controls Comparison of Performance with Targets FEEDBACK FEEDBACK CONTROL CONTROL Feedback Feedback used used to to alter alter plans plans and and strategies strategies Assessment of Cause and Effect 66 Feedback Controls Functions of feedback controls in organizations: •Creating specific objectives or targets ensures that managers understand the plans and strategies that guide firm decisions •Motivate managers to pursue organizational interests •Help managers decide when and how to intervene to make corrections 77 Elements in a Feedback Control System Establish Broad Goals Identify Key Result Areas Establish Targets for Each Based on Mission, Vision, for Each of the Broad Goals Result Area and a Time and Purpose Frame for Accomplishment Follow Up Develop an Action Plan for Make a Specific Manager With Accomplishing Responsible Each Manager Each Target for Each Target 88 Characteristics of Effective Objectives or Targets • • • • • • • • High enough to be motivating Realistic Specific Measurable Understood by all affected managers & employees Set through participative processes Use feedback on performance Cover specific time frame 99 Concurrent Controls Process Controls •• Statistical Statistical Process Process Control Control •• Real-time Real-time Inventory Control Control Behavioral Controls •• Bureaucratic Bureaucratic Controls Controls •• Rules Rules and and Procedures Procedures •• Policies Policies – general general guides guides to to action action •• Clan Clan Control Control •• Socialization Socialization processes processes that that dictate dictate appropriate appropriate behavior behavior •• •• •• Orientation Orientation sessions sessions Training Training Formal Formal communications communications such such as as newsletters, newsletters, mission, mission, visions, visions, values values 10 10 Feedforward Control Systems Rapid Rapid changes changes in in the the social, social, economic, economic, technological technological and and political political environments environments make make good good feedforward feedforward controls controls necessary necessary and and important important • Monitoring Monitoring Systems Systems –– The The firm firm analyzes analyzes information information from from stakeholders, stakeholders, the the industry industry and and the the broad broad environment environment to to predict predict potential potential changes changes • Premise Premise Control Control –– evaluates evaluates whether whether information information used used to to establish establish strategies strategies and and goals goals is is still still valid valid 11 11 Comprehensive Strategic Control Systems Rapidly Rapidly advancing advancing technologies technologies make make continuous continuous improvements improvements through through control control systems systems aa possibility possibility • Information generated should be an important and recurring item to be addressed by top management • Control process should be given frequent attention at all levels • Data from system should be discussed in face-toface meetings • Continually challenge the underlying data, assumptions and strategies 12 12 National Cultures For For control control systems systems to to be be effective effective they they should should reflect reflect the the culture culture of of the the nation nation in in which which they they are are established: established: • Power Power distance distance degree degree to to which which members members of of society society accept accept uneven uneven power power distribution distribution • Individualism/collectivism Individualism/collectivism –– degree degree to to which which the the focus focus of of society society is is on on individual individual or or group group • Masculine/feminine Masculine/feminine –– degree degree to to which which society society draws draws strong strong distinctions distinctions between between gender gender roles roles • Uncertainty Uncertainty avoidance avoidance –– degree degree to to which which members members of of society society are are tolerant tolerant of of uncertainty uncertainty and and ambiguity ambiguity • Confucian Confucian dynamics dynamics –– degree degree to to which which decisions decisions are are focused focused on on the the long long term term vs vs the the short short term term 13 13 National Cultures and Control Systems Influence Influence of of national national cultures cultures on on characteristics characteristics of of control control systems: systems: •• Power Power distance distance high high –– focus focus on on outcomes outcomes Power Power distance distance low low –– focus focus on on adherence adherence to to plan plan •• Individualism Individualism –– individual individual rewards rewards Collectivism Collectivism –– team-based team-based rewards rewards •• Masculine Masculine –– value value on on achievement, achievement, heroism heroism and and material material success success Feminine Feminine –– value value on relationships and on relationships and quality quality of of life life •• Uncertainty Uncertainty avoidance avoidance –– control control over over management management risk risk taking taking Uncertainty Uncertainty tolerance tolerance –– less less rule rule based based •• Long-term Long-term oriented oriented –– focus focus on sales growth growth and and customer on sales customer satisfaction satisfaction Short-term Short-term oriented focus on on profits profits oriented –– focus 14 14 Common Restructuring Approaches • • • • • Refocusing Refocusing Corporate Corporate Assets: Assets: ddownscoping ownscoping Retrenchment: Retrenchment: turnaround turnaround strategy, strategy, often often involving involving downsizing downsizing (workforce (workforce reductions) reductions) Chapter Chapter XI XI Reorganization: Reorganization: provides provides temporary temporary court court protection protection from from foreclosure foreclosure and and an an opportunity opportunity to to renegotiate renegotiate contracts contracts Leveraged Leveraged Buyout Buyout (LBO): (LBO): private private purchase purchase of of business business by by managers, managers, employees, employees, unions, unions, or or private private investors investors Structural Structural Reorganization: Reorganization: changes changes to to organizational organizational design design 15 15 Business Cycle Orientation Capabilities Capabilities that that allow allow aa firm firm to to respond respond more more quickly quickly than than rivals rivals to to business business cycles: cycles: • Business cycle literacy • Forecasting resources • Facilitative organizational structure • Business-cycle sensitive management principles • Supportive organizational culture 16 16 The The Future Future Trends: Trends: • Increasing Increasing global global complexity complexity and and interconnectedness, interconnectedness, fueled fueled by by technological technological advancements advancements • Specialized, Specialized, mobile mobile and and diverse diverse labor labor pools, pools, including including those those found found outside outside home home countries countries • Education Education levels, levels, income income levels levels and and access access to to capital capital will will continue continue to to grow grow worldwide worldwide • New New powerful powerful competitors competitors in in global global marketplace marketplace • Increased Increased concern concern about about governance, governance, sustainability sustainability and and social social responsibility; responsibility; increased increased regulation regulation 17 17 Challenge Challenge of of the Future Future Challenges for managers: • retaining retaining valuable valuable employees employees • creating creating and and preserving preserving competitive competitive advantage advantage • discouraging discouraging new new entrants entrants • serving serving increasingly increasingly demanding demanding customers customers • choosing choosing and and timing timing technology technology investments investments at at aa time time when when change change is is so so rapid rapid • major major shocks shocks associated associated with with terrorism, terrorism, new new diseases diseases and and wars wars 18 18 ... Objectives To To understand: understand:  feedback, feedback, concurrent, concurrent, feedforward feedforward and and comprehensive comprehensive strategic strategic control control systems systems... Concurrent Controls Process Controls •• Statistical Statistical Process Process Control Control •• Real-time Real-time Inventory Control Control Behavioral Controls •• Bureaucratic Bureaucratic Controls... Strategic Direction Strategy Formulation (corporate and business level) Strategy Implementation and Control Strategic Restructuring 33 Strategic Control System A A system system to to support support