Chapter 1 The Nature of Strategic Management

Chapter 1 The Nature of Strategic Management

Ch 8 -1 Copyright 2011 Pearson Education Strategic Management: Concepts and Cases Arab World Edition Fred R. David Abbas J. Ali Abdulrahman Y. Al-Aali Chapter 8: Implementing Strategies: Management and Operations Issues Ch 8 -2

Copyright 2011 Pearson Education Chapter Outline The Nature of Strategy Implementation Annual Objectives Policies Resource Allocation Managing Conflict Matching Structure With Strategy Ch 8 -3 Copyright 2011 Pearson Education Chapter Outline (contd)

Restructuring, Reengineering, and E-Engineering Linking Performance and Pay to Strategies Managing Resistance to Change Managing the Natural Environment Production/Operations Concerns When Implementing Strategies Human Resource Concerns When Implementing Strategies Ch 8 -4 Copyright 2011 Pearson Education Source: Adapted from Fred R. David, How Companies Define Their Mission, Long Range Planning 22, no. 3 (June 1988) 40. Ch 8 -5

Copyright 2011 Pearson Education Nature of Strategy Implementation Formulation vs. Implementation Strategy implementation is different from strategy formulation Formulation focuses on effectiveness Implementation focuses on efficiency Ch 8 -6 Copyright 2011 Pearson Education Nature of Strategy Implementation Management Perspectives

Shift in responsibility Strategists Ch 8 -7 Copyright 2011 Pearson Education Divisional and Functional Managers Management Issues Annual Objectives Policies

Management Issues Resources Organizational Structure Restructuring Rewards/Incentives Ch 8 -8 Copyright 2011 Pearson Education Management Issues (contd) Resistance to Change Natural Environment

Management Issues Supportive Culture Production/Operations Human Resources Ch 8 -9 Copyright 2011 Pearson Education Annual Objectives Purpose of Annual Objectives Basis for resource allocation Mechanism for management evaluation Metric for measuring the progress on longterm objectives Establish priorities (organizational,

divisional, and departmental) Ch 7-10 Ch 8 -10 Copyright 2011 Pearson Education Polices

Refers to specific guidelines , methods , procedures , rules , forms and administrative practices established to support and encourage work toward stated goals Some examples that may requires a policy:To use one or more suppliers To operate one ,two , or three shifts To discourage smoking at work To discourage insider trading To discourage working on a secondary job for a different employees Ch 711 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Resource Allocation Resources allocation is a central management

activity A process of allocating resources consistent with priorities indicated by approved annual objectives All organizations have four types of resources: 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources Ch 8 -12 Copyright 2011 Pearson Education Ch 7-12 Managing Conflict

Conflict can be defined as--------- a disagreement between two or more parties on one or more issues Conflict not always bad An absence of conflict can signal apathy Conflict can help managers identify problems Ch 7-13 Ch 8 -13 Copyright 2011 Pearson Education Managing Conflict Approaches for Managing Conflicts Avoidance Ignoring the problem in hopes that the conflict will resolve itself

Compromising (Defusing) playing down differences between conflicting parties (there is neither a clear winner nor loser ) Confrontation holding a meeting at which conflicting parties present their views and work through their differences. Ch 7-14 Ch 8 -14 Copyright 2011 Pearson Education Matching Structure with Strategy Changes in strategy lead to changes in organizational Structure

Structure largely dictates how objectives and policies will be established Structure dictates how resources will be allocated Ch 7-15 Ch 8 -15 Copyright 2011 Pearson Education Matching Structure with Strategy Basic Forms of Structure Functional Structure Divisional Structure Strategic Business Unit Structure (SBU) Matrix Structure

Ch 7-16 Ch 8 -16 Copyright 2011 Pearson Education The Functional Structure A functional structure groups tasks & activities by business functions such as production &operation ; marketing ; finance ;accounting etc The functional structure is the widely used structure because it is the simplest , least expensive, and

promotes much specialization of labor A university may structure its activates by major functions that include academic affairs , student service , alumni relation , maintenance , and accounting Ch 717 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall The Divisional Structure (decentralized structure )

It is suitable for the large corporations It can be organized in one of four ways By geographic area By product or service By customers By process The divisional structure is the second widely used structure because it enables the corporation to motivate employees ; control operation and compete successfully in diverse location The national investor (a comprehensive banking investment firm ) organizes its activates into four divisions ; investment banking ; private equity ; asset management ; and real estate Ch 718

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall The Strategic Business Unit (SBU) structure As the number , size , and diversity of divisions in an organization increase , the SBU structure is needed . SABIC has grouped its many divisions into six primary SBUs ; chemicals ;; plastic ;polymers ; innovative plastics ; fertilizers and metals

SBU can greatly facilitate strategy implementation efforts The SBU structure places similar divisions into SBU and delegates authority and responsibility for each unit to a senior executive who directly report to the CEO Ch 719 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall The Matrix Structure

Ch 720 A matrix structure is the most complex of all design

because it depends on both vertical and horizontal flows of authority and communication some advantages of the matrix structure ; The project objectives are clear channel of communication will be increased Facilitate the use of specialized personal, equipments , and facilities For a matrix structure to be effective , Organizations need participative planning Training Clear mutual understanding of roles and responsibilities Excellent internal communication Mutual trust and confidence Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Restructuring,, and Re-Engineering

Restructuring (also called Downsizing, rightsizing) ) Reducing the size of the firm in terms of number of employees , number of divisions or units The target is---------- to improve both efficiency and effectiveness Ch 7-21 Ch 8 -21 Copyright 2011 Pearson Education Re-engineering ;it is called also Process innovation , Process redesign

Reengineering is concerned with employee and customer well being than shareholder well being . The purpose is improving cost - quality service and speed of the production Ch 7-22 Ch 8 -22 Copyright 2011 Pearson Education Linking Performance and Pay to Strategies Situation in the Arab World Most companies adopt a compensation system which primarily includes a base salary with annual rises.

Increasingly in large Arab corporations there is a tendency to utilize pay systems similar to those found in western countries. Ch 7-23 Ch 8 -23 Copyright 2011 Pearson Education Production/Operations Concerns Production processes typically constitute more than 70% of firms total assets. Ch 7-24 Ch 8 -24

Copyright 2011 Pearson Education Production/Operations Concerns (contd) Production/Operations Decisions Plant size Kind of tooling Plant location Product design Inventory / Inventory control Choice of equipment

Quality control Shipping and packaging Cost control Technological innovation Use of standards Equipment and resource utilization Job specialization Ch 8 -25

Copyright 2011 Pearson Education Employee training Human Resource Concerns Human Resource Strategic Responsibilities Assessing staffing needs/costs Developing performance incentives Child-care policies Worklife balance issues Ch 7-26 Ch 8 -26 Copyright 2011 Pearson Education

Benefits of a Diverse Workforce Improves corporate culture Improves employee morale Leads to easier recruitment of employees Decreases complaints and litigation Increases creativity Improves client relations Increases productivity Maximizes brand identity Reduces training costs Ch 8 -27 Copyright 2011 Pearson Education

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