Chapter 7 - Strategy Implementation - Organizing for action (1).pptx

presentaion

1. Strategy Implementation: Organizing For Action

2. Strategy Implementation Strategy implementation is the sum total of the activities and choices required for the execution of a strategic plan. It is the process by which objectives, strategies, and policies are put into action through the development of programs, budgets, and procedures.

3. Who Implements Strategy? Depending on how a corporation is organized, those who implement strategy will probably be a much more diverse set of people than those who formulate it. In most large, multi-industry corporations, the implementers are everyone in the organization.

4. What Must Be Done? The managers of divisions and functional areas work with their fellow managers to develop programs, budgets, and procedures for the implementation of strategy. They also work to achieve synergy among the divisions and functional areas in order to establish and maintain a company’s distinctive competence.

5. DEVELOPING PROGRAMS, BUDGETS, AND PROCEDURES

6. DEVELOPING PROGRAMS, BUDGETS, AND PROCEDURES

7. The Matrix of Change (explained)

8. DEVELOPING PROGRAMS, BUDGETS, AND PROCEDURES The matrix of change can be used to address the following types of questions:

9. DEVELOPING PROGRAMS, BUDGETS, AND PROCEDURES The matrix of change can be used to address the following types of questions:

10. DEVELOPING PROGRAMS, BUDGETS, AND PROCEDURES

11. DEVELOPING PROGRAMS, BUDGETS, AND PROCEDURES

12. ACHIEVING SYNERGY Synergy is said to exist for a divisional corporation if the return on investment (ROI) of each division is greater than what the return would be if each division were an independent. Shared know-how: Combined units often benefit from sharing knowledge or skills. This is a leveraging of core competencies . Example: One reason that Procter & Gamble purchased Gillette was to combine P&G’s knowledge of the female consumer with Gillette’s knowledge of the male consumer. Coordinated strategies: Aligning the business strategies of two or more business units may provide a corporation significant advantage by reducing inter-unit competition and developing a coordinated response to common competitors (horizontal strategy). Example : The merger between Arcelor and Mittal Steel, for example, gave the combined company enhanced R&D capabilities and wider global coverage while presenting a common face to the market.

13. ACHIEVING SYNERGY Shared tangible resources: Combined units can sometimes save money by sharing resources, such as a common manufacturing facility or R&D lab. The alliance between Renault and Nissan allowed it to build new factories that would build both Nissan and Renault vehicles. Economies of scale or scope: Coordinating the flow of products or services of one unit with that of another unit can reduce inventory, increase capacity utilization, and improve market access. This was a reason Delta Airlines bought Northwest Airlines. Pooled negotiating power: Combined units can combine their purchasing to gain bargaining power over common suppliers to reduce costs and improve quality. The same can be done with common distributors.

14. ACHIEVING SYNERGY New business creation: Exchanging knowledge and skills can facilitate new products or services by extracting discrete activities from various units and combining them in a new unit or by establishing joint ventures among internal business units.

15. How Is Strategy to Be Implemented? Organizing for Action Organizing for Action Before plans can lead to actual performance, a corporation should be appropriately organized, programs should be adequately staffed, and activities should be directed toward achieving desired objectives.

16. STRUCTURE FOLLOWS STRATEGY Structure follows strategy is changes in corporate strategy lead to changes in organizational structure. Chandler also concluded that organizations follow a pattern of development from one kind of structural arrangement to another as they expand. Chandler, therefore, proposed the following as the sequence of what occurs: 1. New strategy is created. 2. New administrative problems emerge. 3. Economic performance declines.

17. STRUCTURE FOLLOWS STRATEGY 4. New appropriate structure is invented. 5. Profit returns to its previous level.

18. STAGES OF CORPORATE DEVELOPMENT The differences among these three structural stages of corporate development in terms of typical problems, objectives, strategies, reward systems, and other characteristics are specified in detail in Table 9–1.

19. Blocks to Changing Stages Corporations often find themselves in difficulty because they are blocked from moving into the next logical stage of development. Blocks to development may be internal or external. Entrepreneurs who start businesses generally have four tendencies that work very well for small new ventures but become Achilles’ heels for these same individuals when they try to manage a larger firm with diverse needs, departments, priorities, and constituencies:

20. Blocks to Changing Stages Loyalty to comrades: This is good at the beginning but soon becomes a liability as “favoritism.” Task oriented: Focusing on the job is critical at first but then becomes excessive attention to detail. Single-mindedness: A grand vision is needed to introduce a new product but can become tunnel vision as the company grows into more markets and products. Working in isolation: This is good for a brilliant scientist but disastrous for a CEO with multiple constituencies

21. ORGANIZATIONAL LIFE CYCLE The organizational life cycle describes how organizations grow, develop, and eventually decline. It is the organizational equivalent of the product life cycle in marketing. These stages are Birth (Stage I) Growth (Stage II) Maturity(Stage III) Decline (Stage IV) Death (Stage V).

22. ORGANIZATIONAL LIFE CYCLE

23. ADVANCED TYPES OF ORGANIZATIONAL STRUCTURES Many variations and hybrid structures contain these characteristics, two forms stand out: The matrix structure The network structure

24. ADVANCED TYPES OF ORGANIZATIONAL STRUCTURES Matrix Structure In matrix structures, functional and product forms are combined simultaneously at the same level of the organization. Employees have two superiors, a product or project manager, and a functional manager

25. ADVANCED TYPES OF ORGANIZATIONAL STRUCTURES