9: Chapter Strategy Implementation Strategy Implementation - sum total of 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. Key Implementation Questions: - Who carries out strategic plan? - What must be done to align the company's operation in the new intended direction? - How is everyone going to work together to do what is needed? Program Matrix of Change Purpose is to make strategy action oriented - use to examine the likely impact new programs have on existing organization by comparing proposed programs with current programs - offers useful guidelines on where, when, and how fast to implement changes - new programs and targeted practices are on vertical axis, current and existing practices are on the horizontal axis. - steps to creating matrix: 1) compare the new programs with each other to see if they are complementary, interfering, or have no effect on each other 2) examine existing practices for their interactions with each other to see if they are complementary, interfering, or have no effect 3)compare each new program with each existing program for any interaction effects 4) Evaluate each program in terms of its relative importance to achieving the strategy 5) Examine overall matrix to identify problem areas where proposed programs are likely to interfere with each other or with existing practices - help managers decide: feasibility, sequence of execution, location, pace & nature of change & stakeholder evaluation. - Do the proposed programs constitute a coherent, stable system? - Are the current activities coherent and stable? - Is the transition likely to be difficult? - Where should the change begin?
Feasibility
Sequence of Execution
Location
Pace and Nature of Change
Stakeholder Evaluation
Synergy
Shared Know- How
Coordinated Strategy (Horizontal Strategy)
Shared Tangible Resources Economy of Scale/Scope
Pooled Negotiating Power
New Business Creation
Structure Follows Strategy
Stages of Corporate Development
- -How does the sequence affect success? - Are there reasonable stopping points? - Are we b etter off instituting the new programs at a new site or can we recognize the existing facilities at a reasonable cost? - Should the change be slow or fast, incremental, or radical? - Which blocks of current activities must be changed at the same time? - Have we overlooked any important activities or interactions? - Should we get further input from interested stakeholders? - Which new programs and current activities offer the greatest sources of value? - concept which states the whole is greater than the sum of its parts; two units will achieve more together than they could separately - ROI in each division is greater than the ROI if each division were an independent business Combined units often benefit from sharing knowledge or skills. This is a leveraging of core competencies Aligning the business strategies of two or more business units may provide significant advantage by reducing inter-unit competition and help coordinate response to common competitors Combined units can sometimes reduce cost by sharing resources Coordinating flow of product or service with more than one unit can reduce inventory. Increase capacity utilization, and improve market access Combined units can gain bargaining power over common suppliers/distributors to gain better cost and quality New products or services are extracted discrete activities from various units combined or establishing joint ventures - changes in corporate strategy changes structure - Chandler's proposed sequence of occurrence: 1) New strategy is created 2) new administrative problem emerges 3) economic performance declines 4) new appropriate structure is invented 5) profit returns to its previous level A pattern of structural development that corporations follow as they grow and expand - Stage I: Simple structure
Blocks to Changing Stages
Organization Life Cycle
Matrix Structure
- Stage II: Functional Structure - Stage III: Divisional Structure - Stage IV: Beyond SBUs - four tendencies most entrepreneurs cripple their growing businesses: - Loyalty to comrades: can develop into favoritism - Task oriented: focusing on job can becomes excessive attention to detail - Single mindedness: grand for vision product can become tunnel vision as company expands - Working in isolation: hard to manage multiple constituencies - emphasis dominant issued facing the corporation rather than organization structure - describe how organization grow, develop. And eventually decline - Stage 1: Birth o Concentrated In a niche/Entrepreneur dominated - Stage 2: Growth o Horizontal and Vertical Growth/Functional management emphasized - Stage 3: Maturity o Concentric and conglomerate diversification/decentralized into profit - Stage 4: Decline o Profit strategy followed by retrenchment/structural surgery - Stage 5: Death o Liquidation or bankruptcy/dismemberment of structure - functional and product forms are combined simultaneously at the same level of organization - often found in organization when ideas need to be cross fertilized across projects or products, resources are scarce, and abilities to process information and to maeke decisions need to be improved Three Phases (Davis and Lawrence) 1. temporary cross-functional task forces: project manager is in charge as the key horizontal link
Network Structure (virtual organization)
Six Sigma
Job Design
Job Enlargement Job Rotation Job Enrichment Job Characteristics Model
Multinational Corporation (MNC)
2. production/ brand management: task force becomes permanent; function is the primary organizational structure but product/brand management acts as integrators of semi permanent products or brand 3. mature matrix: true dual-authority structure develops- both functional and product structure become permanent - termed as "non-structure" for its lack of in-house business function - useful in unstable environment - utilizes long term contracts & outsourcing - flexible and adaptable; concentrate on competencies and gather efficiency Virtual organization: composed of a series of project grops or collaborations linked by constantly changing nonhierarchical, cobweb-like electronic network Cellular organization: composed of cells (autonomous business units) which can operate alone but which can interact with other cells to produce a more potent and competent business - analytical method for achieving near-perfect results on a production line 1. Define 2. Measure 3. Analyze 4. Improve 5. Establish - refer to the study of individual tasks in an attempt to make them more relevant to the company and to the employees Combining tasks to give a worker more of the same type of duties to perform Moving workers through several jobs to increase variety Altering the jobs by giving the worker more autonomy and control over activities An approach to job design that is based on the belief that tasks can be described in terms of certain objectives characteristics and that those characteristics affect employee motivation - highly developed international company with a deep involvement throughout the world - has a world wide perspective in its management and decision making
International Strategic Alliances International Development Stages
Product-group structure
Geographic-area structure
-global- worldwide operation are interconnected - strategic alliances/joint venture between MNC and local partner in other country 1. Domestic Company: Exports some products through local distributors; handle by export department 2. Domestic Company with Export Division: establish own sales company with offices in other countries to eliminate middlemen; establish export division to oversee foreign sales offices 3. Primarily Domestic Company with International Division: establish manufacturing facilities, sales and service offices in key countries; adds international division to oversee business functions in foreign countries 4. MNC with multidomestic emphasis: establish local operating divisions; managerial functions are organized locally; may expand product line and broaden base of local operating division through acquisitions to help achieve autonomy and self sufficiency. Operations in each country is managed separately 5. MNC with global emphasis: denationalize operations; matrix structure- managers are responsible for both global and domestic issues Structure MNC that enables the company to introduce and mange a similar line of products around the world (centralized) Structure that allows a multinational corporation to tailor products to regional differences and achieve regional coordination (decentralized)