Strategic Management & Competitive Advantage PDF

Strategy Implementation Copyright © 2008 Pearson Prentice Hall. All rights reserved. 1  Strategy Implementation The Strategic Management Process...

Strategy Implementation Copyright © 2008 Pearson Prentice Hall. All rights reserved. 1  Strategy Implementation The Strategic Management Process External Analysis Strategic Strategy Competitive Mission Objectives Choice Implementation Advantage Internal Analysis Implementing Business Level and Corporate Level Strategies Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-2  Strategy Implementation Modern Corporations – Dispersed Ownership A Trade Off M-Form Structure Divides Information Processing Requirements Divides Owners Into Manageable Blocks From Managers Interests of Owners and Managers May Diverge Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-3  Strategy Implementation The Agency Relationship Managers are agents of shareholding investors Investor preferences and CEO goals are often at odds with each other Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-4  Strategy Implementation The Agency Relationship Managing Agency Principals Monitors Division Individual Senior General Shareholders Executives Managers Board Of Directors Shared Institutional Corporate Activity Shareholders Staff Managers Dual Role Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-5  Strategy Implementation The Board of Directors A group that has a fiduciary duty to ensure that the company is run consistently with the long-term interests of the shareholders Salary Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-6  Strategy Implementation Organizational Controls Compensation Policies stock options non-monetary awards vacations bonuses based on: parking places cost reduction office decor financial performance Compensation Policies Should Reinforce Formal and Informal Management Controls Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-7  Strategy Implementation Compensation Policies for Management Aligning Incentives Research shows… Theory predicts… Stock Options Tied to Long Time Performance Horizon Stock Grants Cash Bonus Not Tied to Short Time Performance Horizon Salary Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-8  Strategy Implementation External Control Mechanisms methods that ensure that managerial actions lead to shareholder value maximization, and do not harm other stakeholder groups. Market for corporate control Auditors Banks and analysts Regulatory bodies Media and public activists Salary Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-9  Strategy Implementation Shareholder Activism actions by large shareholders, both institutions and individuals, to protect their interests when they feel that managerial actions diverge from shareholder value maximization Salary Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-10  Strategy Implementation Managers Fight Back! Anti-takeover Provisions Greenmail – Poison Pills Shark repellents Pac Man defense Golden parachutes Salary Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-11  Strategy Implementation Organizational Controls Policies intended to influence behavior by aligning the interests of the individual with the interests of the organization Management Controls Formal Informal budgeting policies culture credit policies attitudes spending policies leadership styles travel policies purchasing policies Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-12  Strategy Implementation Policies for Employees Aligning Incentives Pre-requisite: Motivate __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ Salary Copyright © 2008 Pearson Prentice Strategic Hall. All rights Management reserved. & Competitive Advantage – Barney & Hesterly 8-13