DPM 4106 Lecture 8 PDF

WEEK 9 Lecture 8 Strategy Implementation and Implementation Strategies. Restructuring, Reengineering and Change Management. DPM 4106 - Lecture 8 1 Strategy Formulation vs. Implementation Strategy Formulation Strategy Implementation...

WEEK 9 Lecture 8 Strategy Implementation and Implementation Strategies. Restructuring, Reengineering and Change Management. DPM 4106 - Lecture 8 1 Strategy Formulation vs. Implementation Strategy Formulation Strategy Implementation Positioning forces before Managing forces during the action the action Focus on effectiveness Focus on efficiency Primarily intellectual Primarily operational Requires good intuitive Requires special and analytical skills motivation and leadership skills Requires coordination Requires coordination among a few people among many people DPM 4106 - Lecture 8 2 Nature of Strategy Implementation Management Perspectives Shift in responsibility Divisional or Strategists Functional Managers DPM 4106 - Lecture 8 3 Important Management Issues for Strategy Implementation DPM 4106 - Lecture 8 4  Important Management Issues for Strategy Implementation 1. Establish annual objectives 9. Develop a strategy-supportive 2. Devise policies culture 3. Allocate resources 10. Adapt production/operations 4. Managing Conflict processes 5. Alter existing organizational 11. Develop an effective human structure (if need be) resources function 6. Restructure & reengineer 7. Revise reward & and incentive plans 8. Minimize resistance to change DPM 4106 - Lecture 8 5 (1) Establishing Annual Objectives DPM 4106 - Lecture 8 6  Why Annual Objectives? ❑Annual objectives serve as guidelines for action, directing and channeling efforts and activities of organization members. ❑They provide a source of legitimacy by justifying activities to stakeholders. ❑They serve as standards of performance. ❑They serve as an important source of employee motivation ❑They provide a basis for organizational design. PM 4106 - Lecture 8 7  Why Annual Objectives? ❑Basis for resource allocation ❑Mechanism for management evaluation ❑Monitoring of progress toward long-term objectives DPM 4106 - Lecture 8 8 (2) Devise Policies DPM 4106 - Lecture 8 9  Why Devise Policies? Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior DPM 4106 - Lecture 8 10  A Hierarchy of Policies COMPANY STRATEGY Acquire a chain of retail stores to meet our sales growth and profitability objectives. Supporting Policy All stores will be open from 8 A.M. to 8 P.M. Monday through Saturday. DPM 4106 - Lecture 8 11 DIVISIONAL OBJECTIVE Increase the division’s revenues from $10 million in 2016 to $15 million in 2017. Supporting Policies Beginning in January 2017, salespersons must file a weekly activity report that includes the number of calls made, the number of miles traveled, the number of units sold, the dollar volume sold, and the number of new accounts opened.” DPM 4106 - Lecture 8 12 PRODUCTION DEPARTMENT OBJECTIVE Increase production from 20,000 units in 2016 to 30,000 units in 2017. Supporting Policies Beginning in January 2017, employees will have the option of working up to 20 hours of overtime per week.” (This policy could minimize the need to hire additional employees.) DPM 4106 - Lecture 8 13  A Hierarchy of Policies COMPANY STRATEGY Acquire a chain of retail stores to meet our sales growth and profitability objectives. DIVISIONAL OBJECTIVE Increase the division’s revenues from $10 million in 2016 to $15 million in 2017. PRODUCTION DEPARTMENT OBJECTIVE Increase production from 20,000 units in 2016 to 30,000 units in 2017. DPM 4106 - Lecture 8 (3) Allocate Resources DPM 4106 - Lecture 8 15  Allocating Resource Resource allocation –central management activity that allows for strategy execution –often influenced by political or personal factors – strategic management dictates that resources be allocated according to priorities established by annual objectives DPM 4106 - Lecture 8 16  Four Types of Resources 1. Financial resources 2. Physical resources 3. Human resources 4. Technological resources DPM 4106 - Lecture 8 17 (4) Managing Conflict Conflict: a disagreement between two or more parties on one or more issues DPM 4106 - Lecture 8 18  Some Causes of Conflict Establishing annual objectives can lead to conflict because: individuals have different expectations and perceptions, schedules create pressure, personalities are incompatible, and misunderstandings occur between line managers and staff managers DPM 4106 - Lecture 8 19  Some Things to Remember ◼ Conflict not always “bad” ◼ Lack of conflict may signal apathy ◼ Can energize opposing groups to action ◼ May help managers identify problems DPM 4106 - Lecture 8 20  (5) Alter the Existing Organizational Structure DPM 4106 - Lecture 8 21  There is no one optimal organizational design or structure for a given strategy or type of organization. What is appropriate for one organization may not be appropriate for a similar firm, although successful firms in a given industry do tend to organize themselves in a similar way. As organizations grow, their structures generally change from simple to complex as a result of the linking together of several basic strategies. DPM 4106 - Lecture 8 22  Basic Forms of Structure ◼ Functional Structure ◼ Divisional Structure ◼ Strategic Business Unit Structure (SBU) ◼ Matrix Structure DPM 4106 - Lecture 8 23 (6) Restructuring and Re-engineering DPM 4106 - Lecture 8 24  Restructuring –involves reducing the size of the firm in terms of number of employees, divisions or units, and hierarchical levels. –also called downsizing, rightsizing, or delayering DPM 4106 - Lecture 8 25 Why do Firms Downsize, Rightsize or Delayer? Reduce costs Reduce layers of management to increase decision making speed and get closer to the customer Sharpen focus on core competencies of the firm, and outsource peripheral activities Generate positive reactions from shareholders in order to improve valuation of stock price Increase productivity DPM 4106 - Lecture 8 26 Are there Differences? Downsizing Rightsizing Delayering DPM 4106 - Lecture 8 27  Downsizing - a strategy that reduces the scale (size) and scope of a business to improve its financial performance. Rightsizing – In order to implement a strategic plan some departments are enlarged while others may be eliminated. Delayering – the organisation removes certain levels of management. This results in managers having wider spans of control and the organisation having a flatter structure DPM 4106 - Lecture 8 28  Reengineering Reengineering – involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed – also called process management, process innovation, or process redesign DPM 4106 - Lecture 8 29  When Redesign is Needed (Private Sector) ❑ Your continuous improvement activities have hit a dead end. ❑ The competition has grabbed your customers. ❑ You are approaching the top of the “S Curve.” ❑ Your customer’s requirements have changed. ❑ Technological advances expand the possibilities. ❑ Fundamental shifts in industry. DPM 4106 - Lecture 8 30  When Redesign is Needed (Public Sector) ❑ Air of mystification about procedures ❑ Long queues at delivery points ❑ Multiple visits to government offices ❑Pillar-to-Post ❑ Outcome is in suspense ❑ OK or NOT OK ! ❑ Gatekeepers at every turn ❑ Service is a mercy - not a right ❑ Too many intermediaries and shortcuts DPM 4106 - Lecture 8 31 (7) Revise Reward and Incentive Plans Use Performance-Related Pay/Incentives DPM 4106 - Lecture 8 32 Approaches to Linking Performance and Pay to Strategies Merit pay Incentive pay Profit-sharing DPM 4106 - Lecture 8 33  Criticisms of traditional merit/incentive pay programs It is unfair to rate individual performance. The individual focus of merit/incentive pay discourages teamwork. Exclusive reliance on the supervisor for performance ratings may restrict accuracy. If merit/incentive increases are too small, they will not motivate workers. Merit/incentive pay may lead to an ‘entitlement mentality’. DPM 4106 - Lecture 8 34 (8) Manage Resistance to Change DPM 4106 - Lecture 8 35  Manage Resistance to Change HOW? Force change strategy – involves giving orders and enforcing those orders Educative change strategy – one that presents information to convince people of the need for change Self-interest change strategy – one that attempts to convince individuals that the change is to their personal advantage DPM 4106 - Lecture 8 36  Organizational change should be viewed as a continuous process rather than as a project or event. It is not sufficient today to simply react to change. Managers need to anticipate change and ideally be the creator of change. The new “continuous organizational change” philosophy should mirror the popular “continuous quality improvement philosophy.” DPM 4106 - Lecture 8 37 (9) Managing the Natural Environment DPM 4106 - Lecture 8 38  Formulate strategies that will preserve and conserve natural resources and control pollution. Mainstreaming environmental issues into organizational policies. According to our local guidelines, this would include: Resource extraction for sustainable development; Sustainable, productive, climate-resilient and diversified agriculture Green, inclusive, high-value-adding industrial development DPM 4106 - Lecture 8 Ch 7 -39  (10) Create a Strategy-Supportive Culture DPM 4106 - Lecture 8 40  Creating a Strategy-Supportive Culture HOW? 1. Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection, and socialization 2. Designing of physical spaces, facades, buildings 3. Deliberate role modeling, teaching, and coaching by leaders DPM 4106 - Lecture 8 41 4. Explicit reward and status system, promotion criteria 5. Stories, legends, myths, and parables about key people and events 6. What leaders pay attention to, measure, and control 7. Leader reactions to critical incidents and organizational crises DPM 4106 - Lecture 8 42 8. How the organization is designed and structured 9. Organizational systems and procedures 10. Criteria used for recruitment, selection, promotion, leveling off, retirement, and “excommunication” of people DPM 4106 - Lecture 8 43 Ways and Means for Altering an Organization’s Culture DPM 4106 - Lecture 8 44  (11) Adapt Production/Operations Decisions DPM 4106 - Lecture 8 45 Production/Operations Decisions ◼Plant size ◼Inventory / Inventory control ◼Quality control ◼Cost control ◼Technological innovation DPM 4106 - Lecture 8 46 (12) Human Resource Concerns DPM 4106 - Lecture 8 47  Human Resource Concerns ◼Assessing staffing needs/costs ◼Leave ◼Developing performance incentives ◼Work–life balance issues ◼Matching managers with strategy DPM 4106 - Lecture 8 48  Lecture 8 (B) Marketing Strategies, Financial Statement Analysis, Management Information Systems and Business Analytics and Data Mining. DPM 4106 - Lecture 8 49 Marketing Strategies DPM 4106 - Lecture 8 50  Most Relevant Marketing Issue (Finding an Effective Marketing Strategy) DPM 4106 - Lecture 8 51 (a) Purpose-Based Marketing Purpose-Based Marketing –best way to sell in a weak economy is to “show customers how they can improve their lives” with your product or service –need to build trust and an emotional connection to the customer in order to differentiate your product or service DPM 4106 - Lecture 8 52  (b) Market Segmentation Market Segmentation ❑subdividing of a market into distinct subsets of customers according to needs and use/buying habits ❑widely used in implementing strategies DPM 4106 - Lecture 8 53  ( C)Product Positioning Product positioning – entails developing schematic representations that reflect how your products or services compare to competitors. – it uniquely distinguishes a company from the competition DPM 4106 - Lecture 8 54 Finance/Accounting Issues DPM 4106 - Lecture 8 55  Finance/Accounting Issues ❑ How to raise capital with short-term debt, long-term debt, preferred stock, or common stock - successful strategy implementation often requires additional capital ❑ To lease or buy fixed assets ❑ To determine time of accounts receivable ❑ To establish a eligibility discounts etc. ❑ To determine the amount of cash that should be kept on hand DPM 4106 - Lecture 8 56 Projected Financial Statements Projected Financial Statements –allows an organization to examine the expected results of various actions and approaches –allows an organization to compute projected financial ratios under various strategy-implementation scenarios DPM 4106 - Lecture 8 57  Financial Budgets Financial budget – a document that details how funds will be obtained and spent for a specified period of time – include cash budgets, operating budgets, sales budgets, profit budgets, factory budgets, capital budgets, expense budgets, divisional budgets, variable budgets, flexible budgets, and fixed budgets DPM 4106 - Lecture 8 58  Management Information Systems (MIS) Issues Having an effective management information system (MIS) may be the most important factor in differentiating successful from unsuccessful firms The process of strategic management is facilitated immensely in firms that have an effective information system DPM 4106 - Lecture 8 59  Business Analytics Business analytics – a management information system technique that involves using software to mine huge volumes of data to help executives make decisions – also called predictive analytics, machine learning, or data mining DPM 4106 - Lecture 8 60  Business Analytics A key distinguishing feature of business analytics is that it is predictive rather than retrospective, in that it enables a firm to learn from experience and make current and future decisions based on prior information DPM 4106 - Lecture 8 61  end DPM 4106 - Lecture 8 62