CHAPTER 9 Strategy
Implementation:
Organizing for Action
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN
Prentice Hall, Inc. © 2006
J. DAVID HUNGER
9-1
Strategy Implementation
Strategy Implementation
--Sum total of activities & choices
required for strategic plan execution
through programs, budgets, and
procedures
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Strategy Implementation
Key Implementation Questions –
–Who carries out strategic plan?
–What needs to be done for alignment w/strategy?
–How is work coordinated?
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Strategy Implementation
10 Top Implementation Problems (i.e. excuses)
– Took longer than planned
• (Problem or result?)
– Unanticipated major problems
– Uncontrollable external factors
– Competing activities and crises
• (It’s Not My Fault!)
– Employees not capable
• (Duh!)
–
–
–
–
Lack of training
Ineffective coordination
Inadequate leadership
Tasks/activities poorly defined
• (Those incompetent middle managers…)
– Inadequate information systems
• (Those incompetent IT Guys…)
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Strategy Implementation
Who carries out strategic plan?
Everyone!
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Strategy Implementation
Programs – Budgets – Procedures
Make a strategy Action oriented
–Matrix of change – Program Evaluation
1. Compares Existing versus Target Practices
2. Identifies Practices as complementary or interfering
a) Between existing and target
b) Among existing or target
3. Evaluates each Practice based on relative importance
in accomplishing the strategy
4. Identify problem areas and conflicts
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The Matrix of Change
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Programs, Budgets and Procedures
Budget
Detailed costs associated with each Program
Procedures
Activities that must be carried out to complete
the Programs
Standard Operating Procedures (SOP)
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Strategy Implementation
Synergy
The ROI of each division is greater than if they were
independent separate companies
Achieving Synergy – (6 forms)
–Shared know-how
–Coordinated strategies
–Shared tangible resources
–Economies of scale or scope
–Pooled negotiating power
–New business creation
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9-9
Strategy Implementation
STRUCTURE FOLLOWS STRATEGY (Chandler)
–New strategy is created
–New administrative problems emerge
–Economic performance declines
–New appropriate structure is invented
–Profit returns to previous level
Centralization
(Control)
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Decentralization
(Autonomy)
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Strategy Implementation
Stages of Corporate Development –
–Stage I: Simple structure
Entrepreneur
–Stage II: Functional structure
Team of functional specialists
–Stage III: Divisional structure
Many products/industries
–Stage IV: Beyond SBU’s
Matrix/Network based on projects
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9-11
Strategy Implementation
Blocks to Changing Stages –
Entrepreneur tendencies
–Loyalty to comrades
–Task oriented
–Single-mindedness
–Working in isolation
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9-12
Organizational Life Cycle
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Changing Structural Characteristics of Modern Organizations
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Strategy Implementation
Advanced Types of Organizational
Structures –
–Matrix
•Temporary cross-functional task forces (J&J)
•Product/brand management (P&G)
•Mature matrix (Aerospace)
–Network structure (virtual organization)
•Supply Chain Management & Communications
–Cellular organization
•Self managed teams
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Network Structure
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Strategy Implementation
Business Process Reengineering (BPR)
Principles (Hammer)
–
–
–
–
Organize around outcomes
Those that use the output perform the process
Integrate information processing into real work
Treat geographically dispersed resources as
centralized
– Link parallel activities
– Put decision point where work is performed
– Capture information once at it’s source
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9-17
Strategy Implementation
Six Sigma –
DMAIC Methodology
–Define
–Measure
–Analyze
–Improve
–Control
Sigma Performance Levels -- One To Six Sigma
Sigma Level
Defects Per Million Opportunities
(DPMO)
1
690,000
2
308,537
3
66,807
4
6,210
5
233
6
3.4
Real-World Performance Levels
Situation/Example
In 1 Sigma
World
In 3 Sigma
World
In 6 Sigma
World
Pieces of your mail lost per year [1,600 per year]
1,106
107
<1
Number of empty coffee pots at work (who didn't fill the coffee pot again?) [680 per year]
470
45
<1
Number of telephone disconnections [7,000 talk minutes]
4,839
467
0.02
Erroneous business orders [250,000 per year]
172,924
16,694
0.9
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Strategy Implementation
Job design to implement strategy –
–Job enlargement
–Job rotation
–Job enrichment
–Job characteristics model
•Combine tasks to increase variety
•Form natural work units - make workers responsible
•Establish client relationships
•Vertically load the job – authority & responsibility
•Open feedback channels
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Strategy Implementation
International Issues
–Multi-National Corporation’s
Multi-Domestic versus Global
International Development Stages–
–Domestic company
–Domestic company w/export division
–Domestic company w/int’l division
–MNC w/multi-domestic emphasis
–MNC w/global emphasis
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Geographic Area Structure
Centralization vs. Decentralization–
–Product-group structure
–Geographic-area structure
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9-21
CHAPTER 9 Strategy
Implementation:
Organizing for Action
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN
Prentice Hall, Inc. © 2006
J. DAVID HUNGER
9-22