CHAPTER 9. IMPLEMENTING 11.

Human Resource
STRATEGIES: MANAGEMENT AND 12. Downsize and Furlough
OPERATIONS ISSUE 13. Performance and Strategies

NATURE OF STRATEGY PURPOSE OF ANNUAL OBJECTIVES

IMPLEMENTATION  Basis for resource allocation
 Strategy formulation is positioning  Mechanism for management
forces before the action. evaluate
 Strategy implementation is  Metric for gauging progress on
managing forces during the long-term objectives
action  Establish priorities
 Formulation focuses on ( organizational, divisional, and
effectiveness departmental )
 Implementation focuses on
efficiency POLICIES
 Strategy formulation is primarily  On a day-to-day basis, policies
an intellectual process. are needed to make a strategy
 Strategy implementation is work
primarily an operational process.  Policies are guidelines, methods,
 Strategy formulation requires procedures, rules, forms.
good intuitive and analytical skills. Instruments for strategy
 Strategy implementation requires implementation
special motivation and leadership  Policies can apply to all divisions
skills. and departments e.g. We are an
 Strategy formulation requires equal opportunity employer
coordinating mong a few  Some policies apply to a single
individuals. department e.g. employees in this
department must take at least
 Strategy requires coordination
one training course each year
among many individuals.
HIERARCHY OF POLICIES
MANAGEMENT PERSPECTIVES
Acquire a chain of retail stores to meet
 Shift in responsibility
our sales growth and profitability
Strategists Division or
objectives.
Functional Managers
SUPPORTING POLICIES
MANAGEMENT ISSUES
1. “All stores will be open from 8
1. Annual Objectives
A.M to 8 P.M. Monday through
2. Policies
Saturday.”(This policy could
3. Resources
increase retail sales if stores
4. Organizational Structures
currently are open only 40 hours
5. Restructuring
a week.)
6. Rewards/Incentives
2. “All stores must submit a Monthly
7. Resistance to change
Control Data Report.”(This policy
8. Managers with Strategy
could reduce expense-to-sales
9. Supportive Culture
ratios.)
10. Production/Operation
3. “All stores must support company approach.”(This policy could
advertising by contribution 5 reduce tax liabilities and thus
percent of their total monthly allow more funds to be
revenues for this purpose.” invested in modernizing
4. “All stores must adhere to the product processes.)
uniform pricing guidelines set
forth in the Company Handbook.” SOME EXAMPLE ISSUE THAT MAY
(This policy could help assure REQUIRE A MANAGEMENT POLICY
customers that the company  To offer extensive or limited
offers a consistent product in management development
terms of price and quality in all its workshops and seminars
stores.)  To centralize or decentralize
employee-training activities.
DIVISIONAL OBJECTIVE  To recruit through employment
Increase the division’s a agencies, college campuses,
revenues from 10 million to 15 million and/or newspapers
in 2010.  To promote from within or to hire
from the outside
SUPPORTING POLICIES  To promote on the basis of merit
1. “Beginning in January 2010, or no the basis of seniority
each one of these division’s  To tie executive compensation to
salesperson must file a long-term and/ or annual
weekly activity report that objectives
includes the number of calls
 To offer numerous or few
made, the number of miles
employees benefits
travelled, the number of units,
 To negotiate directly or indirectly
the dollar volume sold, and
with labor unions
the number of number of new
accounts opened. (This policy  To delegate authority for large
could ensure that expenditures or to centrally retain
salespersons do not place to this authority
great and emphasis in certain  To allow much, some, or no
areas.) overtime work
2. Beginning in January 2010,  To establish a high-or-low-safety
this division will return to its stock of inventory
employees 5 percent of its  To use one or more suppliers
gross revenues in the form of  To buy, lease, or rent new
a Christmas bonus.” (This production equipment
policy could increase
employee productivity.) FOUR TYPES OF RESOURCES
3. Beginning in January 2010, 1. Financial resources
inventory levels carried in 2. Physical resources
warehouses will be decreased 3. Human resources
by 30 percent in accordance 4. Technological resources
with a just-in –time (JIT)
manufacturing
MANAGEMENT ISSUES- higher authority, or redesigning present
RESOURCE ALLOCATION positions.
 It is a central management Conflicting parties so that each can gain
activity that allows for strategy an appreciation of the other’s point of
execution. view or holding a meeting at which
 In organizations that do not use a conflicting parties present their views
strategic-management approach and work through their differences.
to decision making, resource
allocation is often based on STRATEGY-STRUCTURE
political or personal factors. RELATIONSHIP: CHANDLER’S
 Resources must be allocated
according to priorities established  New Administrative Problem
by annual objectives. Imagine. If Emerges
they are not!  Organizational Performance
 Allocation or resources alone Declines
does not guarantee success-full  A new Organizational Structure is
established
strategy implementation.
 Organizational Performance
Improves
MANAGING CONFLICT  New Strategy is Formed
CONFLICT can be defined as a
disagreement between two or more
parties on one or more issues. CHAPTER 10. CONTINUATION…
 Conflict not always “bad”
 No conflict may signal apathy BASIC FORMS OS STRUCTURE
 Can energize opposing groups to 1. FUNCTIONAL STRUCTURE
action 2. DIVISIONAL STRUCTURE
 May help managers identify  By Geographic Area
problems  By Product or Service
 By Customer
VARIOUS APPROACHES FOR  By process
MANAGING AND RESOLVING 3. STRATEGIC BUSINESS UNIT
CONFLICT (SBU ) STRUCTURE
4. MATRIX STRUCTURE
AVOIDANCE- ignoring the problem
hoping that the conflict will resolve itself SONOCO PRODUCT’S SBU
or physically separating the conflicting ORGANIZATIONAL CHART
individuals (or groups).  Chief Strategy Officer (CSO)
 Chief Finance Officer (CFO)
DEFUSION-playing down differences  Chief Operating Officer (COO)
between conflicting parties while  Industrial Products SBU
accentuating similarities and common Adhesive Packaging
interests, compromising so that there is Division
neither a clear winner nor loser, Tubes/Cores Division
resorting to majority rule, appealing to a Paper Division
Reels Division
  Consumer Products SBU 5. Stories, legends, myths, and
Flexible Packaging parables about key people in
Division events.
High Density Film 6. What leader pay attention to,
Division measure, and control.
Metal Ends Division 7. Leader reactions to critical
Rigid Division incidents and organization will
 Chief Information Officer (CIO) crises.
 VP of Human Resource 8. How the organization is designed
 VP of Marketing and structured.
9. Organizational system and
MANAGEMENT ISSUES procedures.
10. Criteria used for recruitment,
RESTRUCTURING selection, promotion, levelling off,
 Downsizing retirement, and
 Rightsizing “excommunication” of people.
 Delayering
MANAGEMENT ISSUES-
REENGINEERING PRODUCTION OPERATIONS
 Process Management COCERNS
 Process Innovation Production processes typically constitute
 Process Redesign more than 70% of firm's total assets.

TESTS FOR PERFORMANCE-PAY  Plant size

PLANS  Inventory/Inventory control
Does the plan capture attention?  Quality control
Do employees understand the plan?  Cost control
Is the plan improving communication?  Technological innovation
Does the plan pay out when it should?
Is the company or unit performing MANAGEMENT ISSUES- HUMAN
better? RESOURCE STRATEGIC
RESPONSIBILITIES
CREATING A STRATEGY-  Assessing staffing needs/costs
SUPPORTIVE CULTURE  Developing performance
1. Formal statements of incentives
organizational philosophy charter  ESOP’s
seed materials used for  Child-care policies
recruitment and selection and  Work-life balance issues
socialization.
2. Designing of physical spaces, BENEFITS OF A DIVERSE
facades, buildings. WORKFORCE
3. Deliberate a role modelling,  Improves corporate culture
teaching, and coaching by  Improves employee morale
leaders.  Leads to a higher retention of
4. Explicit reward and status employees
system, promotion criteria.
  Leads to easy recruitment of HIGHLIGHT SUMMARY
employees
 Decreases complains and Functional structure
mitigation increases creativity -groups tasks and activities by
 Decreases and their personal business functions, such as
conflict production/operation, marketing,
 Enables the organization to move finance/ accounting, research and
into emerging market development, and management
 Improve client relations information systems.
 Increases productivity by
improves the bottom line Divisional or decentralized structure
 Maximize brand identity -the second most common type
 Reduces training costs used by U.S businesses. It can be
organized in one or four ways by
THE 10 BEST FIRMS FOR WOMEN TO geographic area, by product or services,
WORK FOR IN 2007 by customer, and by process.
1. Abbot
2. Bon Secours Richmond Health Functional activities
System -are performed both sensory and
3. Ernst & Young in each separate division.
4. HSBC-North America
5. IBM Divisional structure by geographic
6. JPMorgan Chase area
7. Patagonia -is appropriate for organization
8. PricewaterhouseCoopers whose strategies need to be tailored to
9. Principal Financial Group fit the particular needs and characteristic
10. S. C. Johnson & Son of customers in different geographic
areas.
ASSURANCE OF LAERNING
EXERCISES The divisional structure by product or
services
Exploring objectives -is most effective for
PURPOSE implementing strategies when specific
The purpose of this exercise is to product or services need special
bridge the gap between the materials on emphasis.
objectives given in chapter 7 versus
what companies are doing in your area Divisional structure by customer
with the guarding to having clearly -allows an organization to cater
defined objectives. by effectively to the requirements of
clearly defined customer groups.
INSTRUCTION
Do sufficient research to discover Divisional structure by process
five businesses in your local city that -is similar to a functional structure
have clearly defined objectives discuss because activities are organized
the nature and role of the objectives in according to the way work is actually
this firms performed.
Strategic Business Unit (SBU) The New Principle of Marketing
structure
-as the number, size, and 1. Don't just talk at customers-work
diversity of division in an organization with them throughout the
increase, controlling and evaluating marketing process.
divisional operations become 2. Give consumers a reason to
increasingly difficult for strategies. participate.
Matrix structures the most complex of 3. Listen to-and join-the
all design because it depends upon a conversation outside your
both a vertical and horizontal flows of company's Web site.
authority and communication (hence the 4. Resist the temptation to sell, sell,
term matrix). sell Instead attract, attract,
attract.
5. Don't control online
CHAPTER 11. conversations; let it flow freely.
6. Find a “marketing technologists,”
Strategy implementation directly a person who has three excellent
affect the lives of plant managers, skill sets (marketing, technology,
division managers, department and social interaction.
managers, sales managers, product 7. Embrace instant messaging and
managers, project managers, personnel chatting.
managers, staff managers, supervisors
and all employees. PURPOSE-BASED MARKETING

 There is need in an ad to build

Some examples of marketing trust and an emotional connection
decisions that may require policies to the customer in order to
are as follows: differentiate your product or
1. To use exclusive dealerships or services.
multiple channels of distribution.  Ads should be both promote low
2. To use heavy, light, or no TV price and build emotional equity
advertising. through “purpose-based appeal.”
3. To limit (or not) the share of
business done with a single MARKET SEGMENTATION
customer.
4. To be a price leader or a price Two variables are of central importance
follower. to strategy implementation:
5. To offer a complete or limited  Marketing segmentation
warranty.  Product positioning
6. To reward salespeople based on
straight salary, straight
commission, or a combination
salary/commission.
7. To advertise online or not.
  Widely used in implementing NEW SOURCE OF FUNDING
strategies, especially for small
and specialized firms.  Credit unions were not involved in
the subprime-loan market, so
many of them are flush with cash
 The subdividing of a product into and are making loans, especially
distinct subsets of customers to small businesses.
according to needs and buying  Credit unions are chartered as
habits. non-profit corporative institutions
owned by their members.
PRODUCT POSITIONING
 Takes analysis and research
 Entails developing schematic
representation that reflect how CHAPTER 12
your products or services
compared to compete PROJECTED FINANCIAL
competitors on dimensions most STATEMENTS
important to success in the  A central strategy-implementation
industry. technique because it allows an
organization to examine the
FINANCIAL/ ACCOUNTING ISSUES expected results of various
 Acquiring needed capital actions and approaches.
 Developing projected financial
statements There are six steps in performing
 Preparing financial budgets, and projected financial analysis:
 Evaluating the work of a 1. Prepare the projected income
business. statement before the balance
sheet
2. Use the percentage of sales
ACQUIRING CAPITAL TO method to project cost of goods
IMPLEMENT STRATEGIES sold (CGS) and the expense
Two basic sources of capital for an items in the income statement.
organization: 3. Calculate the projected net
1. Depth income
2. Equity 4. Subtract from the net income any
dividends to be paid for that year.
Earnings Per Share/Earnings Before 5. Project the balance sheet items,
Interest and Taxes (EPS/EBIT) beginning with retained earnings
analysis is the most widely used and then a forecasting
technique for determining whether debt, stockholder’s equity, long term
stock, or a combination of debt and liabilities, current liabilities, total
stock is the best alternative for raising liabilities, total assets, fixed
capital to implement strategies. assets, and current asset (in that
order).
6. List comments (remarks) on the
projected and statements.
 the most important factor in
FINANCIAL BUDGETS differentiating successful from
A document that details how and successful firms.
funds will be obtained and spend for a  Information collection, retrieval,
specific period of time. and storage can be used to
create competitive in ways such
EVALUATING THE WORTH OF A as cross-selling to customers,
BUSINESS monitoring suppliers, keeping
management managers and
First approach- determining its net employees informed, coordinating
worth or stockholder’s equity. activities among divisions, and
management funds.
Second approach- the belief that the  A good information system can
worth of any business should be based allow a firm to reduce costs.
largely in the future benefits of its
owners may derive through net profits.

Third approach- the price-earnings

ratio method.

Fourth method- the outstanding shares

method.

RESEARCH AND DEVELOPMENT

(R&D) ISSUES
 Research and development
issues research and development
personnel can play an integral
part in strategy implementation
these individuals are generally
charged with developing new
products and improve improving
old products in a way that will
allow effective strategy
implementation.

MANAGEMENT INFORMATION
SYSTEMS (MIS) ISSUES
 Firms that gather, assimilate, and
evaluate external and internal
information most effectively are
gaining competitive advantages
over other firms.
 Having an effective management
information system (MIS) may be