Report Implementing Strategies: Management &

Operations Issues

• Presented by: • Fatima Ashraf 7837•Madiha Saleem 7866• Iqra Akram 7881• Faiza Ahmad 7885• Kalsoom Fatima7877

Nature of Strategy Implementation:Strategy implementation is the second stage of strategic management.

Contrast Between Strategic Implementation and Strategic Formulation

Strategy formation focus on effectivenessStrategy implementation focus on effacing Strategy formulation is primarily an operational processStrategy formulation requires good intuitive and an analytical skills Strategy implementation requires motivation & leadership

Management Perspective:Establish annual objectiveDevise policiesAllocate resources Alter an existing organizational structureRevise reward and incentive plan.Develop strategy supportive cultureHuman resource function Budget allocation

Annual Objective:Short term milestone that organization must

achieve to reach its long term objective.Annual objective essential because they are: Represent the basis for resource allocation Primary mechanism for evaluating manager Major instrument for monitoring progress

toward achieving long term objective Establish organizational divisional and

departmental priorities.

Policies:Specific guidelines, methods, procedures,

rules, forms to support and encourage work together stated goals.

Policies are instrument for strategy implementation.

Resource AllocationThe process of dividing up and

distributing available, limited resources to competing, alternative uses that satisfy unlimited wants and needs.

Relation with Strategic Management:Central management activityAllows for strategy execution Political & personal factors applied by

organizations having non-strategic management approach

Types of Resources:1. Financial resources 2. Physical resources 3. Human resources4. Technological resources

Factors Prohibiting Effecting Resources Allocation:

Overproduction of resources Organizational politics Vague strategy targetsManaging Conflicts:“A disagreement between two or more parties on one or

more issues”.Reasons: Competition for limited resources Establishing annual objectives can lead to conflict. Example:A manager can have objective to deduce bad doubts by

50% in a given year & can have conflict with the manager having objective to increase sales by 20%.

Matching Structure with Strategy:Change in strategy lead to changes in organizational

structure.

Reasons for Changing Structure:1. Structure dilates how policies & objectives will be

established. 2. Structure dilates how resources will be allocated

Example: Customer Groups

The structure might be suitable only 91 firm. Growth of organization leads to changes in structure Structure can shape choices of strategies.

Matching Structure with Strategy

Types of structural changes needed to implement new strategies

FunctionalDivisional by geographic area Divisional by productDivisional by customer Divisional processStrategic business unit (SBU) structureMatrix

Functional or centralized structure

Functional structure groups tasks & activities by business function, such as production/operations, accounting/finance, R&D, MIS.

A university may structure its activities by major functions that include academic affairs, student service, maintenance, athletics & accounting.

Merits of functional structure

Simple & inexpensive. Allows rapid decision making. Efficient use of managerial & technical talent. Promotes specialization of labor. Widely use of resources. Minimizes need for elaborate control .

Demerits of functional structure

Delegation of authority is not encouraged. Minimize career development. Leads to communication problem. Leads to narrow thinking. Accountability is forced to the top. Inadequate planning for products & markets.

Divisional or decentralized structure

As a small organization grows, it has more difficulty managing different products or

services in different markets. The divisional structure can be organized

into four ways.

Divisional structure by geographic area

This divisional structure is appropriate for organizations whose strategies to be fit for the particular needs & characteristics of customers in different geographic area.

This type of structure can be most appropriate for organizations that have similar branched facilities located in widely dispersed areas

Example: Mcdonald’s

Divisional structure by product or service

This type of structure is most appropriate for implementing strategies when specific products or services need special emphasis.

This structure is widely used when an organization offers few products or services.

Microsoft recently reorganized the whole corporation into three large divisions by product. Headed by president. New divisions are

Platform products & services Business Entertainment & devices

Divisional structure by customers

This type of structure is appropriate for organizations to cater the requirements of clearly defined customer groups.

Example : Book publishing companies often organize their activities around customer groups such as

Universities Colleges Secondary schools

Divisional structure by process

This type of structure is appropriate when activities are organized according to the way work is actually performed. This structure is similar to a functional structure.

Example : In Textile Mills activities are divided according to their process. cutting, dying, printing.

each process (division) would be responsible for generating profits.

Merits of divisional structure

Creates career development chances. Leads to competitive environment internally. Allows strict control or attention to regions,

product, customer, process. Promotes delegation of authorities. Accountability is clear. Allows easy adding of new products or

regions.

Demerits of divisional structure

Costly. Lead to limited sharing of resources & ideas. Requires skilled management. Some regions , products, customers, process

may special attention. Each division requires functional specialist

who must be paid. Elaborate control system.

The Strategic Business Unit Structure:Use: In large firms Introduction:A separate operating division of a company with some

degree of autonomy referred to as a (Strategic Business Unit) structure.

Need Of Business:When the number, size and diversity of divisions in an

organization increase, controlling and evaluating divisional operations becomes difficult for strategists.

Solution:The solution of this problem is the “SUB” structure.

Advantages of SBU Structure Matching with Strategy1. Improving coordination 2. Channeling accountability 3. Manageable task4. Minimum problems5. Response6. Focus

Disadvantages of SBU Structure

1. Increase expenses2. Inter functional rivalry3. Slow response time4. Responsibility5. Critical process

Despite its disadvantages many organizations use this structure.

The Matrix Unit Structure:Use: In large firms Introduction:An organizational structure that facilitate the horizontal flow of skills

and information as well as vertical flow of authority and communication.

Need for Matrix Structure:1. Management of large projects.2. Product development process.Working of Matrix Structure:Employee report on day to day performance to the project manager

and also report to HOD. Manager’s authority flows horizontally. HOD authority flows vertically.

Advantages 1. Project objectives clear2. Employees can see

result3. Shifting down project is

easy4. Facilitates uses of

special equipments5. Resources are shared

Disadvantages1. Require excellent

communication2. Costly3. Violates unity of

communication4. Dual budget authority5. Dual sources of reward

and punishment 6. Shared authority and

reporting7. Require mutual trust.

Restructuring • Reducing the size of the firm in terms of

number of employees, division or units and the number of hierarchical levels in the firm`s organizational structures.

• Primary benefit of restructuring is cost reduction

• Primarily concerned with the shareholders well being.

RestructuringAlso called• Downsizing• Rightsizing• De-layering

Reengineering

• Reconfiguring or redesigning work jobs and processes to improve cost, quality, service and speed.• It is primarily concern with the

employees and customers well being than shareholders wellbeing.

ReengineeringAlso called • Process management • Process Innovation• Process redesign