Seventeenth Edition: Implementing Strategies: Management and Marketing Issues

Strategic Management Concepts: A
Competitive Advantage Approach,

Concepts and Cases
Seventeenth Edition
Chapter 7
Implementing Strategies:
Management and
Marketing Issues
Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved
Learning Objectives (1 of 2)
7.1 Describe the transition from formulating to implementing
strategies.
7.2 Discuss reasons why annual objectives are essential for
effective strategy implementation.
7.3 Identify and discuss the nature and role of policies in
strategy implementation.
7.4 Explain the role of resource allocation and managing
conflict in strategy implementation.
7.5 Discuss the need to match a firm’s structure with its
strategy.
Learning Objectives (2 of 2)
7.6 Identify, diagram, and discuss different types of
organizational structure.
7.7 Identify and discuss 15 dos and don’ts in constructing
organizational charts.
7.8 Discuss four strategic production/operations issues vital
for successful strategy implementation.
7.9 Discuss seven strategic human resource issues vital for
successful strategy implementation.
7.10 Describe key strategic marketing issues vital for
implementing strategies.
Figure 7.1 The Comprehensive, Integrative
Strategic-Management Model
Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 1 (February 1989): 91. See
also Anik Ratnaningsih, Nadjadji Anwar, Patdono Suwignjo, and Putu Artama Wiguna, “Balance Scorecard of David’s
Strategic Modeling at Industrial Business for National Construction Contractor of Indonesia,” Journal of Mathematics and
Technology, no. 4 (October 2010): 20.
Figure 7.2 Contrasting Strategy Formulation with Strategy Implementation
Annual Objectives
Annual Objectives:
1. Represent the basis for allocating resources
2. Are a primary mechanism for evaluating managers
3. Are the major instrument for monitoring progress toward
achieving long-term objectives
4. Establish organizational, divisional, and departmental
priorities
5. Are essential for keeping a strategic plan on track
Figure 7.3 The Stamus Company’s
Hierarchy of Aims
Policies (1 of 3)
• Policy
– specific guidelines, methods, procedures, rules, forms,
and administrative practices established to support and
encourage work toward stated goals
– instruments for strategy implementation
Policies (2 of 3)
• Policies
– set boundaries, constraints, and limits on the kinds of
administrative actions that can be taken to reward and
sanction behavior
– let both employees and managers know what is
expected of them, thereby increasing the likelihood that
strategies will be implemented successfully
– provide a basis for management control and allow
coordination across organizational units
Policies (3 of 3)
• Policies
– reduce the amount of time managers spend making
decisions. Policies also clarify what work is to be done
and by whom
– promote delegation of decision making to appropriate
managerial levels where various problems usually arise
– clarify what can and cannot be done in pursuit of an
organization’s objectives
Types of Resources
• Financial
• Physical
• Human
• Technological
Resource Allocation
• Resource Allocation
– central management activity that allows for strategy
execution
– Strategic management enables resources to be
allocated according to priorities established by annual
objectives
Managing Conflict
• Conflict
– Disagreement between two or more parties on one or
more issues
– 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
Managing Conflict (1 of 2)
• Conflict is not always bad. An absence of conflict can
signal indifference and apathy.
• Approaches for managing conflict range from
– Ignoring the problem
– Physically separating the conflicting individuals
– Holding meetings to seek compromise
Table 7.5 Some Management Trade-
Off Decisions Required in Strategy
Implementation
1. To offer extensive or limited management development
workshops and seminars
2. To recruit through employment agencies, college campuses,
or newspapers
3. To promote from within or to hire from the outside
4. To promote on the basis of merit or on the basis of seniority
5. To tie executive compensation to long-term or annual
objectives
6. To allow heavy, light, or no overtime work
7. To establish a high- or low-safety stock of inventory
Matching Structure With Strategy
• Structure largely dictates how objectives and policies will
be established
• Structure dictates how resources will be allocated
Table 7.6 Symptoms of an Ineffective
Organizational Structure
1. Too many levels of management
2. Too many meetings attended by too many people
3. Too much attention being directed toward solving
interdepartmental conflicts
4. Too large a span of control
5. Too many unachieved objectives
6. Declining corporate or business performance
7. Losing ground to rival firms
8. Revenue or earnings divided by number of employees or
number of managers is low compared to rival firms
The Functional Structure
• Functional Structure
– groups tasks and activities by business function, such
as production/operations, marketing,
finance/accounting, research and development, and
management information systems
Table 7.7 Advantages and
Disadvantages of a Functional
Advantages Disadvantages
1. Simple and inexpensive 1. Accountability forced to the top
2. Capitalizes on specialization of 2. Delegation of authority and
business activities such as responsibility not encouraged
marketing and finance
3. Minimizes need for elaborate 3. Minimizes career development
control system
4. Allows for rapid decision making 4. Low employee and manager morale
5. Inadequate planning for products and
markets
6. Leads to short-term, narrow thinking
7. Leads to communication problems
Divisional Structure
• Functional activities are performed both centrally and in
each separate division
• Organized by geographic area, product or service,
customer, or process
Disadvantages of a Divisional
1. Clear accountability 1. Can be costly
2. Allows local control of local situations 2. Duplication of functional activities
3. Creates career development chances 3. Requires a skilled management force

4. Promotes delegation of authority 4. Requires an elaborate control system
5. Leads to competitive climate internally 5. Competition among divisions can
become so intense as to be
dysfunctional
6. Allows easy adding of new products or 6. Can lead to limited sharing of ideas
regions and resources
7. Allows strict control and attention to 7. Some regions, products, or
products, customers, or regions customers may receive special
treatment
The Strategic Business Unit (SBU)
Structure
• SBU Structure
– groups similar divisions into strategic business units
and delegates authority and responsibility for each unit
to a senior executive who reports directly to the chief
executive officer
– can facilitate strategy implementation by improving
coordination between similar divisions and channeling
accountability to distinct business units
The Matrix Structure (1 of 2)
• Matrix Structure
– most complex of all designs because it depends upon
both vertical and horizontal flows of authority and
communication
The Matrix Structure (2 of 2)
• For a matrix structure to be effective, organizations need
participative planning, training, clear mutual understanding
of roles and responsibilities, excellent internal
communication, and mutual trust and confidence
Figure 7.4 A Typical Matrix Structure with
Typical Executive Titles in a Large Firm
Disadvantages of a Matrix Structure
1. Clear project objectives 1. Requires excellent vertical and
horizontal flows of communication
2. Employees clearly see results of their 2. Costly because creates more
work manager positions
3. Easy to shut down a project 3. Violates unity of command principle
4. Facilitates uses of special equipment, 4. Creates dual lines of budget
personnel, and facilities authority
5. Shared functional resources instead of 5. Creates dual sources of reward and
duplicated resources, as in a divisional punishment
structure
6. Creates shared authority and
reporting
7. Requires mutual trust and
understanding
Table 7.10 15 Guidelines for
Developing an Organizational Chart
1. Instead of chairman of the board, make it chairperson of the board.
2. Make sure the board of directors reveals diversity in race, ethnicity, gender, and age.
3. Make sure the chair of the board is not also the CEO or president of the company.
4. Make sure the CEO of the firm does not also carry the title president.
5. Reserve the title president for the division heads of the firm.
6. Include a COO if divisions are large or geographically dispersed.
7. Make sure only presidents of divisions report to the COO.
8. Make sure functional executives such as CFO, CIO, CMO, CSO, R&D, CLO, CTO, and
HRM report to the CEO, not the COO.
9. Make sure every executive has one boss, so lines in the chart should be drawn
accordingly, assuring unity of command.
10. Make sure span of control is reasonable, probably no more than 10 persons reporting
to any other person.
11. Make sure diversity in race, ethnicity, gender, and age is well represented among
corporate executives.
12. Avoid a functional type structure for all but the smallest firms.
13. Decentralize, using some form of divisional structure, whenever possible.
14. Use a SBU type structure for large firms with more than 10 divisions.
15. Make sure executive titles match product names as best possible in division-by-
product and SBU-designated firms.
Figure 7.5 ABC Company’s Existing
(Not Good) Organizational Chart
Figure 7.6 ABC Company’s Improved
(Excellent) Organizational Chart
Figure 7.7 Winnebago’s Actual (Not
Good) Organizational Chart
Figure 7.8 Winnebago’s Improved
(Excellent) Organizational Chart
Restructuring
• Restructuring
– involves reducing the size of the firm in terms of
number of employees, number of divisions or units,
and number of hierarchical levels in the firm's
organizational structure
– primary benefit sought from restructuring is cost
reduction
Reengineering
• Reengineering
– involves reconfiguring or redesigning work, jobs, and
processes for the purpose of improving cost, quality,
service, and speed
– does not usually affect the organizational structure or
chart, nor does it imply job loss or employee layoffs
Managing Resistance to Change
• Resistance to change
– May be the single greatest threat to successful strategy
implementation.
– Successful strategy implementation hinges on
managers’ ability to develop an organizational climate
conducive to change.
Strategic Human Resource Issues
Seven human resource issues:
1. Linking performance and pay to strategy
2. Balancing work life with home life
3. Developing a diverse work force
4. Using caution in hiring a rival’s employees
5. Creating a strategy-supportive culture
6. Using caution in monitoring employees’ social media
7. Developing a corporate wellness program
Linking Performance and Pay to
Strategies
• Decisions on salary increases, promotions, merit pay, and
bonuses need to support the long-term and annual
objectives of the firm
• Gain sharing and bonus systems can be used
Balance Work and Home Life
• Work and family strategies now represent a competitive
advantage for those firms that offer such benefits as:
– elder care assistance
– flexible scheduling
– job sharing
– adoption benefits
– onsite summer camp
– employee help line
– pet care
– lawn service referrals
Develop a Diverse Workforce (1 of 2)
Six benefits of having a diverse workforce are:
1. Women and minorities have different insights, opinions,
and perspectives that should be considered.
2. A diverse workforce portrays a firm committed to
nondiscrimination.
3. A workforce that mirrors a customer base can help attract
customers, build customer loyalty, and design/offer
products/services that meet customer needs/wants.
4. A diverse workforce helps protect the firm against
discrimination lawsuits.
Develop a Diverse Workforce (2 of 2)
5. Women and minorities represent a huge additional pool
of qualified applicants.
6. A diverse workforce strengthens a firm’s social
responsibility and ethical position
Table 7.13 Ways and Means for
Altering an Organization’s Culture
1. Recruitment
2. Training
3. Transfer
4. Promotion
5. Restructuring
6. Reengineering
7. Role modelling
8. Positive reinforcement
9. Mentoring
10. Revising vision or mission
11. Redesigning physical spaces or facades
12. Altering reward system
13. Altering organizational policies, procedures, and practices
Monitoring Social Media
• Proponents of companies monitoring employees’ social-
media activities emphasize that
– a company’s reputation in the marketplace can easily
be damaged by disgruntled employees venting on
social media sites
– social media records can be subpoenaed, like email,
and used as evidence against the company
Corporate Wellness Program
• The Affordable Care Act increased the maximum
incentives and penalties employers may use to encourage
employee well-being
• Most companies have both
– “carrots,” such as giving employee discounts on
insurance premiums or even extra cash,
– “sticks,” such as imposing surcharges on premiums for
those who do not make progress toward getting
healthy.
Strategic Marketing Issues (1 of 2)
1. How to make advertisements more interactive to be more
effective
2. How to take advantage of social-media conversations
about the company and industry
3. To use exclusive dealerships or multiple channels of
distribution
4. To use heavy, light, or no TV advertising versus online
advertising
Strategic Marketing Issues (2 of 2)
5. To limit (or not) the share of business done with a single
supplier or business customer
6. To be a price leader or a price follower
7. To offer a complete or limited warranty
8. To extend an existing product line or create a new line of
products
Figure 7.9 Segment, Target, and
Position: The Key to Marketing
Strategy
Figure 7.10 Positioning Products to
Meet Target Market Needs
Figure 7.11 A Perceptual Map for
Auto-Insurance Providers
Figure 7.12 A Perceptual Map for
Marriott’s Brand of Hotels
Figure 7.13 How to Gain and Sustain
Competitive Advantages
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Strategic Management Concepts: A

Competitive Advantage Approach,

3. Creates career development chances 3. Requires a skilled management force

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