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Unit 6 : Implementing Strategies - Management & Production Issues -…
Unit 6 : Implementing Strategies - Management & Production Issues
Strategy Management Issues
The need for clear annual objectives
Annual Objective
E.g. : Increase revenue 5% yearly, increase profit by 10% yearly
5 reason to have annual objective in strategy implementation stage
Major instrument for monitoring progress toward achieving long-term objectives
Establish organisation, divisional, and department priorities
Are essential for keeping a strategic plan on track
Primary mechanism for evaluating managers
Represent the basis for allocating resources
Purpose : guideline for action, directing and channeling efforts and activities of organisation employees
Policies
Specific guidelines, methods, procedures, rules and admin practices established to support & encourage work towards stated goals.
I.e. : policy that bans employees from accessing personal social media during working hours.
6 reason to have policy in strategy implementation stage
Set boundaries, constraints and limits on the kinds of administrative actions that can be taken to reward and sanction behaviour.
Let both employees and managers know what is expected of them, thereby increasing the likelihood that strategies will be implemented successfully.
Clarify what can and cannot be done in pursuit of an organisation's objectives
Provides a basis for management control and allow coordination across organisational units
Reduce the amount of time managers spend making decisions. Polices also clarify what work is to be done and by whom
Promote delegation of decisions making to appropriate managerial levels where various problems usually arise
Allocate resources and manage conflict
Types of Resources
Physical - Physical assets are tangible resources ( inventory, building, manufacturing plants / factory, machines motor vehicle )
Human - Employees, managers, directors, head of department
Financial - Cash, debt / equity funds
Technological - System, IT, database, software
Resources Allocation
Resources to be allocated according to priorities established by annual objectives
Managing Conflict
Managing Conflict
Avoidance - Ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals.
Confrontation - Holding a meeting at which conflicting parties present their views and work through their differences
Conflict
Disagreement between two or more parties on one or more issues
E.g. :
Whether to emphasise short-term profit or long-term growth
Whether to emphasise profit margin or market shares
Whether to emphasise market development or market penetration
Whether to seek growth or stability
Whether to take high risk or low risk
Whether to be more socially responsible or more profitable
Whether to outsource jobs or pay more to keep job internally
Whether to acquire externally or to build internally
Whether to use debt or equity to raise fund
Whether to use part-time or full-time employees
Match Structure With Strategy
Types of Organisational Structure
Too many levels of management
Too many meeting attended by too many people
Too much attention being directed toward solving interdepartmental conflict
Too large a span of control
Too many unachieved objectives
Declining corporate or business performance
Losing ground to rival firms
Revenue or earning divided by number of employees or number of managers is low compared to rival firms.
4 Types of Organisational Structure
Strategic Business Unit (SBU)
Group 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
Matrix Structure
Advantage
Easy to shut down a project
Facilities uses of special equipment, personnel, and facilities
Result of their work clearly seen by employees
Shared functional resources instead of duplicated resources, as in a divisional structure
Clear project objectives
Disadvantage
Create dual lines of budget authority
Create dual sources of reward and punishment
Violates unity fo command principles
Create shared authority and reporting
Costly because create more manager position
Requires mutual trust and understanding
Requires excellent vertical and horizontal flows of communication
Most complex of all design because it depends upon both vertical and horizontal flows of authority and communication
Divisional Structure / Decentralised Structure
Advantage
Promotion delegation of authority
Leads to competitive climate internally
Create career development chances for employees
Allows easy adding of new products or regions
Allows local control of local situation
Allows strict control and attention to products, customers or regions
Clear accountability
Disadvantage
Requires an elaborate control system
Competition among division can become so intense as to be dysfunctional / not function properly
Duplication of functional activities
Some regions may have a limited of idea or resources allocated
Can be costly ( set up function for every division )
Some regions, products or customers may receive special tratment
Functional Structure / Centralised Structure / Flat Organisational Structure
Disadvantage
Low employee and manager morale
Inadequate planning for products and markets
Miminise career development
Leads to short-term, narrow thinking
Leads to communication problems
Delegation of authority and responsibility not encouraged
Accountability forced to the top
Advantage
Capitalisation on specialisation of business activities such as marketing and finance
Minimises need for elaborate control system
Simple & Inexpensive
Allows for rapid decision making
Group task and activities by business function, such as production / operation, marketing, finance and accounting, research and development, and management information system.
Strategy Production Issues
Restructuring & Reengineering
Restructuring
When : declining stage
Purpose : Cost Reduction
Involves reducing the size of the firm in terms of number of employees, number of division or units, and number of hierarchical levels in the firm's organisational structure
E.g. : During the pandemic, MediaPrima restructure the business and it leads to thousand of retrenchment.
Reengineering
Purpose : improving cost, quality service and speed
Does not usually affect the organisational structure or chart nor does it imply job loss or employee layoffs
Involves reconfiguring or redesigning work, job
E.g. : Toyota uses "just in time system". It decreases the leakage and damage of the stock.
Manage Resistance To Change
Successful strategy implementation also depend on manager's ability develop an organisational climate conducive to change
How to manage :
Force Change Strategy - involves giving order and enforcing those order
Educative Change Strategy - presents information to convince people of the need for change
Self-Interest Change Strategy - attempt to convince individual that the change is to their personal advantage
One of the greatest threats to successful strategy implementation
Decide Where and How To Produce Goods
Factors that should be studied before locating production facilities (where): availability of major resources, the prevailing wage rate in the area, transportation costs, location of major market, political risks, availability of employees.
The Nature of Strategy Implementation
Strategy Formulation
It focuses on effectiveness
It is primarily an intellectual process
It is a positioning forces before the action
It requires good analytical skills
Strategy Implementation
It focuses on efficiency
It is primarily an operational process
It is managing forces during the action
It requires special motivation and leadership skills.