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BITS PilaniPilani Campus

Strategic Management and Business Policy

(MBA ZG611)Session – 11

Dr. Jyoti

Strategic Management and Business Policy – MBA ZG611 BITS Pilani, Pilani Campus

Strategy Implementation: Staffing and Directing

Chapter 10

Wheelen, Thomas L. and J. David Hunger, Concepts in Strategic Management and Business Policy,

Pearson Education, 12th ed., 2010.


Learning Objectives

• Understand the link between strategy and staffing decisions• Match the appropriate manager to the strategy• Understand how to implement an effective downsizing

program• Discuss important issues in effectively staffing and directing

international expansion• Assess and manage the corporate culture’s fit with a new

strategy• Decide when and if programs such as MBO and TQM are

appropriate methods of strategy implementation• Formulate action plans


Implementation involves leading and coaching people to use their abilities and skills most effectively and efficiently to achieve organizational objectives.

Without direction, people tend to do their work according to their personal view of what tasks should be done, how, and in what order.

They may approach their work as they have in the past or emphasize those tasks that they most enjoy—regardless of the corporation’s priorities.

This can create real problems, particularly if the company is operating internationally and must adjust to customs and traditions in other countries.

This direction may take the form of management leadership, communicated norms of behavior from the corporate culture, or agreements among workers in autonomous work groups.

It may be accomplished more formally through action planning or through programs, such as Management By Objectives and Total Quality Management.

Procedures can be changed to provide incentives to motivate employees to align their behavior with corporate objectives.

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Managing Corporate CultureEach one of us has a unique personality – traits and characteristics

that influence the way we act and interact with others. When we describe someone as warm, open, relaxed, shy, or aggressive, we are describing personality traits.

An organization, too, has a personality, which we call its culture.Organizational culture has been described as the shared values,

principles, traditions, and ways of doing things that influence the way organizational members act. In most organizations, these shared values and practices have evolved over time and determine, to a large extent, how things are done in the organization.

Because an organization’s culture can exert a powerful influence on the behavior of all employees, it can strongly affect a company’s ability to shift its strategic direction.

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Leading: Dimensions of Organizational Culture


Strong versus Weak Organizational Cultures


Managing Corporate Culture

• Strong cultures may show resistant to change

• An Optimal culture is one that supports mission and strategies

• Change in strategy should be followed by change in culture

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Accessing Strategy-Culture Compatibility

1. Is the proposed strategy compatible with the company’s current culture

2. Can the culture be easily modified to make it more compatible with the new strategy

3. Is management willing and able to make major organizational changes and accept probable delays and a likely increase in costs

4. Is management still committed to implementing the strategy

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Managing Cultural Change Through Communication

• CEO and top management communicated the strategic vision throughout the organization

• Current performance was compared to competition and constantly updated

• Vision was translated into key elements needed to accomplish the vision

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Methods of managing two different culturesThere are four general methods of managing two different cultures.

The choice of which method to use should be based on (1) how much members of the acquired firm value preserving their own culture and (2) how attractive they perceive the culture of the acquirer to be

• Integration- balanced give and take of cultures and managerial practices. It merges two cultures in such a way that the separate cultures of both firms are preserved in resulting culture.

• Assimilation- domination of one culture over the other. Domination is not forced, but it is welcomed by members of acquired firm.

• Separation of the two company’s cultures: They are structurally separated, without cultural exchange.

• Deculturation- disintegration of one culture resulting from unwanted and extreme pressure form the other to impose its culture and practices.

Managing Diverse Cultures Following an Acquisition


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Activities can be directed toward accomplishing strategic goals through action planning.

An Action plan states- what actions are going to be taken, by whom, during what time frame, and with what expected results

1. Specific actions to be taken to make the program operational2. Dates to begin and end each action3. Person responsible for carrying out each action4. Person responsible for monitoring the timeliness and

effectiveness of each action5. Expected financial and physical consequences of each action6. Contingency plans

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Importance of Action plans

• Serve as a link between strategy formulation and evaluation and control

• Specifies what needs to be done differently from current operations

• Evaluation and control processes appraise performance and identify remedial actions

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Management by Objectives (MBO)- a technique that encourages participative decision making through shared goal setting and performance assessment based on achieving stated objectives

• Establishing and communicating organizational objectives

• Setting individual objectives• Developing an action plan to achieve objectives• Performance review (periodic and annual)

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Total Quality Management (TQM)- is an operational philosophy that is committed to customer satisfaction and continuous improvement

Objectives1. Better, less variable quality of the product and service2. Quicker less variable response in processes to customer

needs3. Greater flexibility in adjusting to customers’ shifting

requirements4. Lower cost through quality improvement and

elimination of non-value added work

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Essential Ingredients of TQM

1. Intense focus on customer satisfaction2. Internal as well as external customers3. Accurate measurement of every critical

variable in a company’s operations4. Continuous improvement of products and

services5. New work relationships based on trust and

teamwork

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Dimensions of National CultureHofstede found that each nation’s unique

culture could be identified using five dimensions.

1. Power distance2. Uncertainty avoidance3. Individualism-collectivism4. Masculinity-femininity5. Long-term orientation

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Evaluation and Control

Chapter 11

Wheelen, Thomas L. and J. David Hunger, Concepts in Strategic Management and Business Policy,

Pearson Education, 12th ed., 2010.


Learning Objectives

• Understand the basic control process• Choose among traditional measures, such as ROI, and

shareholder value measures, such as economic value added, to properly assess performance

• Use the balanced scorecard approach to develop key performance measures

• Apply the benchmarking process to a function or an activity• Understand the impact of problems with measuring

performance• Develop appropriate control systems to support specific

strategies


Evaluation and Control ensures that a company is achieving what it set out to accomplish by comparing performance with desired results and taking corrective action as needed

Evaluation and Control in Strategic Management


1. Determine what to measure2. Establish standards of performance3. Measure actual performance4. Compare actual performance with the

standard5. Take corrective action





Appropriate MeasuresPerformance is the end result of activity

Steering controls measure variables that influence future profitability

• Cost per passenger mile (airlines)• Inventory turnover ratio (retail)• Customer satisfaction

Measuring Performance


Types of Controls

• Output controls- specify what is to be accomplished by focusing on the end result

• Behavior controls specify how something is done through policies, rules, standard operating procedures and orders from supervisors

• Input controls emphasize resources



Enterprise Risk Management a corporate-wide, integrated process for managing uncertainties that could negatively or positively influence the achievement of objectives

1. Identify the risks using scenario analysis, brainstorming, or performing risk assessments

2. Rank the risks, using some scale of impact and likelihood

3. Measure the risks using some agreed-upon standard



Primary Measures of Corporate Performance

• Return on Investment (ROI)• Earnings per share (EPS)• Operating cash flow

– Free cash flow



Popular Measures of Internet Companies

Non-Financial Measures

• Stickiness• Eyeballs• Mindshare• Monthly unique viewers



Balanced score card– combines financial measures that tell results of actions already taken with operational measures on customer satisfaction, internal processes and the corporation’s innovation and improvement activities

• Financial• Customer• Internal business perspective• Innovation and learning



Benchmarking- the continual process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders



1. Indentify the area or process to be examined2. Find behavioral and output measures3. Select an accessible set of competitors of best

practices4. Calculate the differences among the

company’s performance measurements and those of the competitors and determine why the differences exist

5. Develop tactical programs for closing performance gaps

6. Implement the programs and compare the results



Enterprise Resource Planning (ERP)- unites all of a company’s major business activities within a single family of software modules providing instant access throughout the organization

Radio Frequency Identification (RFID)- an electronic tagging technology used to improve supply chain efficiency

Divisional and Functional IS Support- used to support, reinforce, or enlarge business level strategy throughout the decision support system

Strategic Information System


• Lack of quantifiable objectives or performance standards

• Inability to use information systems to provide timely and valid information

Problems in Measuring Performance


Short term orientation- managers only consider current tactical or operational issues and ignore long-term strategic issues

• Lack of time• Do not recognize importance of long-term

issues• Are not evaluated on a long-term basis

Problems in Measuring Performance


1. Controls should involve only the minimum amount of information needed to give a reliable picture of events (80/20 Rule)

2. Controls should monitor only meaningful activities and results, regardless of measurement difficulty

3. Controls should be timely so that corrective action can be taken before it is too late

4. Long-term and short-term goals should be used

5. Controls should aim at pinpointing exceptions6. Emphasize the reward of meeting or

exceeding standards rather than punishment for failing to meet standards

Guidelines for Proper Control


Thank you


Some of the Slides for reference have been taken from online resources provided by Pearson

Publications Copyright ©2010 Pearson Education, Inc.

publishing as Prentice Hall

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