Strategy

Execution
Chapter 10
Execution
is about having the employees
required to support a company's
strategy and making sure they are
doing what the
company needs them to do to
achieve its strategic goals.
The strategic-management process does not
end with deciding what strategy or strategies to
pursue. There must be a translation of strategic
thought into action. This translation is much
easier if managers and employees of the firm
understand the business, feel a part of the
company, and through involvement in strategy-
formulation activities have become committed to
helping the organization succeed. Without
understanding and commitment, strategy
implementation efforts face major problems.

Implementing strategy affects an organization

from top to bottom, including all the functional
and divisional areas of a business.

3
 Accenture, based in Dublin, Ireland,
employs around 275,000 individuals
Accenture Plc and provides service to clients in over
120 countries. Regarded as one of the

(ACN) largest consulting firms, in terms of

revenue, Accenture’s largest employee
base is in India, with almost 100,000
employees compared to the 50,000 in
the United States. Accenture’s 39
industry subgroups fall under its five
operating groups—financial services;
resources; communications, media, and
technology; products; and health and
public service.
Contrasting Strategy Formulation with Strategy Implementation

The Need for Clear Annual Objectives

Annual objectives are desired milestones an organization needs to achieve to

ensure successful strategy implementation. Annual objectives are essential for
strategy implementation for five primary reasons:
1. They represent the basis for allocating resources.
2. They are a primary mechanism for evaluating managers.
3. They enable effective monitoring of progress toward achieving long-term
objectives.
4. They establish organizational, divisional, and departmental priorities.
5. They are essential for keeping a strategic plan on track.

Considerable time and effort should be devoted to ensuring that annual objectives
are well conceived, consistent with long-term objectives, and supportive of
strategies to be implemented. Active participation in establishing annual objectives
is needed for the preceding reasons listed.

5
The Need for Clear Policies
Policies refer to specific guidelines, methods, procedures,
rules, forms, and administrative practices established to
support and encourage work toward stated goals. Changes
in a firm’s strategic direction do not occur automatically. On
a day-to-day basis, policies are needed to make a strategy
work. Policies facilitate solving recurring problems and
guide the implementation of strategy. Policies are essential
instruments for strategy implementation, for at least six
reasons:
 Policies set boundaries, constraints, and limits on the kinds of
1 administrative actions that can be taken to reward and sanction behavior.

Policies let both employees and managers know what is expected of them,
2 thereby increasing the likelihood that strategies will be implemented
successfully.

Policies provide a basis for management control and allow coordination across
3 organizational units.

Policies reduce the amount of time managers spend making decisions. Policies also
4 clarify what work is to be done and by whom.

Policies promote delegation of decision making to appropriate managerial levels

5 where various problems usually arise.

6 Policies clarify what can and cannot be done in pursuit of an organization’s objectives.

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 Allocate Resources and Manage Conflict
All organizations have at least four types of resources (or assets) that can be used to achieve
desired objectives: (1) financial resources, (2) physical resources, (3) human resources, and
(4) technological resources.

Resource allocation can be defined as In organizations that do no strategic planning,

distributing an organization’s “assets” resource allocation is often based on political
or personal factors and bias, rather than being
across products, regions, and segments based on clear analysis and thought. Strategists
according to priorities established by should be wary of a number of factors that
annual objectives. Allocating resources commonly prohibit effective resource
is a vital strategy-implementation allocation, including an overprotection of
resources, too great an emphasis on short-run
activity. Strategic management itself is
financial criteria, organizational politics, vague
sometimes referred to as a “resource strategy targets, a reluctance to take risks, and a
allocation process.” lack of sufficient knowledge.
 Manage Conflict
Honest differences of opinion, turf protection, and competition for limited resources can
inevitably lead to conflict.
• Conflict can be defined as a disagreement between two or more parties on one or more
issues. Establishing annual objectives can lead to conflict because individuals have
different expectations, perceptions, schedules, pressures, obligations, and personalities.
Misunderstandings between line managers (such as production supervisors) and staff
managers (such as human resource specialists) can occur.
• Conflict must be managed for strategy implementation to be successful. Managing
conflict is a strategic issue in most, if not all, organizations.
• Conflict is not always bad. An absence of conflict can signal indifference and apathy.
Conflict can serve to energize opposing groups into action and may help managers
identify problems.
 “If everyone is thinking alike, then somebody isn’t thinking.”
General George Patton
Various approaches for managing and resolving conflict can be classified into three
categories: avoidance, defusion, and confrontation.
• Avoidance includes such actions as ignoring the problem in hopes that the conflict will
resolve itself or physically separating the conflicting individuals (or groups).
• Defusion can include playing down differences between conflicting parties while
accentuating similarities and common interests, compromising so that there is neither a
clear winner nor loser, resorting to majority rule, appealing to a higher authority, or
redesigning present positions.
• Confrontation is exemplified by exchanging members of conflicting parties so that
each can gain an appreciation of the other’s point of view or holding a meeting at which
conflicting parties present their views and work through their differences.

20XX presentation title 10

 Match Structure with Strategy
Changes in strategy often To emphasize short-term profits or long-term growth
require changes in the way an To emphasize profit margin or market share
organization is structured, for To emphasize market development or market penetration
two major reasons. First, To lay off or furlough
structure largely dictates how To seek growth or stability
objectives and policies will be
To take high risk or low risk
established. For example,
To be more socially responsible or more profitable
objectives and policies
established under a geographic To outsource jobs or pay more to keep jobs at home
organizational structure are To acquire externally or to build internally
couched in geographic terms. To restructure or reengineer
To use leverage or equity to raise funds
To use part-time or full-time employees
 Symptoms of an • 1. Too many levels of management
Ineffective • 2. Too many meetings attended by too many people
Organizational • 3. Too much attention being directed toward solving
interdepartmental conflicts
Structure
• 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

20XX presentation title 12

 Types of Organizational Structure
Structure matters! There are seven basic types of organizational structure: (1)
functional, (2) divisional by geographic area, (3) divisional by product, (4)
divisional by customer, (5) divisional by process, (6) strategic business unit
(SBU), and (7) matrix.
Companies, like people and armies, strive to be better organized/structured
than rivals, because better organization can yield tremendous competitive
advantages. There are countless examples throughout history of incidents,
battles, and companies where superior organization overcame massive odds
against the entity.
The Functional Structure
The most widely used structure is the functional or centralized type because this structure is
the simplest and least expensive of the seven alternatives. A functional structure groups tasks
and activities by business function, such as production and operations, marketing, finance and
accounting, research and development, and management information systems.

Advantages Disadvantages

1. Simple and inexpensive 1. Accountability forced to the top

2. Capitalizes on specialization of business 2. Delegation of authority and responsibility not
activities such as marketing and finance encouraged
3. Minimizes need for elaborate control 3. Minimizes career development
system 4. Low employee and manager morale
4. Allows for rapid decision making 5. Inadequate planning for products and markets
6. Leads to short-term, narrow thinking
7. Leads to communication problems
 The Divisional Structure
The divisional (decentralized) structure is the second-most common type. Divisions are sometimes referred to as segments,
profit centers, or business units. As a small organization grows, it has more difficulty managing different products and
services in different markets. Some form of divisional structure generally becomes necessary to motivate employees,
control operations, and compete successfully in diverse locations. The divisional structure can be organized in one of four
ways: (1) by geographic area, (2) by product or service, (3) by customer, or (4) by process. With a divisional structure,
functional activities are performed both centrally and in each separate division.

Advantages Disadvantages
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. 4.Promotes delegation of authority 4. Requires an elaborate control system
5. 5. Leads to competitive climate internally 5. Competition among divisions can become so
6. 6. Allows easy adding of new products or intense as to be dysfunctional
6. Can lead to limited sharing of ideas and resources
regions
7. Some regions, products, or customers may receive
7. 7. Allows strict control and attention to
special treatment
products, customers, or regions
The Strategic Business Unit (SBU) Structure

As the number, size, and diversity of divisions in an organization increase, controlling and evaluating
divisional operations become increasingly difficult for strategists. Increases in sales often are not
accompanied by similar increases in profitability. The span of control becomes too large at top levels of
the firm. The strategic business unit structure groups similar divisions into SBUs and delegates
authority and responsibility for each unit to a senior executive who reports directly to the chief
executive officer. This change in structure can facilitate strategy implementation by improving
coordination between similar divisions and channeling accountability to distinct business units.

Two disadvantages of an SBU structure However, these limitations often do not

are that it requires an additional layer of outweigh the advantages of improved
management, which increases salary coordination and accountability. Another
expenses. Also, the role of the group vice advantage of the SBU structure is that it
president is often ambiguous. makes the tasks of planning and control by
the corporate office more manageable.
 The Matrix Structure
A matrix structure is the most complex of all designs because it depends on both vertical and horizontal flows of authority
and communication (hence the term matrix). In contrast, functional and divisional structures depend primarily on vertical
flows of authority and communication. A matrix structure can result in higher overhead because it creates more management
positions. Other disadvantages of a matrix structure that contribute to overall complexity include dual lines of budget
authority (a violation of the unity-of-command principle), dual sources of reward and punishment, shared authority, dual
reporting channels, and a need for an extensive and effective communication system

Advantages Disadvantages

1. Clear project objectives 1. Requires excellent vertical and horizontal flows of

2. Results of their work clearly seen by communication
employees 2. Costly because creates more 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 authority
personnel, and facilities 5. Creates dual sources of reward and punishment
5. Shared functional resources instead of 6. Creates shared authority and reporting
duplicated resources, as in a divisional 7. Requires mutual trust and understanding
structure
 Dos and Don’ts in Developing
Organizational Charts
• There are some basic dos and don’ts in regard to devising or constructing
organizational charts, especially for midsize to large firms. First of all, reserve the
title CEO for the top executive of the firm.
• Don’t use the title president for the top person; use it for the division top managers
if there are divisions within the firm.
• Also, do not use the title president for functional business executives. They
should have the title chief, or vice president, or manager, or officer, such as “Chief
Information Officer,” or “VP of Human Resources.” Furthermore, do not
recommend a dual title (such as CEO and president) for just one executive.
Chief Executive Officer (CEO) Chief Legal Officer (CLO)
Chief Finance Officer (CFO) Research & Development Officer (R&D) Chief
Chief Strategy Officer (CSO) Marketing Officer (CMO)
Chief Information Officer (CIO) Chief Technology Officer (CTO) Competitive
Human Resources Manager (HRM) Intelligence Officer (CIO) Maintenance Officer
Chief Operating Officer (COO) (MO)
 Fifteen Guidelines for Developing an
Organizational Chart
1. Instead of chairman of the board, make it chairperson 9. Make sure every executive has one boss, so lines in the chart
of the board. should be drawn accordingly, assuring unity of command.
10. Make sure span of control is reasonable, probably no more
2. Make sure the board of directors reveals diversity in
race, ethnicity, gender, and age. than 10 persons reporting to any other person.
11. Make sure diversity in race, ethnicity, gender, and age is
3. Make sure the chair of the board is not also the CEO or
well represented among corporate executives.
president of the company.
12. Avoid a functional type structure for all but the smallest
4. Make sure the CEO of the firm does not also carry the firms.
title president. 13. Decentralize, using some form of divisional structure,
5. Reserve the title president for the division heads of the whenever possible.
firm. 14. Use an SBU type structure for large, multidivisional firms.
6. Make sure the firm has a COO. 15. Make sure executive titles match product names as best
7. Make sure only presidents of divisions report to the possible in division-by-product and SBU-designated firms.
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.
 - Production /operations
capabilities, limitations, and
STRATEGIC policies can significantly enhance
and inhibit the attainment of

PRODUCTION / objectives.
- Major part of the strategy
implementation process takes place
OPERATIONS at the production site.
- Strategic production-related
ISSUES decisions on plant size, plant
location, product design, choice of
equipment, kind of tooling, size of
inventory, inventory control, quality
control, cost control, etc. can
determine the success or failure of
strategy-implementation efforts.
Four production/
operation issues

1. Restructuring/ reengineering
2. Managing resistance to
change
3. Deciding where/how to
produce goods
4. Managing an ESOP
 Restructuring/ reengineering
- Becoming commonplace on the corporate
landscape across the United States and Europe.
- 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. And is
concerned primarily with shareholder well-being
rather than employee well-being.
- Reengineering involves reconfiguring or
redesigning work, jobs, and processes for the
purpose of improving cost, quality, service, and
speed. It is more concerned with employee and
customer well-being than shareholder.
Manage Resistance to Change
-Resistance regularly occurs in organizations in the form of
sabotaging production machines, absenteeism, filling unfounded
grievances, and an unwillingness to cooperate.
-Resistance to change may be the single-greatest threat to
successful strategy implementation.
- Change must be viewed by managers and employees as an
opportunity for the firm to compete more effectively, rather than
being seen as a threat to everyone’s livelihood.
3 Stage or Level of strategy-
implementation process
1. Force change strategy – involves giving orders and enforcing those orders; has
the advantage of being fast, but it is plague by low commitment commitment and
high resistance.
2. Educative change strategy- one that presents information to convince people of
the need for change; disadvantage is that implementation becomes slow and difficult,
however, it evokes greater commitment and less resistance than does the force
change strategy.
3. Rational change strategy or self-interest change strategy – one that attempts to
convince individuals that the change is to their personal advantage. When this appeal
is successful, strategy implementation can be relatively easy.
 DECIDE WHERE AND HOW TO PRODUCE GOODS

Just-in-time(JIT)
- Significantly reduces the costs of
implementing strategies.
- Parts and materials are delivered to a
production site just as they are needed, rather
than being stockpiled as hedge against later
deliveries.

20XX presentation title 26

Factors should be studied before
locating production facilities
- Availability of major resources
- Prevailing wage rates in the area
- Transportation costs related to shipping and receiving
- Location of major markets
- Political risk in the area or country
- Availability of trainable employees
EMPLOYEE STOCK OWNERSHIP
PLANS (ESOPs)
Besides reducing worker alienation and stimulating
productivity, employee stock ownership plans (ESOPs)
allow firms other benefits, such as substantial tax savings.

ESOP is a tax-qualified, defined-contribution, employee-

benefit plan whereby employees purchase stock of the
company through borrowed money or cash contributions. It
empower employees to work as owners; this is primary
reason why the numbers of ESOPs have grown dramatically
today.
Strategic Human Resource Issues
Human resource issues can make or break successful strategy implementations.
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
Strategy
- Organization’s compensation system needs to be aligned with strategic outcomes. Decisions on salary
increases, promotions, merit pay, and bonuses need to support the long-term and annual objectives of the
firm. A dual bonus system based on both annual and long-term objectives can be helpful in linking
performance and pay to strategies. It is important that bonuses not be based solely on short-term results,
because such a system ignores long-term company strategies and objectives.
- Gain sharing requires employees or departments to establish performance targets; if actual results exceed
objectives, all members get bonuses.
- Criteria such as sales, profit, production efficiency, quality, and safety could also serve as bases for an
effective bonus system. A bonus system can be effective tool for motivating individuals to support strategy-
implementation efforts.
- A combination of reward strategy incentives, such as salary raises, stock options, fringe benefits, promotions,
praise, recognition, criticism, fear, increased job autonomy, and awards, can be used to encourage managers
and employees to push hard for successful strategic implementation.
Balance Work Life and Home Life
- More women than men both earn undergraduate and graduate degree in United States, but a wage disparity
still persists between genders at all educational levels.
- 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 lines, pet care, and even lawn service referrals.
- Globally, it is widely acknowledge that the best countries for working women are, Iceland, Norway, Sweden,
Finland, and Denmark, all of which rate above the United States.
- Working Mother magazine annually published its listing of “The 100 Best Companies for Working Mothers”.
Three especially important variables used in the ranking were availability of flextime, advancement
opportunities, and equitable distribution of benefits. Other important criteria are compressed weeks,
telecommuting, job sharing, childcare facilities, maternity leave for both parents, mentoring, career
development, and promotion for women.
- A corporate objective to become more lean and mean must today include consideration for the fact that a
good home life contributes immensely to a good work life. The work and family issue is no longer just a
women’s issue. Some specific measures that firms are taking to address this issue are providing spouse
relocation assistance as an employee benefit; supplying company resources for the family recreational and
educational use; establishing employee country clubs; and creating family and work interaction
opportunities.
Develop a Diverse Workforce
An organization can perhaps be most effective when its workforce mirrors the
diversity of its customers. For global companies, this goal can be optimistic, but it is a
worthwhile goal.

Six benefits of having a diverse workforce as follows:

1. Women and minorities have different insights, opinions, and perception 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.
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.
 Use Caution in Hiring a Rival’s
Employees
A recent article titled “Dos and Don’ts of Poaching
Workers” in Investor’s Business Daily gives guidelines to
consider before hiring a rival’s employees. The practice
of hiring employees from rival firms has a long tradition,
but increasingly in our lawsuit-happy environment, firms
must consider whether that person(s) has access to the
“secret sauce formula, customer list, programming
algorithm, or any propriety or confidential information”
of the rival firm. If the person has that information and
joins your firm, lawsuits could follow that hiring,
especially if the person was under contract at rival firm
or had signed a “noncompetent agreement.”
WAYS AND MEANS FOR ALTERING AN ORGANIZATION’S
CULTURE
1. Recruitment
2. Training
3. Transfer
4. Promotion
5. Restructuring
6. Reengineering
7. Role modeling
8. Positive reinforcement
9. Mentoring
10.Revising vision and/or mission
11.Redesigning physical spaces/facades
12.Altering reward system
13.Altering organizational policies, procedures, and practices
 Create a Strategy-Supportive Culture

All organizations have a unique culture. Strategist should strive to

preserve, emphasize, and build on aspects of an existing culture that
supports proposed new strategies. Aspects of an existing culture that are
antagonistic to a proposed strategy should be identified and changed.
Changing a firm’s culture to fit a new strategy is usually more effective
than changing a strategy to fit an existing culture.

20XX presentation title 35

Elements useful in linking culture to
strategy:
1. Formal statements of organizational philosophy, charters, creeds,
materials used for recruitment and selection, and socialization
2. Designing of physical spaces, facades, and buildings
3. Deliberate role modeling, teaching, and coaching by leaders
4. Explicit reward and status system and promotion criteria.
5. Stories, legends, myths, and parables about key people and
events.
6. What leaders pay attention to, measures, and control.
7. Leaders reactions to critical incidents and organizational crises.
8. How the organization is designed and structured.
9. Organizational systems and procedures.
10.Criteria used for recruitment, selection, promotion, leveling off,
retirement, and “excommunication” of people.
 Use Caution in Monitoring Employee’s
Social Media
- Many companies monitor employee’s social media activities, and have the legal right to do so, but there are many
pros and cons of this activity. Proponents of companies monitoring employee’s social media activities emphasizes
that 1.) a company’s reputation in the marketplace can easily be damaged by disgruntled employees venting on social
media sites and 2.) social media records can be subpoenaed, like email, and used as evidence against the company.
- Companies should never use social media to discriminate based on age, ethnic background, religion, sexuality, or
handicapped issues.
- However, arguments against the practice of companies monitoring employee’s social media activities say it is an
invasion of privacy and too often becomes “a fishing expedition” sifting through tons of personal information
irrelevant to the company or its business.
- On balance, companies generally should monitor employee and potential employee’s social media activities whenever
they have a reason to believe the person is engaged in illegal or unethical conduct – but to systematically investigate
every employee and job candidate’s social media activities is arguably counterproductive.

20XX presentation title 37

Develop a Corporate Wellness Program
- Corporate wellness has become a major strategic issue in companies.
- Corporate wellness programs have proliferated in recent years due in part to the Affordable Care
Act, which increased the maximum incentives and penalties employers may use to encourage
employee well-being.
- Most companies therefore now have both “carrots” such as giving employee discounts on
insurance premiums or even extra cash, and “sticks”, such as imposing surcharges on premiums
for those who do not make progress towards getting healthy.
THANK YOU!
Group 4 Shajanah Sumagang

Rica Cereza

Grace Ann Gallana

Mryna Juanico

April Esparas