Chapter 8 Strategic Control and Restructuring

1. Chapter 8 Strategic Control and Restructuring

2. The Strategic Management Process Internal and External Analysis Strategy Formulation (corporate and business level) Strategic Direction Strategy Implementation and Control Strategic Restructuring

3. Strategic Control System A system to support managers in - assessing whether the organization’s strategy is accomplishing goals as intended - identifying areas needing attention

4. Types of Control • Feedback - Provides managers with performance information so that they can make adjustments if necessary • Concurrent - Provides real-time information used to control organizational processes • Feedforward - Helps managers anticipate changes in the external and internal environments

5. Stakeholders and Environment FEEDFORWARD CONTROL Missions and Goals time Implementation (including targets and concurrent controls) Performance Strategies Comparison of Performance with Targets Assessment of Cause and Effect FEEDBACK CONTROL

6. Feedback Controls Budgets Ratio Analysis Goal Setting and Evaluation Surveys Audits

7. Elements in a Feedback Control System • Establishment of broad goals based on strategic direction • Identification of key result areas for each broad goal • Establishment of specific targets and time frames • Assignment of responsibility • Development of an action plan • Follow up with each manager

8. Concurrent Controls Process Controls • Statistical Process Control • Real-time Inventory Control Behavioral Controls • Bureaucratic Controls • Rules and Procedures • Policies--general guides to action • Clan Control • Socialization processes that dictate appropriate behavior

9. Feedforward Control Systems Environmental discontinuities (major, unexpected changes) make good feedforward controls necessary and important • Feedforward controls– The firm analyzes information from stakeholders, the industry and the broad environment to predict potential changes • Premise Control – evaluates whether information used to establish strategies and goals is still valid

10. Comprehensive Strategic Control Systems Rapidly advancing technologies make continuous improvements through control systems a possibility • Information generated should be an important and recurring item to be addressed by top management • Control process should be given frequent attention at all levels • Data from system should be discussed in face-to-face meetings • Continually challenge the underlying data, assumptions and strategies

11. National Cultures National cultures can be distinguished on the basis of: • Power distance - degree to which members of society accept uneven power distribution • Individualism/collectivism – degree to which the focus of society is on individual or group • Masculine/feminine – degree to which society draws strong distinctions between gender roles • Uncertainty avoidance – degree to which members of society are tolerant of uncertainty and ambiguity • Confucian dynamics – degree to which decisions are focused on the long term vs. the short term

12. National Cultures and Control Systems Influence of national cultures on characteristics of control systems: • Power distancehigh – focus on outcomes Power distance low – focus on adherence to plan • Individualism – individual rewards Collectivism – team-based rewards • Masculine – value on achievement, heroism and material success Feminine – value on relationships and quality of life • Uncertainty avoidance – control over management risk taking Uncertainty tolerance – less rule based • Long-term oriented – focus on sales growth and customer satisfaction Short-term oriented – focus on profits

13. The Strategic Management Process Internal and External Analysis Strategy Formulation (corporate and business level) Strategic Direction Strategy Implementation and Control Strategic Restructuring

14. Restructuring Approaches • Refocusing Assets : Downscoping • Retrenchment: Turnaround strategy, often involving downsizing (workforce reductions) • Chapter XI Reorganization • Leveraged Buyout (LBO) • Changes to Organizational Design (structural reorganization)

15. Challenge of the Future Trends: • Technological advancements, including communications and the Internet • Globalization • Blended cultures, diverse and mobile labor pools • New companies from emerging markets • More educated, demanding customers • Increased concern about governance and social responsibility

16. Challenge of the Future Implications for industries: • Lower entry barriers in many industries • Faster imitation • Collapsing product-life cycles • A global retail marketplace • A highly educated, increasingly mobile global labor market. • More demanding customers • Increased pressure to adhere to global standards of social responsibility

17. Challenge of the Future Challenges for managers: • retaining valuable employees • creating and preserving competitive advantage • holding back new entrants • serving increasingly demanding customers • choosing and timing technology investments at a time when change is so rapid • major shocks associated with terrorism, new diseases and wars