Slide strategic management 6e by harrison chapter 8 strategic control and restructuring

Chapter 8
Strategic
Strategic Control
and Restructuring

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Learning Objectives
To
To understand:
understand:
 feedback,
feedback, concurrent,
concurrent, feedforward
feedforward and
and
comprehensive
comprehensive strategic
strategic control
control systems
systems
 the
the implications
implications of
of national
national cultures
cultures for
for the
the design
design

of
of control
control systems
systems
 characteristics
characteristics of
of the
the most
most common
common restructuring
restructuring
tactics
tactics
 the
the concept
concept of
of business
business cycle
cycle orientation
orientation and
and how
how itit
is
is useful
useful in
in helping
helping firms
firms deal
deal with
with economic

economic cycles
cycles

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Strategic Management Process
External and Internal
Analysis

Strategic
Direction

Strategy Formulation
(corporate and
business level)

Strategy Implementation
and Control

Strategic Restructuring
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Strategic Control System
A
A system
system to
to support
support managers

managers in
in
-- assessing
assessing whether
whether the
the organization’s
organization’s
strategy
strategy is
is accomplishing
accomplishing goals
goals as
as intended
intended
-- identifying
identifying areas
areas needing
needing attention
attention

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Types of Control
• Feedback
Feedback -- Provides
Provides managers
managers with
with performance
performance

information
information so
so that
that they
they can
can make
make adjustments
adjustments ifif
necessary
necessary
• Concurrent
Concurrent -- Provides
Provides real-time
real-time information
information used
used
to
to control
control organizational
organizational processes
processes
• Feedforward
Feedforward –– Monitoring
Monitoring systems
systems that
that help
help
managers
managers anticipate
anticipate changes

changes in
in their
their external
external and
and
internal
internal environments
environments
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Stakeholders
and
Environment

Feedback
Feedback that
that guides
guides impressions
impressions &
& expectations
expectations

FEEDFORWARD
FEEDFORWARD CONTROL
CONTROL

Missions
and
Goals

Strategies

Implementation
(including targets &

time

Performance

concurrent controls)
controls

Comparison
of Performance
with Targets
FEEDBACK
FEEDBACK
CONTROL
CONTROL
Feedback
Feedback used
used to
to alter
alter plans
plans and
and
strategies
strategies

Assessment
of Cause and
Effect
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Feedback Controls
Functions of feedback controls in organizations:
•Creating specific objectives or targets ensures that
managers understand the plans and strategies that guide
firm decisions
•Motivate managers to pursue organizational interests
•Help managers decide when and how to intervene to
make corrections

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Elements in a Feedback
Control System
Establish Broad Goals

Identify Key Result Areas

Establish Targets for Each

Based on Mission, Vision,

for Each of the Broad Goals

Result Area and a Time

and Purpose

Frame for Accomplishment

Follow Up

Develop an Action Plan for

Make a Specific Manager

With

Accomplishing

Responsible

Each Manager

Each Target

for Each Target

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Characteristics of Effective
Objectives or Targets
•

•
•
•
•
•
•
•

High enough to be motivating
Realistic
Specific
Measurable
Understood by all affected managers & employees
Set through participative processes
Use feedback on performance
Cover specific time frame
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Concurrent Controls
Process Controls
•• Statistical
Statistical Process
Process Control
Control
•• Real-time
Real-time Inventory Control
Control

Behavioral Controls

•• Bureaucratic
Bureaucratic Controls
Controls
•• Rules
Rules and
and Procedures
Procedures
•• Policies
Policies – general
general guides
guides to
to action
action
•• Clan
Clan Control
Control
•• Socialization
Socialization processes
processes that
that dictate
dictate appropriate
appropriate behavior
behavior
••
••
••

Orientation
Orientation sessions
sessions

Training
Training
Formal
Formal communications
communications such
such as
as newsletters,
newsletters, mission,
mission, visions,
visions, values
values
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Feedforward Control Systems
Rapid
Rapid changes
changes in
in the
the social,
social, economic,
economic,
technological
technological and
and political
political environments
environments make
make
good

good feedforward
feedforward controls
controls necessary
necessary and
and important
important
• Monitoring
Monitoring Systems
Systems –– The
The firm
firm analyzes
analyzes information
information
from
from stakeholders,
stakeholders, the
the industry
industry and
and the
the broad
broad
environment
environment to
to predict
predict potential
potential changes
changes
• Premise
Premise Control
Control –– evaluates

evaluates whether
whether information
information used
used to
to
establish
establish strategies
strategies and
and goals
goals is
is still
still valid
valid

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Comprehensive Strategic
Control Systems
Rapidly
Rapidly advancing
advancing technologies
technologies make
make continuous
continuous
improvements
improvements through
through control
control systems

systems aa possibility
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-toface meetings
• Continually challenge the underlying data,
assumptions and strategies
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National Cultures
For
For control
control systems
systems to
to be
be effective
effective they
they should
should reflect
reflect the
the
culture
culture of
of the
the nation
nation in

in which
which they
they are
are established:
established:
• Power
Power distance
distance -- degree
degree to
to which
which members
members of
of society
society
accept
accept uneven
uneven power
power distribution
distribution
• Individualism/collectivism
Individualism/collectivism –– degree
degree to
to which
which the
the focus
focus
of
of society
society is
is on

on individual
individual or
or group
group
• Masculine/feminine
Masculine/feminine –– degree
degree to
to which
which society
society draws
draws
strong
strong distinctions
distinctions between
between gender
gender roles
roles
• Uncertainty
Uncertainty avoidance
avoidance –– degree
degree to
to which
which members
members of
of
society
society are
are tolerant
tolerant of
of uncertainty

uncertainty and
and ambiguity
ambiguity
• Confucian
Confucian dynamics
dynamics –– degree
degree to
to which
which decisions
decisions are
are
focused
focused on
on the
the long
long term
term vs.
vs. the
the short
short term
term
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National Cultures and Control Systems
Influence
Influence of
of national
national cultures

cultures on
on characteristics
characteristics of
of control
control systems:
systems:
•• Power
Power distance
distance high
high –– focus
focus on
on outcomes
outcomes
Power
Power distance
distance low
low –– focus
focus on
on adherence
adherence to
to plan
plan
•• Individualism
Individualism –– individual
individual rewards
rewards
Collectivism
Collectivism –– team-based
team-based rewards
rewards

•• Masculine
Masculine –– value
value on
on achievement,
achievement, heroism
heroism and
and material
material success
success
Feminine
Feminine –– value
value on
relationships and
on relationships
and quality
quality of
of life
life
•• Uncertainty
Uncertainty avoidance
avoidance –– control
control over
over management
management risk
risk taking
taking
Uncertainty
Uncertainty tolerance
tolerance –– less
less rule

rule based
based
•• Long-term
Long-term oriented
oriented –– focus
focus on
sales growth
growth and
and customer
on sales
customer satisfaction
satisfaction
Short-term
Short-term oriented
focus on
on profits
profits
oriented –– focus

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Common Restructuring
Approaches
•
•
•
•
•

Refocusing
Refocusing Corporate
Corporate Assets:
Assets: ddownscoping
ownscoping
Retrenchment:
Retrenchment: turnaround
turnaround strategy,
strategy, often
often involving
involving
downsizing
downsizing (workforce
(workforce reductions)
reductions)
Chapter
Chapter XI
XI Reorganization:
Reorganization: provides
provides temporary
temporary court
court
protection
protection from
from foreclosure
foreclosure and
and an
an opportunity
opportunity to

to renegotiate
renegotiate
contracts
contracts
Leveraged
Leveraged Buyout
Buyout (LBO):
(LBO): private
private purchase
purchase of
of business
business by
by
managers,
managers, employees,
employees, unions,
unions, or
or private
private investors
investors
Structural
Structural Reorganization:
Reorganization: changes
changes to
to organizational
organizational design
design

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Business Cycle Orientation
Capabilities
Capabilities that
that allow
allow aa firm
firm to
to respond
respond more
more quickly
quickly
than
than rivals
rivals to
to business
business cycles:
cycles:
• Business cycle literacy
• Forecasting resources
• Facilitative organizational structure
• Business-cycle sensitive management principles
• Supportive organizational culture

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The
The Future

Future
Trends:
Trends:
• Increasing
Increasing global
global complexity
complexity and
and
interconnectedness,
interconnectedness, fueled
fueled by
by technological
technological
advancements
advancements
• Specialized,
Specialized, mobile
mobile and
and diverse
diverse labor
labor pools,
pools,
including
including those
those found
found outside
outside home
home countries
countries
• Education

Education levels,
levels, income
income levels
levels and
and access
access to
to
capital
capital will
will continue
continue to
to grow
grow worldwide
worldwide
• New
New powerful
powerful competitors
competitors in
in global
global marketplace
marketplace
• Increased
Increased concern
concern about
about governance,
governance, sustainability
sustainability
and
and social
social responsibility;

responsibility; increased
increased regulation
regulation
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Challenge
Challenge of
of the Future
Future
Challenges for managers:
• retaining
retaining valuable
valuable employees
employees
• creating
creating and
and preserving
preserving competitive
competitive advantage
advantage
• discouraging
discouraging new
new entrants
entrants
• serving
serving increasingly
increasingly demanding
demanding customers

customers
• choosing
choosing and
and timing
timing technology
technology investments
investments at
at aa
time
time when
when change
change is
is so
so rapid
rapid
• major
major shocks
shocks associated
associated with
with terrorism,
terrorism, new
new
diseases
diseases and
and wars
wars

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