Chapters 1 and 2

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 organizations 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 distance high 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