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CHAPTER 7 • IMPLEMENTING STRATEGIES: MANAGEMENT AND OPERATIONS ISSUES 215

TABLE 7-1 Some Management Issues Central
to Strategy Implementation
Establish annual objectives
Devise policies
Allocate resources
Alter an existing organizational structure
Restructure and reengineer
Revise reward and incentive plans
Minimize resistance to change
Match managers with strategy
Develop a strategy-supportive culture
Adapt production/operations processes
Develop an effective human resources function
Downsize and furlough as needed
Link performance and pay to strategies

resources function, and, if necessary, downsizing. Management changes are necessarily more
extensive when strategies to be implemented move a firm in a major new direction.
Managers and employees throughout an organization should participate early and
directly in strategy-implementation decisions. Their role in strategy implementation should
build upon prior involvement in strategy-formulation activities. Strategists’ genuine personal
commitment to implementation is a necessary and powerful motivational force for managers
and employees. Too often, strategists are too busy to actively support strategy-implementation
efforts, and their lack of interest can be detrimental to organizational success. The rationale
for objectives and strategies should be understood and clearly communicated throughout an
organization. Major competitors’ accomplishments, products, plans, actions, and perfor-
mance should be apparent to all organizational members. Major external opportunities and
threats should be clear, and managers’ and employees’ questions should be answered. Top-
down flow of communication is essential for developing bottom-up support.
Firms need to develop a competitor focus at all hierarchical levels by gathering and
widely distributing competitive intelligence; every employee should be able to benchmark
her or his efforts against best-in-class competitors so that the challenge becomes personal.
For example, Starbucks Corp. in 2009–2010 is instituting “lean production/operations” at
its 11,000 U.S. stores. This system eliminates idle employee time and unnecessary
employee motions, such as walking, reaching, and bending. Starbucks says 30 percent of
employees’ time is motion and the company wants to reduce that. They say “motion and
work are two different things.”

Annual Objectives

Establishing annual objectives is a decentralized activity that directly involves all managers
in an organization. Active participation in establishing annual objectives can lead to accep-
tance and commitment. Annual objectives are essential for strategy implementation because
they (1) represent the basis for allocating resources; (2) are a primary mechanism for evalu-
ating managers; (3) are the major instrument for monitoring progress toward achieving
long-term objectives; and (4) establish organizational, divisional, and departmental priori-
ties. 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. Approving, revising, or rejecting annual objectives is much more than a
rubber-stamp activity. The purpose of annual objectives can be summarized as follows:
Annual objectives serve as guidelines for action, directing and channeling efforts and
activities of organization members. They provide a source of legitimacy in an enter-
prise by justifying activities to stakeholders. They serve as standards of performance.