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220 PART 3 • STRATEGY IMPLEMENTATION

TABLE 7-5 Some Management Trade-Off Decisions
Required in Strategy Implementation
To emphasize short-term profits or long-term growth
To emphasize profit margin or market share
To emphasize market development or market penetration
To lay off or furlough
To seek growth or stability
To take high risk or low risk
To be more socially responsible or more profitable
To outsource jobs or pay more to keep jobs at home
To acquire externally or to build internally
To restructure or reengineer
To use leverage or equity to raise funds
To use part-time or full-time employees

Managing Conflict

Interdependency of objectives and competition for limited resources often leads 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 and perceptions, schedules create pressure, personalities are incom-
patible, and misunderstandings between line managers (such as production supervisors)
and staff managers (such as human resource specialists) occur. For example, a collection
manager’s objective of reducing bad debts by 50 percent in a given year may conflict with
a divisional objective to increase sales by 20 percent.
Establishing objectives can lead to conflict because managers and strategists must
make trade-offs, such as whether to emphasize short-term profits or long-term growth,
profit margin or market share, market penetration or market development, growth or stabil-
ity, high risk or low risk, and social responsiveness or profit maximization. Trade-offs are
necessary because no firm has sufficient resources pursue all strategies to would benefit
the firm. Table 7-5 reveals some important management trade-off decisions required in
strategy implementation.
Conflict is unavoidable in organizations, so it is important that conflict be managed and
resolved before dysfunctional consequences affect organizational performance. 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.
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, compro-
mising 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.

Matching Structure with Strategy
Changes in strategy often require changes in the way an organization is structured for two
major reasons. First, structure largely dictates how objectives and policies will be estab-
lished. For example, objectives and policies established under a geographic organizational
structure are couched in geographic terms. Objectives and policies are stated largely in