Page 271 -

CHAPTER 7 • IMPLEMENTING STRATEGIES: MANAGEMENT AND OPERATIONS ISSUES 237

the design, marketing, and distribution of bikes, but it no longer produces bikes itself. The
Dayton, Ohio, company closed its plants in Ohio, Missouri, and Mississippi.
Just-in-time (JIT) production approaches have withstood the test of time. JIT signifi-
cantly reduces the costs of implementing strategies. With JIT, parts and materials are
delivered to a production site just as they are needed, rather than being stockpiled as a
hedge against later deliveries. Harley-Davidson reports that at one plant alone, JIT freed
$22 million previously tied up in inventory and greatly reduced reorder lead time.
Factors that should be studied before locating production facilities include the avail-
ability of major resources, the prevailing wage rates in the area, transportation costs related
to shipping and receiving, the location of major markets, political risks in the area or
country, and the availability of trainable employees.
For high-technology companies, production costs may not be as important as produc-
tion flexibility because major product changes can be needed often. Industries such as
biogenetics and plastics rely on production systems that must be flexible enough to allow
frequent changes and the rapid introduction of new products. An article in the Harvard
Business Review explained why some organizations get into trouble:

They too slowly realize that a change in product strategy alters the tasks of a pro-
duction system. These tasks, which can be stated in terms of requirements for
cost, product flexibility, volume flexibility, product performance, and product
consistency, determine which manufacturing policies are appropriate. As strate-
gies shift over time, so must production policies covering the location and scale
of manufacturing facilities, the choice of manufacturing process, the degree of
vertical integration of each manufacturing facility, the use of R&D units, the
control of the production system, and the licensing of technology. 20
A common management practice, cross-training of employees, can facilitate strategy
implementation and can yield many benefits. Employees gain a better understanding of the
whole business and can contribute better ideas in planning sessions. Cross-training
employees can, however, thrust managers into roles that emphasize counseling and coach-
ing over directing and enforcing and can necessitate substantial investments in training and
incentives.

Human Resource Concerns When Implementing
Strategies
More and more companies are instituting furloughs to cut costs as an alternative to laying
off employees. Furloughs are temporary layoffs and even white-collar managers are being
given furloughs, once confined to blue-collar workers. A few organizations furloughing
professional workers in 2009 included Gulfstream Aerospace, Media General, Gannett,
the University of Maryland, Clemson University, and Spansion. Recent research shows
that 11 percent of larger U.S. companies implemented furloughs during the global eco-
nomic recession. 21 Winnebago Industries, for example, required all salaried employees to
take a week-long furlough, which saved the company $850,000. The Port of Seattle saved
$2.9 million by furloughing all of its 800 nonunion workers, mostly professionals, for two
weeks. Table 7-12 lists ways that companies today are reducing labor costs to stay finan-
cially sound.
The job of human resource manager is changing rapidly as companies continue to
downsize and reorganize. Strategic responsibilities of the human resource manager include
assessing the staffing needs and costs for alternative strategies proposed during strategy
formulation and developing a staffing plan for effectively implementing strategies. This
plan must consider how best to manage spiraling health care insurance costs. Employers’
health coverage expenses consume an average 26 percent of firms’ net profits, even though
most companies now require employees to pay part of their health insurance premiums.
The plan must also include how to motivate employees and managers during a time when
layoffs are common and workloads are high.