Strategic Management in Global Environments
Chrisyanqu
OrgStructure.pdf
10/4/21
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ASPECTS OF STRATEGY IMPLEMENTATION
ORGANIZATIONAL STRUCTURE AND CONTROLS
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OBJECTIVE
DESCRIBE ELEMENTS OF STRATEGY IMPLEMENTATION AND HOW THEY HELP OR HINDER ORGANIZATIONAL PERFORMANCE
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PATH DEPENDENCE
¡ Any set of decisions you must m ake, is lim ited by decisions you have m ade in the past.
¡ i.e., H istory m atters
¡ Evolution is typically thought of as path dependent. E.g., in com puter/softw are industry, legacy system s indicate path dependence.
¡ H ighlights the critical im portance of strategic intent
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WHY IMPORTANT?
Organizational structure and controls affect firm performance.
1 Performance declines when strategy is not matched with the most appropriate structure and controls.
2 Part of manager’s work is to monitor alignment and act when changes are needed.
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WHAT COMES FIRST, STRATEGY OR STRUCTURE?
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Which comes first? IMPORTANT TO UNDERSTAND WHAT NEEDS TO CHANGE FOR ALIGNMENT
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Simple
Functional
Multidivisional
Efficient implementation of formulated strategy usually results in sales growth, which brings about coordination and control problems
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WHAT IS STRUCTURE
¡ A firm's formal role configuration, procedures, governance, and control mechanisms, and authority and decision-making processes.
¡ Formal reporting relationships
¡ Policies, procedures, processes
¡ Controls & authority
¡ Decision making processes
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FEATURES OF ORGANIZATIONAL STRUCTURE
STABILITY: provides the capacity required to
consistently and predictably manage work
routines
FLEXIBILITY: provides the opportunity to explore
competitive possibilities & allocate resources to value
added activities
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STABILITY VS. FLEXIBILITY?
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Match structural features with product lifecycle and strategy
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STRUCTURE TYPES
Simple Owner/manager makes all major decisions Difficult to maintain this structure as the firm grows
Functional For single or dominant-business firms
Allows to specialize tasks Overcomes information processing limits of owner/manager
Multidivisional Each division operated as separate business Appropriate for related or unrelated diversified businesses
Corporate managers focus on finding and exploiting synergies
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FUNCTIONAL STRUCTURE FOR COST LEADERSHIP
¡ M ay be t tall structure, w ith m any reporting relationships
¡ O perations is the m ain function
¡ Process engineering em phasized
¡ R&D deem phasized
¡ Form alized procedures around
low -cost culture
¡ Job roles are highly structured
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FUNCTIONAL STRUCTURE FOR DIFFERENTIATION
¡ Marketing is the main function for keeping track of new product ideas
¡ New product development is emphasized
¡ Most functions are decentralized, but R&D and MKTG have centralized staff that work closely with each other
¡ Formalization is limited so that new ideas can emerge easily
¡ Structure is organic, job roles less structured
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TYPES OF MULTIDIVISIONAL STRUCTURES
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COOPERATIVE FORM - MULTIDIVISIONAL
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SBU FORM – MULTIDIVISIONAL (RELATED LINKED STRATEGY)
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COMPETITIVE FORM – MULTIDIVISIONAL (UNRELATED STRATEGY)
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CHARACTERISTICS OF STRUCTURES
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GEOGRAPHIC AREA STRUCTURE FOR MULTIDOMESTIC STRATEGY
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PRODUCT DIVISIONAL STRUCTURE FOR GLOBAL STRATEGY
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HYBRID FORM FOR IMPLEMENTING A TRANSNATIONAL STRATEGY
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ORGANIZATIONAL CONTROLS
Use Use a gap analysis to determine if corrective action is needed
Suggest Suggest corrective action when the differences between actual & expected are unacceptable
Indicate Indicate how to compare actual results with expected results
Guide Guide the use of strategy
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TYPES OF ORGANIZATIONAL CONTROLS
Strategic controls Examine the fit between what the firm might do and what it can do
Financial controls Financial objective criteria used to measure the firm’s performance
against previously established quantitative standards
Operational controls Quantitative and qualitative criteria used to determine functional level performance outcomes (e.g., HR,
logistics, customer, etc.)
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UNDERSTAND PERFORMANCE GAPS AND INFORM STRATEGIC DECISIONS
Gap analysis:
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A RUDIMENTARY GAP ANALYSIS ILLUSTRATION
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IN CONCLUSION
¡ W hy is organizational structure and controls im portant?
¡ W hat are am bidextrous organizations?
¡ W hat are the different types of structures?
¡ W hat should be em phasized in a functional structure that m atches a differentiation strategy?
¡ W hat are organizational controls?
¡ W hat are the different types of controls?
¡ W hat is a gap analysis?
¡ H ow would you design and conduct a gap analysis for your academ ic progress?
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