Post on 12-Dec-2015
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Overview
Strategy implementationHow a company should create, use, and
combine organizational structure, control systems, and culture to pursue strategies that lead to a competitive advantage and superior performance
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Implementing Strategy Through Organizational Structure, Control, and Culture Organizational structure
Assigns employees to specific value creation tasks and roles and specifies how those are linked to increase efficiency, quality, innovation, and responsiveness to customers
To coordinate and integrate the efforts of all employees
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Implementing Strategy Through Organizational Structure, Control, and Culture (cont’d) Control system
A set of incentives to motivate employees to increase efficiency, quality, innovation, and responsiveness to customers
Provides feedback on performance so corrective action can be taken
Organizational culture The collection of values, norms, beliefs, and attitudes
shared within an organizations and that control interactions within and outside the organization
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Building Blocks of Organizational Structure Grouping tasks, functions, and divisions
Organizational structure follows the range and variety of tasks that an organization pursues
Companies group people and tasks into functions and then functions into divisions
Bureaucratic costs
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Building Blocks of Organizational Structure (cont’d) Allocating authority and responsibility
Hierarchy of authority (chain of command)Span of control (number of subordinates)Tall and flat organizationsDrawbacks of taller organizations
Less flexibility and slower response time Communication problems Distortion of commands Expense
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Allocating Authority and Responsibility (cont’d)
The minimum chain of command To combat an organization that is too tall Hand responsibility up and empower those below
Centralization or decentralization? Delegating responsibility reduces information overload and
enables managers to focus on strategy Empowering lower-level managers increases motivation and
accountability Empowering employees requires fewer managers Centralized decisions allow easier coordination of activities Centralization means that decisions fit broad organizational
objectives
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Building Blocks of Organizational Structure (cont’d) Integration and integrating mechanisms
Direct contact among managers across functions or divisions
Liaison roles Gives one manager in each function or division the
responsibility for coordinating with the other
Teams
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Strategic Control Systems
Four basic building blocksControl and efficiencyControl and qualityControl and innovationControl and responsiveness to customers
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Types of Strategic Control System Personal control
Face-to-face interaction Output control
Performance goals for each division, department, and employee
Behavior control Rules and procedures to direction actions or behaviors of
divisions, functions, and individuals Operating budget Standardization
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Using Information Technology
Behavior control IT standardizes behavior through the use of a
consistent, cross-functional software platform Output control
IT allows all employees or functions to use the same software platform to provide information on their activities
Integrating mechanism IT provides people at all levels and across all
functions with more information
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Strategic Reward Systems
Based on strategy managers must decide which behaviors to reward
A control system measures those behaviors and links the reward structure to them
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Organizational Culture
Culture and strategic leadership Traits of strong and adaptive corporate
culturesBias for actionNature of the organization’s mission (sticking
with what the organization does best)How to operate the organization (motivating
employees to do their best)
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Building Distinctive Competencies at the Functional Level Grouping by function: functional structure
Grouping people on the basis of their expertise or because they use the same resources
Advantages People can learn from one another People can monitor each other Managers have greater control With different functional hierarchies, the company can
avoid becoming too tall
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The Functional Level The role of strategic control
Managers and employees can monitor and improve operating procedures
Easier to apply output control
Developing culture Managers must implement functional strategy and develop
incentive systems to allow each function to succeed Manufacturing: TQM R&D: innovation to bring products quickly to market Sales: output and behavior controls
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Functional Structure and Bureaucratic Costs Communications problems Measurement problems Customer problems Location problems Strategic problems The outsourcing option
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Implementing Strategy in a Single Industry Implementation begins at the functional level,
however, managers must coordinate and integrate across functions and business units
Effective strategy implementation at the business level Increases differentiation, adds value for
customers, allows for a premium priceReduces bureaucratic costs
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Implementing Strategy in a Single Industry (cont’d) Implementing a cost-leadership approach
Reducing costs across all functionsContinuously monitoring for effective operation
Implementing a differentiation approachDesign structure around the source of distinctive
competency, differentiated product, and customer groups
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Implementing Strategy in a Single Industry (cont’d) Implementing a broad product line—product
structureGroup the overall product line into product groupsCentralize support value chain functions to lower
costsDivide support functions into product-oriented
teams of functional specialists who focus on the needs of one specific product group
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Implementing Strategy in a Single Industry (cont’d) Increasing responsiveness to customer
groups—market structureGroup people and functions by customer or
market segmentsDifferent managers are responsible for
developing products for each group of customers
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Implementing Strategy in a Single Industry (cont’d) Expanding nationally—geographic
structureTo be responsive to needs of regional
customersTo reduce transportation costs
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Implementing Strategy in a Single Industry (cont’d) Competing in fast-changing, high-tech
environments—product-team and matrix structuresMatrix structure
Value chain activities are grouped by function and by product or project
Flat and decentralized Promotes innovation and speed Norms and values based on innovation and product
excellence
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Implementing Strategy in a Single Industry (cont’d) Competing in fast-changing, high-tech
environments—product-team and matrix structures (cont’d)Product-team structure
Tasks divided along product or project lines Functional specialists are part of
permanent cross-functional teams
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Implementing Strategy in a Single Industry (cont’d) Focusing on a narrow product line
Tends to have higher production costs because output is lower, reducing opportunity for scale economies
Has to develop some form of distinctive competency
Functional structure is appropriate
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Restructuring and Reengineering
Restructuring involves Streamlining hierarchy of authority and reducing number of
levels Downsizing the workforce to reduce costs
Reasons Change in the business environment Excess capacity Organization grew too tall and inflexible; bureaucratic costs To improve competitive advantage and stay on top