Strategy and Structure Ppt

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STRATEGY ANDSTRUCTURE

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Major kinds of

organizational formSimple tasks performed b a small gro!p of people"an be str!"t!red in se#eral $as%

&'ndi#id!all

&Self(managed team

&)ierar"* of a!t*orit

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Comple+ )ierar"*ies

& in#ol#e organizing large n!mbers of gro!ps $it*ine+tensi#e and potentiall o#erlapping s"*emes

& arises from t*e need not j!st to organizeindi#id!als into gro!ps, b!t to organize gro!ps intolarger gro!ps

& Comple+ *ierar"*ies are designed to address t*efollo$ing t$o iss!es %

( Departmentalization

( Coordination of a"ti#ities

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Departmentalization

& -ormal gro!pings in large organizations "an bebased on f!n"tional areas, geograp*, prod!"ts,

tpes of "!stomers and so on

& A .rm s*o!ld de"ide on t*e organizing dimensionsbased on

o

e"onomies of s"ale and s"opeo transa"tions "osts

o agen" "osts

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Coordination and Control

& Coordination in#ol#es

t*e /o$ of information to fa"ilitate de"isions

t*at f!rt*er t*e organization0s obje"ti#es and

t*e distrib!tion of de"ision making rig*ts andr!le making a!t*orit $it*in t*e organization1

& Coordination and "ontrol "*oi"es $ill a2e"tbot* te"*ni"al e3"ien" and agen" e3"ien"1

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4rganizational Str!"t!re 5Controls

& Some str!"t!ral "*ara"teristi"s de.ned

6 Specialization

6 Centralization

6 Formalization

& 4t*er str!"t!ral "*ara"teristi"s

6 Authority, Responsibility, Degree of Integration,how Coordination is achieved, Reportingrelationships, Standardization

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T*e Relations*ip 7et$een Strategand Str!"t!re

& Modifing "!rrent strateg or sele"ting a ne$ one"alls for "*anges to organizational str!"t!re

& Re"ipro"al relations*ip ( "*ange to one "a!ses"*ange in t*e ot*er

& No one str!"t!re is s!perior to t*e ot*ers6 o best or optimal structure for all !rms

& Strateg(str!"t!re .t "an lead to a "ompetiti#ead#antage and abo#e a#erage ret!rns

& Str!"t!re m!st mat"* strateg& Str!"t!ral "*oi"e s*o!ld be based on "ontrol,

"oordination, and moti#ation iss!es

& Se#eral str!"t!re forms "an be !sed to implementstrategies

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4rganizational Str!"t!re

&Tpes of organizational str!"t!res

6 "nitary Functional Structure #"$form%

6 &ultidivisional #&$form%

6 &atri' Structure

6 etwor( Structure

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U(form

& Ea"* department in t*e .rm is responsible for aparti"!lar f!n"tional area s!"* as .nan"e ormarketing1

& U(form promotes performan"e $it*in t*e departmentb!t makes "oordination a"ross departments di3"!lt1

& T*e !nitar f!n"tional str!"t!re is s!itable for stable"onditions $*en operating e3"ien" is t*e prime"onsideration1

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T*e -!n"tional 8U(form9

Str!"t!re

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M(form

& T*e m!ltidi#isional .rm is organized along s!"*dimensions as

( prod!"t line

( geograp* or

( tpe of "!stomers

& Di#isional managers $ill be responsible for

operating de"isions and t*e top management $ill*andle strategi" de"isions1

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T*e M!ltidi#isional 8M(

form9 Str!"t!re

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Ad#antages of t*e M(

form& Meas!ring di#isional performan"e is easier !nder

M(form1

& :a for performan"e s"*emes are easier toimplement in managerial "ompensation1

& Di#isional managers "ompete for f!nds in t*einternal "apital markets based on t*eir operatingperforman"e in t*e past1

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Matri+ Str!"t!re

& A .rm t*at !ses a matri+ str!"t!re is organizedalong t$o 8or more9 dimensions ( for e+ample,prod!"t line and geograp*1

& 'n a t$o(dimensional matri+, an emploee belongsto t$o *ierar"*ies and *as t$o bosses1

& T*e demands of "ompeting dimensions s*o!ld bero!g*l e;!al1

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Matri+ Str!"t!re

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Ad#antages of Matri+

Str!"t!re& Matri+ str!"t!re "an *elp e+ploit e"onomies of

s"ale and s"ope1

& A .rm ma need national "oordination to a"*ie#ee"onomies of s"ale for man!fa"t!ring a parti"!larprod!"t and regional "oordination to negotiate$it* large b!ers for di2erent prod!"ts1

& Matri+ str!"t!re allo$s a .rm to e"onomize ons"ar"e *!man reso!r"es

& )a#ing a .rm $ide engineering department 8ormarketing department9 $ill be more e3"ient t*anmaintaining a separate engineering gro!p forea"* prod!"t1

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Net$ork Str!"t!re

& Designed aro!nd t*e $orker rat*er t*an t*e task1

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Net$ork Str!"t!re

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Net$ork Str!"t!re

& :referred $*en "oordination "osts do noto!t$eig* t*e gains in te"*ni"al e3"ien"1

& -a"ilitates t*e /o$ of di#erse information,leading to *ig* le#el of ne$ prod!"tde#elopment in *ig* te"*nolog "ompanies

& 7e"oming more pop!lar as t*e "ost oforganizing *as fallen1

& 'nternet pro#ides a less e+pensi#einfrastr!"t!re for net$ork organizations t*antraditional means of data e+"*ange1

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4rganizational Str!"t!re 5Controls

&Organizational Controls

6 )uide the use of strategy, indicate how to compareactual results with e'pected results, and suggestcorrective actions to ta(e when the di*erence isunacceptable

6 Are an important aspect of structure

6 +elp managers recognize when it is time to aduststructure

6 Firms use strategic, !nancial, and behavioral

controls to support their strategies

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Contingen" t*eor

& T*ree fa"tors t*at a2e"t t*e relati#e e3"ien" ofdi2erent str!"t!res

Te"*nolog and task interdependen"e

'nformation /o$

T*e tension bet$een integration and di2erentiation

& Contingen" fa"tors are not s!3"ient for

!nderstanding a .rm str!"t!re1

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Strategy and Structure Ppt

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