4750 Implementation

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Strategy Implementation &

Organization Design

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Strategy Implementation

Strategy implementation involves the use of

organizational design, the process of

deciding how a company should create,

use, and combine organizational structure,control systems, and culture to pursue a

business model successfully.


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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 tocustomers

To coordinate and integrate the efforts of all employees


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Implementing Strategy Through Organizational

Structure, Control, and Culture (contd)

Control system

A set of incentives to motivate employees to

increase efficiency, quality, innovation, and

responsiveness to customers

Provides feedback on performance socorrective action can be taken

Organizational culture

The collection of values, norms, beliefs, and

attitudes shared within an organizations and

that control interactions within and outsidethe organization


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Implementing Strategy


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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 functionsand then functions into divisions

Bureaucratic costs


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Structure (contd)

Allocating authority and responsibility

Hierarchy of authority (chain of command)

Span of control (number of subordinates)

Tall and flat organizations

Drawbacks of taller organizations

Less flexibility and slower response time

Communication problems Distortion of commands

Expense



Tall and Flat Structures



Allocating Authority and Responsibility

(contd)

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




Structure (contd)

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



Strategic Control Systems

Four basic building blocks

Control and efficiency

Control and quality

Control and innovation

Control and responsiveness to customers



Types of Strategic Control System

Personal control

Face-to-face interaction

Output control

Performance goals for each division, department, andemployee

Behavior control

Rules and procedures to direction actions or behaviors of

divisions, functions, and individuals Operating budget

Standardization



Using Information Technology

Behavior control

IT standardizes behavior through the use of aconsistent, cross-functional software platform

Output controlIT allows all employees or functions to use the

same software platform to provide information ontheir activities

Integrating mechanismIT provides people at all levels and across all

functions with more information



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



Organizational Culture

Culture and strategic leadership

Traits of strong and adaptive corporate cultures

Bias for action

Nature of the organizations mission (sticking with

what the organization does best)

How to operate the organization (motivating

employees to do their best)



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



Functional Structure



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



Functional Structure and Bureaucratic

Costs

Communications problems

Measurement problems

Customer problems

Location problems

Strategic problems

The outsourcing option



How

Organizational

Design

Increases

Profitability


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Kodaks Product Structure


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Market Structure


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Geographic Structure


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Matrix Structure


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Product-Team Structure


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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; bureaucraticcosts

To improve competitive advantage and stay on top


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Restructuring and Reengineering

(contd)

Reengineering

Fundamental rethinking and radical redesign of

business processes to achieve dramatic

improvementsFocuses not on functions, but on processes (which

cut across functions)


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CSR

Ethical issues

4750 Implementation

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