Strategy Implementation My

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Strategy Implementation

Strategy and Structure


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WHY STRUCTURE FOLLOWS STRATEGY

Ch anges in strategy may require New structure for successful implementation

Researc h results indicate

Organizational structure affects performance Structure merits reassessment w h enever strategy

ch anges

New strategy likely entails different kills & key activities

How work is structured is a means to an end -- Notan end in itself!


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WHY STRUCTURE FOLLOWS

STRATEGY

Structure is a tool for Facilitating execution of strategyHelping to achieve performance targets

Harnessing individual effortsCoordinating performance of diverse tasks


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M atc h ing Structure to Strategy

Guidelines for helping structure to fit strategy:

Pinpoint primary activities, comps, caps nb to strategy

Decide on balance between internal & outsourced

Primary activities, caps & critical units as building blocks of structure

Degree of authority needed to manage each unit

Co-ordination mechanismsRelationship with external environment


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Strategy critical activities

Identify critical and primary activitiesimportant for strategy implementation

Wh en company adopts market leader strategycritical tasks include: low cost producer,specialpromotional appeal,tig h t qualitycontrol,special designCritical tasks for h itec h industries:R&D,pdtdevelopment,market researc h


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U nderstanding relation among

activitiesRelations h ip among critical, supportive androutine activities s h ould be analyzed andscrutinize

Grouping activities into organization units


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A pproac h es to organization

structuresSimpleFunctional

ProductGeograp h ic

Decentralised

SBUM atrix


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Organization StructuresOrganization Structures

Simple StructureSimple Structure

PresidentPresident

EmployeesEmployees

OwnerOwner--manager makes decisions.manager makes decisions.Little specialization of tasks.Little specialization of tasks.Few rules, little formalization.Few rules, little formalization.

Advantages: Advantages:

-- Provides high flexibilityProvides high flexibility-- Rapid product introductionRapid product introduction-- Few coordination problemsFew coordination problems


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Disadvantages

Cannot respond to increasing demand beyondpoint

Excessive dependence on owner managerwh o is not a professionalA pplicable to small markets or for lessdemand products


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Acc ountingAcc ountingLegalLegal

Aff airsAff airs

HRMHRM Finan c eFinan c e MarketingMarketing R&DR&D Produ c tionProdu c tion

PresidentPresident

Organization structureOrganization structure

Functional structureFunctional structure


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Functional structureFunctional structure

Advantages Advantages

-- Centralized control of operationsCentralized control of operations

-- Promotes inPromotes in- -depth functional expertisedepth functional expertise-- Enhances operating efficiency where tasks are routineEnhances operating efficiency where tasks are routine

DisadvantagesDisadvantages

-- Functional coordination problemsFunctional coordination problems

-- InterInter--functional rivalryfunctional rivalry-- Overspecialization and narrow viewpointsOverspecialization and narrow viewpoints-- Hinders development of crossHinders development of cross- -functional experiencefunctional experience-- Slower to respond in turbulent environmentsSlower to respond in turbulent environments


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G overnmentG overnment

Aff airsAff airs

LegalLegal

Aff airsAff airs

CorporateCorporateR&D LabR&D Lab

Strategi cStrategi cPlanningPlanning

CorporateCorporateHumanHuman

Resour c esResour c es

CorporateCorporateMarketingMarketing

CorporateCorporateFinan c eFinan c e

Produ c tProdu c tDivisionDivision





PresidentPresident


Product Product--divisional structuredivisional structure


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Organization based on products versus functionsOrganization based on products versus functions

Each division is a separate business in which dayEach division is a separate business in which day- -toto--daydaydecisions are delegated to divisional managers.decisions are delegated to divisional managers.

Divisions are managed using strategic controlsDivisions are managed using strategic controls detaileddetailedknowledge of firm operations allows managers to remain activelyknowledge of firm operations allows managers to remain activelyinvolved.involved.

Overdiversification leads to inability to process detailed informationOverdiversification leads to inability to process detailed informationand a reliance on financial controls to evaluate managers.and a reliance on financial controls to evaluate managers.


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Advantages Advantages

-- Decentralized decision makingDecentralized decision making

-- Each business is organized around productsEach business is organized around products-- Puts profit/loss accountability on managersPuts profit/loss accountability on managers

-- Facilitates rapid response to environmental changesFacilitates rapid response to environmental changes

-- Allows efficient management of a large number of units Allows efficient management of a large number of units

DisadvantagesDisadvantages-- May lead to costly duplication of functionsMay lead to costly duplication of functions

-- InterInter--divisional rivalrydivisional rivalry

-- Corporate managers may lose inCorporate managers may lose in- -depth understandingdepth understanding


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B usinessB usinessProje c tProje c t



R&DR&D Produ c tionProdu c tion MarketingMarketing Finan c eFinan c e

Spe c ialistsSpe c ialists





Spe c ialistsSpe c ialists Spe c ialistsSpe c ialists




SpecialistsSpe

cialists


PresidentPresidentMatrix StructureMatrix Structure


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Matrix structureMatrix structure

Contains aspects of both functional and product Contains aspects of both functional and product- -divisionaldivisionalstructures.structures.

Advantages: Advantages:

-- Creates checks and balances between competing viewpointsCreates checks and balances between competing viewpoints-- Promotes holistic view of the firmPromotes holistic view of the firm

-- Encourages cooperation and consensus buildingEncourages cooperation and consensus building

Disadvantages:Disadvantages:

-- Very complex and costly Very complex and costly-- Shared authority increases communication timeShared authority increases communication time

-- Difficult to respond rapidlyDifficult to respond rapidly

-- May promote bureaucracy and reduce innovation (in large firms).May promote bureaucracy and reduce innovation (in large firms).


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Strategy Implementation My