Structure for Strategies

8/9/2019 Structure for Strategies

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Organisational Systems

Organisational systems & processes are the wheels that

make an organisation go. An organisational system is a

set of interacting elements devised to accomplish a process. Systems have sub- systems that are the

interacting elements that make up a unified whole.


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There are six organisational systems which are

as below:-

1. Information System.

2. Control System.

3. Appraisal System.4. Motivation System.

5. Development System &

6. Planning System.


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1. Information System.

A structure subdivides the total responsibility while theinformation system serves to coordinate the dividedresponsibility. If a strategy is to be effectively implemented,Organisational arrangements that provide the information to

managers to perform their task & relate their work to othersare necessary. The information system, therefore, serves twoimportant purposes: it enables the managers to know whatthey need to grasp in order to perform their tasks & also tocoordinate their activities with others.

A broader term management information system (MIS) isused to denote the organisational arrangements designed toaid managers in performing their activities.


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2. Control System.

Control has traditionally been considered as a major

management function. While controlling, the manager

essentially deals with the measurement & correction of the

performance of activities of subordinates in order to make

sure that enterprise objective & plan devised to attain them

are being accomplished. In other words, control ensures that

the implementation of strategy takes place according to

predetermined plans.


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The control cycle.

1. Establish standards.

2. Measure performance.

3. Evaluate performanceagainst standards.

4. Determine corrective

performance.


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3. Appraisal system.

The achievement of organisational objectives has to bemonitored if the implementation of strategy is to take place.The appraisal system performs this critical role of evaluatingmanagerial performance in the light of organisationalobjectives. Managerial appraisal is an important element inthe total control system.

The use of the results of appraisal have to be guided by thetrue function of measurement which is to increase theperceptions of the problems limiting achievement. Only asystem of appraisal that provides the strategists with anunderstanding of the problems before the managers who are

responsible for implementation, is an effective system. In thiscontext management by objectives (MBO) providesparticipatory method of performance & objective setting,where managers can be involved in appraisal so that theythemselves & their superiors know what has prevented themfrom achieving the desired objectives.


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4. Motivation System.

The motivation system plays a positive role in inducingstrategically desired behaviour so that managers areencouraged to work towards the achievement of organisational objectives. But, as yet, there is no completeunderstanding ofhow motivation works. However, it is knownthat incentives play an important role in motivation.Incentives are the means by which individuals can beencouraged to perform better. Generally, the incentives aredivided into two groups : the monetary & the non monetaryincentives. Monetary incentives are provided in the form of

money. Salary, bonus, profit sharing plan, & so on, arecommon monetary incentives. Non- monetary incentives arein the form of rewards, recognition, designation, perquisites,& so on.


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6. Planning System.

In an organisation, the function of formulation of strategy is astaff function while the implementation of strategy is a linefunction. Both these views prevails & affects organisationalpolicies related to the role of the planning system.

Strategists are concerned with the mechanism of the

planning system & the way it should be changed to suit therequirements of a new or modified strategy. It would benatural to expect that the planning system would work betterin a centralised manner in entrepreneurial & functionalstructured organisations. In divisional organisation, theplanning system could be a decentralised one with the activeinvolvement of SBU-level managers in the formulation as wellas implementation of strategy. Thus, it is important to adaptthe planning system to the requirements of the strategy thatis to be implemented.


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Conclusion.

In this way, we can say that, Organisational system like

information, control, appraisal, motivation, development, &

planning form the core of any structure. Each of these systems

plays a significant role in strategy implementation. There

design has to come from a consideration of the requirement

of the strategy being implemented. In implementation, these

systems have to be changed to suit the requirements of a new

or modified strategy.


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(A) STRUCTURE FOR BUSINESS STRATEGIES:

Business strategies are cost leadeship,

differentiation or focus strategies.For a cost leadership strategy , requires a strong ,

centralised authority to direct actions , backedby stringent controls to keep a close check oncosts. There would be less autonomy foremployees & more emphasis on strongleadership. Decision- making authority couldbe centralised in a staff function , to emphasisecost reduction in all functional areas.


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CEOCENTRALISED STAFF

Finance HRM Mktg Operations


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Organisations that adopt a differentiation business

strategy want to produce products & services thatcustomers see as being different in ways for which

they are willing to pay a premium price. A

differentiation strategy would require a learning

approach to organisation design. The organisationstructure would have to be flexible . Decision

making authority needs to be decentralised so that

the organisation can respond fast to changes in the

external environment. Employees would have to beempowered to exhibit creativity & innovation in

looking for newer ways for differentiating products

& services and be in close touch with markets &

customers.


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CEO

R & D Mktng

HRMFinance Operations


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Corporate strategies of integration ,

diversification , internationalisation,

cooperation & retrenchment generatediffering requirements to be satisfied by

different organisation designs &

structures.


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(a) Structure for Concentration

strategy:Under the corporate strategy of

concentration, the organisation does not

plan anything different from what it isalready doing and so does not require

structural changes. In market

penetration , the emphasis will be onmarketing & in product development

strategy, on R& D and other operations.


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(b) Structures for Integration strategies:Horizontal integration generates commitment

to adjacent business.Organisation design &

structure may have to be changed to

accommodate those adjacent businesses.

Addition to th

e existing structure may lead th

eorganisation to create a geographical or product

structure to cater to the requirements ofhorizontal

integration.Under the vertical integration, the

organisation extends itself either backward toraw material or foreward to the customers.

Diversification strategies would satisfy these

requiments.


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(c) Structures for Diversification

strategies:

According to related or unrelateddiversification multidivisional & SBU

structures would be implemented. Related

diversification would create the requirementof retaining the linkages among functions &

departments within the organisation .

Unrelated diversification implemented mainly

through the multidivisional structure , could

ignore such linkages in favour of divisional

autonomy to pursue a different line of

business.


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CEO

PRLegal

Corporatefinance

CorporateHRM

CorporateMarketing

CorporateOperation

SBU

A

SBU

B

SBU

C

SBU

D

Structure for related diversification


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CEO

Corporate

Finance

Corporate

HRMCorporate

legal

Corporate

PR

Division

A

Division

B

Division

C

Division

D

Structure for unrelated diversification

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Structure for Strategies