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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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Building Blocks of Organizational
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
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Tall and Flat Structures
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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
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Building Blocks of Organizational
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
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Strategic Control Systems
Four basic building blocks
Control and efficiency
Control and quality
Control and innovation
Control 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, andemployee
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 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
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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 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)
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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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Functional Structure
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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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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