Strategy Implementation

Strategy Implementation:
Sum total of the activities and choices required

for the execution of a strategic plan. Process by which strategies and policies are put into action through programs, budgets, and procedures.

Why is structural implementation is needed?

Strategic plan is implemented New strategies put in place Implementatio n of new strategies Mismatches occur

Performance is improves

Structure is changed

Effectiveness is reduced

Performance is decline

Structural implementaion is more concerned with the match that should exist between Strategy & structure . A particular strategy creates special requirements that should be fullfilled by the structure. If does not, then the structure will have to redesigned.

Implementing Strategy Tools

Leadership
Structural design Information and control systems

Human resources

Environment
Organization

Tools for Putting Strategy into Action

Leadership Persuasion Motivation Culture/values

Structural Design Organization Chart Teams Centralization Decentralization, Facilities, task design

Human Resources Recruitment/selection Transfers/promotions Training Layoffs/recalls

Information and Control Systems Pay, reward system Budget allocations Information systems Rules/procedures

Types of organizational structures- there are several types of

structures that are found in organization. Here we described , some major types of organization structure with special emphasis on their appropriateness for the different types of strategies. i. ii. iii. iv. v. vi. Entrepreneurial structure Functional structure Divisional structure SBU(strategic business unit ) structure Matrix structure Network structure

Some other types of structurei. ii. iii. iv. Product-based structure Customer- based structure Geographic structure Intrapreneurial structure

What is an Entrepreneurial structure?

This type of structure is built around the owner manager and is typical of small companies in the early stages of their development. The entrepreneur often has specialist knowledge of the product or service Example owner/managed business

Advantages
There is only one person taking decisions - this should lead to decisions being made quickly. As soon as an element of the market alters, the entrepreneur should recognise it and act quickly. A lack of a chain of command and the small size of the organisation should mean that the entrepreneur has control over the workforce and all decisions within the organisation leading to better goal congruence.

Disadvantages
This type of structure is usually suited to small companies where due to the size; there is no career path for the employees. If the organisation grows, one person will not be able to cope with the increased volume of decisions etc.

What is a functional structure?

This type of structure is common in organizations that have outgrown the entrepreneurial structure and now organize the business on a functional basis. It is most appropriate to small companies which have few products and locations and which exist in a relatively stable environment. For example a business making one type of electrical component for use in a car manufacturing company.

Advantages
This organisational structure relates to an organisation which has outgrown the entrepreneurial stage. Rather than duplicating roles in different parts of the company, similar activities are grouped together so leading to: a) lower costs b) standardisation of output/systems, etc. c) people with similar skills being grouped together and so not feeling isolated. d) Due to the larger size of the organisation and the grouping into functions, there is a career path for employees - they can work their way up through the function.

Disadvantages

a) Managers of the functions may try to make decisions to increase their own power/be in the best interest of their function rather that work in the best interest of the company overall, leading to empire building and conflicts between the functions. b) Due to the longer chain of command, decisions will be made more slowly. c) This style of structure is not suited to an organisation which is rapidly growing and diversifying - the specialists in for example the production function would not be able to cope with making gas fires and radios.

What is a divisional structure?

A divisional structure occurs when an organization is structured in accordance with product lines or divisions or departments. They are headed by general managers who enjoy responsibility for their own resources. Divisions are likely to be seen as profit centers and may be seen as strategic business units for planning and control purposes. Some departments, e.g. accounts will be centralized.

Advantages

a)If an organization wants to grow and diversify the divisional structure should be adopted.
b)It encourages growth and diversity of products, e.g. by adding additional flavors etc to capture other segments of the market. This in turn promotes the use of specialized equipment and facilities. c)Due to the breakdown of the company's activities into the divisions, it should mean that the divisional managers can clearly see where their area of responsibility lies and it should leave the top management free to concentrate on strategic matters, rather than to get involved in the day to day operations of each division - although this can lead to a lack of control over the activities of the division and possible lack of goal congruence. d) The focus of attention is on product performance and profitability. By placing responsibility for product profitability at the division level, they are able to react and make decisions quickly on a day to day basis. e) The role of the general manger has less concentration upon specialization. This promotes a wider view of the company's operations.

Disadvantages

a) In most divisionalised companies, some functions, e.g. accounting or human resources will be provided centrally. If this is the case, the cost of the centralized function could be recharged to those divisions using e.g. the human resource function.

b) There are different ways of calculating the recharge and divisional managers may complain if the profitability of their division is reduced by an amount that they perceive as being arbitrary.

What is a SBU?
Strategic Business Units or SBUs have been defined as autonomous divisions or organizational units, small enough to be flexible and large enough to exercise control over most of the factors affecting their long-term performance. They focus on product offering and market segmenthaving clear marketing plan, campaign and analysis. They have autonomous mission and objective. They inspire the owning empire to respond quickly to changing economic situations. The author has tried to explore the concept of business structure and management from the SBU perspective, while looking at different categories of SBUs, in this article. He has also discussed the management mechanism of the SBUs in details. Read on to understand this crucial perspective

What is a matrix structure?

a) A matrix structure aims to combine the benefits of decentralisation (e.g. speedy decision making) with those of co-ordination (achieving economies and synergies across all business units, territories and products). b) It usually requires employees from various departments to form a group to achieve a specific target. c)They require dual reporting to managers and the diagram shows a mix of product and functional structures. For example in a university, a lecturer may have to report to both subject and department heads.

Advantages In today's rapidly changing environment, there is a need for effective coordination in very complex situations. If a car manufacturer wants to design, produce and market a new model, the process involves most parts of the organisation and a flexible/adaptable system is needed to achieve the objectives. The more rigid structure experienced in a divisional company would not have the flexibility to be able to coordinate the tasks and the people, whereas the matrix structure can cope. The production managers could be replaced with customer managers, in which case the whole team will be focussed on meeting the needs of the customer.

Disadvantages Where the matrix structure can cause difficulty is in the lines of control. These may become ambiguous and conflict with each other. A team member may be answerable to the product manager and to a functional head, and this may cause confusion and stress. Time consuming meetings may be required to resolve the conflict, so resulting in higher administration costs.

What is a network structure?

The network structure is a newer type of organizational

structure, often seen as less hierarchical (or more "flat"), more decentralized, and more flexible, in which managers coordinate and control relations, both internal and external to the firm. The concept underlying the network structure is the social network, a social structure of interactions. Proponents argue that the network structure is more agile. As a decentralized structure, the network structure shows fewer tiers in the organizational structure, a wider span of control, and a bottom-to-top flow of decision making and ideas. A downside of the network structure may be that this more fluid structure leads to a more complex set of relations in the organization.