Chapter 8
Chapter 8
Chapter 8
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.
Depending on how the corporation is organized, those who implement strategy will probably be a much more diverse set of people than those who formula it. In most large, multi-industry corporations, the implementers are everyone in the organization. Many of the people in the organization who are crucial to successful strategy implementation probably have little to do with the development of the corporate and even business strategy.
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The Managers of divisions and functional areas work with their fellow managers to develop programs, budget, and procedures for the implementation of strategy. They also work to achieve synergy among the divisions and functional areas in order to establish and maintain a companys distinctive competence.
Programs:
Purpose is to make the strategy action-oriented.
Compare proposed programs and activities with current
Budgets:
Planning a budget is the last real check a firm has on
Procedures:
SOPs:
Detail the various activities that must be carried out to
Achieving Synergy: One of the goals to be achieved in strategy implementation is sinergy between and among functions and business units. This is the reason why corporations commomly reorganize after an acquisition. Synergy is said to exist for a divisional corporation if the return on investment (ROI) is greater than what the return would be if the division was an independent business.
Before plans can lead to actual performance, a corporation should be appropriately organized, programs should be adequately staffed, and activities should be directed to ward achieving desired objects. Changes in corporate startegy lead to changes in organizational structure.
Simple Structure:
Stage I: Entrepreneur
Decision making tightly controlled Little formal structure Planning short range/reactive Flexible and dynamic
Functional Structure:
Stage II:
Management team Functional specialization Delegation decision making Concentration/specialization in industry
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Divisional Structure:
Stage III:
Diverse product lines Decentralized decision making SBUs Almost unlimited resources
Beyond SBUs:
Stage IV:
Increasing environmental uncertainty Technological advances Size & scope of worldwide businesses Multi-industry competitive strategy Better educated personnel
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2. Objectives
Profits and meeting functionally oriented budgets and performance targets. Functionally oriented moves restricted to one product scope; exploitation of one basic product or service field. One unit, functionally specialized group.
3. Strategy
Implicit and personal; exploitation of immediate opportunities seen by owner-manager. One unit, one-man show.
Growth and product diversification; exploitation of general business opportunities. Multiunit general staff office and decentralized operating divisions. (Continued)
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Stage 1
Personal, subjective control based on simple accounting system and daily communication and observation.
Stage II
Control grows beyond one person; assessment of functional operations necessary; structured control systems evolve.
Stage III
Complex formal system geared to comparative assessment of performance measures, indicating problems and opportunities and assessing management ability of division managers. More impersonal application of comparisons such as profits, ROI, P/E ratio, sales, market share, productivity, product leadership, personnel development, employee attitudes, public responsibility. Allotment by due process of a wide variety of different rewards and punishments on a formal and systematic basis. Companywide policies usually apply to many different classes of managers and workers with few major exceptions for individual cases.
Personal criteria, relationships with owner, operating efficiency, ability to solve operating problems.
Functional and internal criteria such as sales, performance compared to budget, size of empire, status in group, personal relationships, etc. More structured; usually based to a greater extent on agreed policies as opposed to personal opinion and relationships.
6. Reward-punishment system
Informal, personal, subjective; used to maintain control and divide small pool of resources to provide personal incentives for key performers.
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Stage I Dominant Issue Birth Popular Strategies Likely Structure Concentration in a niche Entrepreneurdominated
Stage III1 Maturity Concentric and conglomerate diversification Decentralization into profit or investment centers
Note: 1. An organization may enter a Revival Phase either during the Maturity or Decline Stages and thus extend the organizations life.
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Matrix Structure
The matrix structure, in contrast, maybe very appropriate when organizations conclude that neither functional nor divisional forms, even when combined with horizontal linking mechanism like strategic business units, are right for their situations. In matrix structures, functional and product forms are combined simultaneously at the same level of the organization. 3 Distinct Phases Temporary cross-functional task forces Product/brand management Mature matrix
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Matrix Structure
Top Management
Manufacturing
Sales
Finance
Personnel
Manager: Project A
Manufacturing Unit
Sales Unit
Finance Unit
Personnel Unit
Manager: Project B
Manufacturing Unit
Sales Unit
Finance Unit
Personnel Unit
Manager: Project C
Manufacturing Unit
Sales Unit
Finance Unit
Personnel Unit
Manager: Project D
Manufacturing Unit
Sales Unit
Finance Unit
Personnel Unit
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Vertical communication
Centralized top-down decision making Vertical integration Work/quality teams
Horizontal communication
Decentralized participative decision making Outsourcing & virtual organizations Autonomous work teams
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Network Structure
The network structure is an example of what could be termed a non structure by its virtual elimination of in-house business functions. A corporation organized in this manner is often called a virtual organization because it composed of a series of project groups or collaboration linked by constantly changing nonhierarchical. The network structure becomes most useful when : The environment in unstable environments Need for innovation and quick response
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Packagers Designers Corporate Headquarters (Broker) Manufacturers Promotion/ Advertising Agencies Distributors Suppliers
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Reengineering
Reengineering is the radical redesign of business processes to achieve major gains in cost, service, or time. Effect way to implement a turnaround strategy. It is not in itself a type of structure, but it is an effective way to implement a turnaround strategy. Reengineering strives to break away from the old rules and procedures that develop and become ingrained in every organization over the years.
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Reengineering Principles:
1. Organize around outcomes, not tasks 2. Have those who use the output perform the process 3. Subsume information-processing work into the real work that produces the information 4. Treat geographically dispersed resources as though they were centralized 5. Link parallel activities instead of integrating their results 6. Put decision point where work is performed and build control into the process 7. Capture information once at the source
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Job enlargement
Combining tasks
Job rotation
Increase variety of tasks
Job enrichment
More autonomy and control to workers
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In order for the job to be motivation 1.The worker needs to feel a sense of responsibility, feel the task to be meaningful, and receive useful feedback on performance. 2.The job has to satisfy needs that are inmportant to the worker.
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President
R&D
Corporate Staff
*Note: Because of space limitations, product groups for only Europe and Asia are shown here.
Product Group A
Product Group B
Product Group C
Product Group B
Product Group D
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Chapter 8 Wheelen/Hunger
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