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Strategy Implementation: Organizing for Action

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Strategy Implementation: Organizing for Action Does organizational structure come after strategy formulation? Well, yes, in theory! New strategy is created – PowerPoint PPT presentation

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Title: Strategy Implementation: Organizing for Action


1
Strategy Implementation Organizing for Action
  • Does organizational structure come after strategy
    formulation? Well, yes, in theory!
  • New strategy is created
  • New administrative problems emerge
  • Economic performance declines
  • New appropriate structure is invented
  • Profit returns to its previous level.

2
Strategy Implementation Organizing for Action
  • Simple structure Entrepreneur and staff
  • Efficient implementation of formulated strategy
  • Sales growth coordination and control problems
  • Functional structure RD, finance, etc.
  • Efficient implementation of formulated strategy
  • Sales growth coordination and control problems
  • Multidivisional (M-form) structure business
    units or profit centers
  • Top level management responsible for formulating
    and implementing overall strategies
    acquisitions, restructuring, international and
    cooperative strategies

3
Strategy Implementation Organizing for Action
  • Matrix Structure
  • Based on the concept that horizontal
    relationships across the firm are just as
    important as the traditional reporting
    relationship within a typical functional
    organization

4
Strategy Implementation Organizing for Action
  • Matrix Structure
  • Uncertainty in business environment try to
    spend less time catching up, more time
    responding to external changes
  • Adaptation to change cope with ambiguity, learn
    quickly, gain new competencies
  • Differentiation and specialization across
    business units integration challenge
  • Management - a high degree of empowerment in
    those who compose and organize the activities of
    key teams high levels of trust.

5
Strategy Implementation Organizing for Action
  • Matrix Structure
  • Companies using Matrix Structure
  • International Business Machines
  • IBM Research Labs Worldwide
  • Nokia
  • New structure in 2003 Designed to focus on the
    needs of particular customer segments while
    retaining centralized manufacturing,
    administration and marketing capabilities to
    benefit from economies of scale.
  • Philips
  • General Electric

6
Strategy Implementation Organizing for Action
  • Resource Allocation
  • Attempt to allocate resources according to
    priorities established by annual objectives
  • Financial,
  • Physical
  • Human and
  • Technological

7
Strategy Implementation Organizing for Action
  • Resource Allocation
  • A number of factors inhibit effective resource
    allocation
  • Overprotection of resources,
  • too great an emphasis on short-term financial
    criteria,
  • organizational politics,
  • vague strategy targets,
  • a reluctance to take risks, and
  • a lack of sufficient knowledge

8
Strategy Implementation Organizing for Action
  • Strategy Implementation Action Agenda
  • What to do now versus later?
  • What requires much time and personal attention?
  • What can be delegated to others?

9
Strategy Implementation Organizing for Action
  • Managerial Components of Implementing Strategy
  • Strategic leadership to drive implementation
    forward
  • Shape work environment and corporate culture to
    fit strategy
  • Setting up appropriate award/incentive systems to
    achieve strategic targets
  • Installing necessary information, communication,
    and operating systems to enable personnel to
    carry out roles

10
Strategy Implementation Organizing for Action
  • Managerial Components of Implementing Strategy
  • Instituting best practices and pushing continuous
    improvement
  • Establishing strategy-supporting policies
  • Allocating ample resources to strategy-critical
    activities
  • Building core competencies (resources
    capabilities) for successful strategy execution

11
Strategy Implementation Organizing for Action
  • Elements of Implementation
  • Programs activities, timeframes, and
    deliverables
  • Budgets doesnt necessarily follow program
    development as text suggests
  • Procedures operating procedures set up for each
    key activity (distribution, inventory management,
    pricing strategies, etc.)

12
Strategy Implementation Organizing for Action
  • How strategic activities require cooperation
    among different departments
  • Filling customer orders accurately and promptly
    sales (wins the order) finance (check credit
    terms) production (product goods and replenish
    stock) warehousing (check stock, pick, package
    and ship order) shipping (get product to
    customer).

13
Strategy Implementation Organizing for Action
  • How strategic activities require cooperation
    among different departments
  • Speeding new products to market process is
    fragmented among RD, engineering, purchasing,
    manufacturing , and marketing.

14
Strategy Implementation Organizing for Action
  • How strategic activities require cooperation
    among different departments
  • Obtaining feedback from customers and making
    product modifications to meet their needs
    involves customer service and after-sales
    support, RD, engineering and design, components
    purchasing, manufacturing and assembly, and
    marketing research.

15
Strategy Implementation Organizing for Action
  • The level of autonomy given to certain business
    units, divisions, and projects depends on many
    criteria.
  • The following three are considered the primarily
    criteria
  • volatility of environment
  • low cost versus differentiation focus
  • degree of resource-sharing between functional
    areas

16
Strategy Implementation Organizing for Action
  • Greater autonomy generally associated with
  • Higher the volatility
  • Higher levels of differentiation
  • Lower levels of resource sharing

17
Strategy Implementation Organizing for Action
  • How many possible scenarios are possible based
    on these three criteria?
  • Which scenarios suggest highest and lowest
    autonomy?
  • Can you think of business types that fit into
    each of these scenarios?

18
Strategy Implementation Organizing for Action
  • Why do we have organizational charts?
  • The Matrix structure - Is it outdated?
  • Coordinating product and functional areas, or
    product and geographic areas.
  • Provides coverage, but creates redundancy and
    lacks flexibility.

19
Fluidity of Organizational Charts TimeVisions
intranet-based org chart software
20
Strategy Implementation Organizing for Action
TimeVisions customers include (partial listing)
  • European Council
  • American Airlines
  • Georgia-Pacific
  • Ericsson
  • Bayer Corporation
  • GTE
  • Mercedes-Benz
  • Chevron
  • Colgate-Palmolive
  • Compaq (Houston)
  • Toyota Motor

21
Strategy Implementation Organizing for Action
  • Job Design Issues
  • Rethinking the individual tasks to make them more
    relevant to the company and the employees
  • Try to answer the question Based on what the
    company does (and does well), how should
    individual tasks be assigned and accomplished?

22
Strategy Implementation Organizing for Action
  • Job Design Issues
  • How much task variety should there be?
  • How should teams be used?
  • To what degree should job rotation be used?
  • How should authority in decision-making be
    increased/decreased?
  • What channels of communication should be provided?

23
Strategy Implementation Organizing for Action
  • Application of Technology to Manage
  • Human resources
  • Logistics (in- and out-bound)
  • Knowledge flow
  • Apply technologies based on strategic priorities
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