Building Resources Strengths and Organizational Capabilities

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Building Resources Strengths and
Organizational Capabilities
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Strategy Implementing Tasks

• Build an organization capable of carrying out the
  strategy successfully
• Steer resources to critical activities
• Establish supportive policies and procedures
• Institute best practices and demand continuous
  improvement

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Strategy Implementing Tasks

• Install necessary information, communication,
  e-commerce and operating systems
• Tie rewards to performance
• Create supportive work environment and culture
• Exhibit internal leadership to drive the strategy
  forward

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TOWS Analysis
Opportunities Threats
Strengths Max Max Min Max
Weaknesses Max Min Min Min
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Building a Capable Organization

• Gather a strong management team
• Recruiting and development of employees
• Screen and train well
• Employ job enlargement, job rotation and job
  enrichment
• Foster intrapreneurship
• Provide appropriate incentives

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Building a Capable Organization

• Develop core competencies
• Rarely consist of narrow skills or efforts of a
  single department
• Typically reside in the combined efforts of
  different groups and departments
• Concentrate more effort than rivals on
  strengthening these skills
• Develop broad bases of competence

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Building a Capable Organization

• Developing organizational capabilities
• Develop the ability to do something
• With experience the ability begins to translate
  into a competence
• With success the organization refines the
  capability beyond its rivals it becomes a
  distinctive competence

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Matching Structure with Strategy

• Identify strategy-critical activities
• Outsource non-critical activities
• Partner to gain added capabilities
• Make strategy-critical activities the main
  building blocks
• Delegate authority to business units

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Matching Structure with Strategy

• Ensure coordination amongst units
• Maximize support contributions
• Minimize support costs
• Build organizational bridges with outsiders
• Match structure with strategy

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Williamsons Structures

• Functional or U-form (Unitary) Design
• Organizational members and units are grouped into
  functional departments such as marketing and
  production
• Coordination is required across all departments
• Design approach resembles functional
  departmentalization in its advantages and
  disadvantages

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Williamsons Structures U-Form
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Williamsons Structures

• Conglomerate or H-form (Holding) Design
• Organization consists of a set of unrelated
  businesses with a general manager for each
  business
• Holding-company design is similar to product
  departmentalization
• Coordination is based on the allocation of
  resources across companies in the portfolio
• Design has produced only average to weak
  financial performance has been abandoned for
  other approaches

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Williamsons Structures H-Form
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Williamsons Structures

• Divisional or M-form (Multidivisional) Design
• An organizational arrangement based on multiple
  businesses in related areas operating within a
  larger organizational framework
• The design results from a strategy of related
  diversification
• Some activities are extremely decentralized down
  to the divisional level others are centralized
  at the corporate level
• The largest advantages of the M-form design are
  the opportunities for coordination and sharing of
  resources
• Successful M-form organizations can out perform
  U-form and H-form organizations

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Williamsons Structures M-Form
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Davis and Lawrence

• Matrix Design
• An organizational arrangement based on two
  overlapping bases of departmentalization (e.g.,
  functional departments and product categories)
• A set of product groups or temporary departments
  are superimposed across the functional
  departments
• Employees in the resulting matrix are members of
  both their departments and a project team under a
  project manager
• The matrix creates a multiple command structure
  in which an employee reports to both departmental
  and project managers
• A matrix design is useful when
• There is strong environmental pressure
• There are large amounts of information to be
  processed
• There is pressure for shared resources

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Davis and Lawrence Matrix Design
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Davis and Lawrence

• Matrix Design Advantages
• Enhances organizational flexibility
• Involvement creates high motivation and increased
  organizational commitment
• Team members have the opportunity to learn new
  skills
• Provides an efficient way for the organization to
  use its human resources
• Team members serve as bridges to their
  departments for the team
• Useful as a vehicle for decentralization

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Davis and Lawrence

• Matrix Design Disadvantages
• Employees are uncertain about reporting
  relationships
• Managers may view design as an anarchy in which
  they have unlimited freedom
• The dynamics of group behavior may lead to slower
  decision making, one-person domination,
  compromise decisions, or a loss of focus
• More time may be required for coordinating
  task-related activities

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Hammer and Stanton

• Hybrid Designs
• An organizational arrangement based on two or
  more common forms of organization design
• An organization may have a mixture of related
  divisions and a single unrelated division
• Most organizations use a modified form of
  organization design that permits it to have
  sufficient flexibility to make adjustments for
  strategic purposes

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Mintzbergs Structures

• According to Henry Mintzberg the structural
  configuration of an organization can be
  differentiated by
• Prime Coordinating Mechanism
• Key Part of Organization
• Type of Decentralization 

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Mintzbergs Structures

• Prime Coordinating Mechanism
• Direct Supervision
• One individual is responsible for the work of
  others
• Standardization of work processes
• The content of the work is specified or
  programmed
• Standardization of skills
• Explicitly specifies the kind of training
  necessary to do the work
• Standardization of outputs
• Specifies the results, or output, of the work
•  Mutual adjustment
• Coordinates activities through informal
  communications

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Mintzbergs Structures

• Key Part of Organization
• Strategic apex- Top management and its support
  staff
• Technostructure- Analysts such as industrial
  engineers, accountants, planners, and human
  resource managers
• Operating core- Workers who actually carry out
  the organizations tasks
• Middle line- Middle and lower-level management
• Support staff- Units that provide support to the
  organization outside of the operating workflow
  (for example, legal counsel, executive dining
  room staff, and consultants)

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Mintzbergs Structures

• Types of Decentralization 
• Vertical and horizontal centralization
• Limited horizontal decentralization
• Vertical and horizontal decentralization
• Limited vertical decentralization
• Selective decentralization

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Mintzbergs Structures

• The Simple Structure
• The simple structure uses direct supervision as
  its primary coordinating mechanism, has as its
  most important part its strategic apex, and
  employs vertical and horizontal centralization.
  Relatively small corporations controlled by
  aggressive entrepreneurs, new government
  departments, and medium-sized retail stores are
  all likely to exhibit a simple structure. These
  organizations tend to be relatively young. The
  CEO (often the owner) retains much of the
  decision-making power. The organization is
  relatively flat and does not emphasize
  specialization. Many smaller U-form organizations
  are structured in this fashion. Trilogy Software
  would be an example of a firm using this approach.

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Mintzbergs Structures

• The Machine Bureaucracy
• The machine bureaucracy uses standardization of
  work processes as its prime coordinating
  mechanism the technostructure is its most
  important part and limited horizontal
  decentralization is established. The machine
  bureaucracy is quite similar to Burns and
  Stalkers mechanistic design discussed in Chapter
  12 of Griffins Management, Eighth Edition (p.
  382). Examples include McDonalds and most large
  branches of the U.S. government. This kind of
  organization is generally mature in age, and its
  environment is usually stable and predictable. A
  high level of task specialization and a rigid
  pattern of authority are also typical. Spans of
  management are likely to be narrow, and the
  organization is usually tall. Large U-form
  organizations are also likely to fall into this
  category.

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Mintzbergs Structures

• The Professional Bureaucracy
• The third form of organization design suggested
  by Mintzberg is the professional bureaucracy.
  Examples of this form of organization include
  universities, general hospitals, and public
  accounting firms. The professional bureaucracy
  uses standardization of skills as its prime
  coordinating mechanism, has the operating core as
  its most important part, and practices both
  vertical and horizontal decentralization. It has
  relatively few middle managers. Further, like
  some staff managers, its members tend to identify
  more with their professions than with the
  organization. Coordination problems are common.

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Mintzbergs Structures

• The Divisionalized Form
• The divisionalized form, Mintzbergs fourth
  design, exhibits standardization of output as its
  prime coordinating mechanism, the middle line as
  its most important part, and limited vertical
  decentralization. This design is the same as both
  the H-form and the M-form described earlier.
  Limited and Disney are illustrative of this
  approach. Power is generally decentralized down
  to middle managementbut no further. Hence each
  division itself is relatively centralized and
  tends to structure itself as a machine
  bureaucracy. As might be expected, the primary
  reason for an organization to adopt this kind of
  design is market diversity.

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Mintzbergs Structures

• The Adhocracy
• The adhocracy uses mutual adjustment as a means
  of coordination, has at its most important part
  the support staff, and maintains selective
  patterns of decentralization. Most organizations
  that use a fully-developed matrix design are
  adhocracies. An adhocracy avoids specialization,
  formality, and unit of command. Even the term
  itself, derived from ad hoc, suggests a lack of
  formality. Sun Microsystems is an excellent
  example of an adhocracy.

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Mintzbergs Structures