SOM497 Business Policy

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SOM497 Business Policy Strategy
CHAPTER 9 Strategy Implementation Organizing
for Action
STRATEGIC MANAGEMENT BUSINESS POLICY 10TH
EDITION THOMAS L. WHEELEN J. DAVID HUNGER
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Strategy Implementation

• What is it?
• How is it achieved?
• Differs from Strategy Formulation
• Key Implementation Questions (for strategy
  makers)
• Who carries out strategic plan?
• What needs doing for alignment w/ strategy?
• How is work coordinated?

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What must be done? (To align firms operations)

• Programs make a strategy action oriented
• Always evaluating and monitoring impact from new
  programs on existing organization
• Feasibility
• Sequence of execution
• Location
• Pace nature of change
• Stakeholder evaluations
• Budgets statement of firms programs in terms of
  money required
• Procedures a list of steps that describe how
  tasks/job are to be done

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What must be done?

• Achieving Synergy for a divisional corporation
• benefits from greater ROI for each division
  working together than if each division were
  independent
• Forms
• Shared know-how
• Coordinated strategies
• Shared tangible resources
• Economies of scale or scope
• Pooled negotiating power
• New business creation

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How is strategy to be implemented? (via
organization)

• Firms should be appropriately structured
• Structure follows strategy
• New strategy is created
• New administrative problems emerge
• Economic performance declines
• New appropriate structure is invented
• Profit returns to previous level

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How is strategy to be implemented?

• Common structural development pattern of growth
• Stages of Corporate Development
• Stage I Simple structure
• Stage II Functional structure
• Stage III Divisional structure
• Stage IV Beyond SBUs

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Stages of Corporate Development

• Stage I Simple structure
• Entrepreneur tends to be the owner of firm
• Owner makes all the decisions
• Managerial functions are limited
• Little formal structure
• Weakness Crisis of leadership

• Stage II Functional structure
• When firm grows and need a change in managerial
  style
• CEO and limited corporate staff
• Team of functional line managers
• Tends to concentrate/specialize in one industry
• Weakness Crisis of Autonomy

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Stages of Corporate Development

• Stage III Divisional structure
• Firm has several product lines in several
  industries that need specialists in regards to
  product/market distinctions
• CEO and greater corporate staff in central
  headquarters
• There are decentralized operating divisions
• Weakness Crisis of control

• Stage IV SBUs Matrix
• Strategic business units (SBUs)
• Modification of Divisional structure
• SBU has its own business strategy
• Weakness objectives competitors can be
  different from those of the parent company
• Matrix Structure (next slide)

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Advanced Organizational Structures

• Matrix Structure
• Structure combines both functional specialization
  and business product/project specialization
• Weakness Pressure (e.g. multiple superiors,
  intensity for innovation)

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Organizational Life Cycle
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Advanced Organizational Structures

• Future Organizational Structure
• Decentralized
• Small-scale SBUs
• Reengineering
• Stronger capabilities
• Collaborative
• Networks
• Empowerment
• Electronic information
• Accountability
• e-commerce
• Cellular

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How is strategy to be implemented?(via
organization)

• Job Design to implement strategy
• Job enlargement
• Job rotation
• Job enrichment

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International Issues in Strategy Implementation

• Multinational corporations (MNCs)
• Highly developed international firm
• Deep involvement throughout world
• The design of organizations structure is affected
  by
• The companys development stage in international
  activities
• The types of industries the companys involved in
• Some issues
• Should strategic alliances be used as a
  complement or substitute for internal functions?
• Should authority be centralized or decentralized?
• Product group structure
• Geographic area structure

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Next Class Cola Wars

• Handouts (x2) have been distributed to the class
• If you need the handouts, pick them up after
  class or print them off the course website
• But wait

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Mid-Term Review

• Format will include
• Multiple Choice
• Fill-in the blank
• SWOT
• Porters Five Forces(Hint memorize all 5
  forces)
• Topics covered are
• (Will be discussed during class)