Effective Strategy Implementation Techniques and Organizational Structure Insights
Discover key concepts and structures for successful strategy implementation in strategic management. Learn about the steps of the strategic management process, the importance of implementation, and key questions to consider. Explore the roles of diverse stakeholders in carrying out strategic plans, creating new organizational activities, and organizing for action. Avoid common pitfalls in strategy implementation by addressing communication, alignment, coordination, and cultural aspects.
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Presentation Transcript
CHAPTER 9 Strategy Implementation Part I - Concept and Organizational Structure -
Steps of Strategic Management Process Ch. 4 & 5 Ch. 6, 7, & 8 Ch. 9 & 10 Ch. 11
CHAPTER 9 Strategy Implementation Part I: Concept and Organizational Structure
The greatest strategy is doomed if it is implemented badly. - Bernard Reimann - Strategy Implementation is a key part of strategic management - Poor implementation has been blamed for a number of strategic failures (ex.) problems on post-merger integration : poor communication / unrealistic synergy expectations / structural problem / missing master plan / lost momentum / lack of top management commitment / unclear strategic fit
Key Implementation Questions Who carries out strategic plan? What needs doing for alignment with strategy? How is work (people) coordinated?
WHO More diverse set of people than those who formulate it Large scale implementation plans: VP of functions, Director of divisions/SBUs Specific plant, department, unit plans: plant managers, project managers, unit heads Operational manager down to the First-line supervisors & every employees Communication important Involving people from all organizational levels in the formulation and implementation of strategy better organizational performance
WHAT Programs To create a series of new organizational activities Action oriented (ex) Xerox s Lean Six Sigma as part of a turnaround strategy Budgets to allocate funds to the new activities a real check on the feasibility of strategy Procedures activities to be carried out to complete programs to handle the day-to-day details (ex) Hamburger making procedures at McDonald s
HOW: Organizing for Action How should the company construct the organizational structure? How should the company should lead people to make them work in a desired direction? How to make the cultural environment facilitate strategy implementation?
HOW: Organizing for Action Alfred Chandler Structure follows Strategy New strategy is created New administrative problems emerge Economic performance declines New appropriate structure is invented Profit returns to previous level
Types of Organizational Structure (1) Simple structure entrepreneur: all the important decisions personally and involved in every detail & phase of the organization planning: short range or reactive little formal structure strength flexibility & dynamism weakness extreme reliance on the entrepreneur Functional structure a team of manager who have functional specializations strength concentration & specialization in one industry weakness need more decision-making freedom to manage diversified product lines
Types of Organizational Structure (2) Divisional structure the various units act to optimize their own sales & profits without regard to the overall corporation strength organizing according to its own strategies, alleviating the burden of CEO, accountability of the profits & losses of each division, increasing internal efficiency weakness so large & complex, increasing overhead cost, (de)centralized issue, increasing total cost at the overall corporate level, possibility of information distortion Strategic Business Unit (SBU) Grown too large & complex to be managed through formal programs & rigid systems Groping similar divisions into strategic business units Conglomerate structure Forming BUs based on their financial portfolio BUs are Independent structures that are not related to each other
Basic Organizational Structures Functional structure Divisional structure
Types of Organizational Structure (3) Matrix structure Benefit from divisional structure as well as functional structure Business teams (what / when) + Functions (who / how) Temporary cross-functional task forces permanent product/brand management strength Check and balance Efficient in cost management weakness Dual chain of command Complicated reporting line
Types of Organizational Structure (4) in-house business functions are outsourced to external organizations through contracts: hollow corporation a series of project groups or collaborations Network structure (virtual organization) need for innovation & quick response under unstable environment strength Increasing flexibility & adaptability to cope with rapid technological change and shifting patterns of international trade & competition concentrating on its distinctive competencies weakness numerous potential partners can be a source of problem no internal synergy by combining activities overspecialized on only a few functions, it runs the risk of
Summary of organizing No complete or ideal organizational design Every basic organizational structure has its own weakness as well as strength Hybrid structure - combinations of basic structures - basic structure + project team / task force / venture team
Three questions on Ch. 9 1. What would be the key elements of strategy implementation? 2. Explain the meaning of the following: 1) Structure follows strategy 2) Staffing follows strategy 3. What kind of organizational structure do you want to design for your company?
[Practice Questions] Stone Finch, Inc.: Young Division, Old Division 1. What is Stone Finch Jim Billings' strategy? 2. How would you rate Jim Billings' performance as CEO? What is his leadership style? 3. What do you think of the concept of an entrepreneurial subsidiary? Do you think this is a concept that can solve the contradictory situation of managing existing business/products and innovations at the same time? 4. What are some of the most critical challenges Jim Billings is facing right now? How serious are these problems? How quickly does he need to take action? Why? 5. What should Jim Billings do to solve the problem?
