geography Then integration vertical by 575zVr97

VIEWS: 7 PAGES: 27

									Chapter 11 – Organizational
Structure & Controls




                              11-1
Agenda
1. Introduction to Organizational Structure
2. Simple Structure
3. Functional Structure
4. Multidivisional Structure
5. International




                                              11-2
Organizational Structure
Organizational structure specifies:
    The firm’s formal reporting relationships,
     procedures, controls, authority, and decision-
     making processes
    The work to be done and how to do it, given the
     firm’s strategy or strategies
It is critical to match organizational structure to the
firm’s strategy!




                                                          11-3
Organizational Controls
Organizational controls
     • guide strategy,
     • compare actual with expected results, and
     • suggest corrective actions if necessary.
    Strategic controls
     • Subjective assessment of the fit between what
       the firm might do (opportunities) and what it
       can do (competitive advantage)
    Financial controls
     • Objective assessment of firm performance



                                                       11-4
                             Burgelman’s “Rubber Band Model”
                                                What it Takes
                                                  to Win
                                            Basis of Competitive
                                             Advantage in the
                                                  Industry



             What We SAY                                              What We DO
                                                 CULTURE
     Official Corporate
                                            Internal Selection     Strategic Action
          Strategy
                                              Environment




                                                 Distinctive
Source: Burgelman, Robert A., Strategy is
Destiny: How Strategy Making Shapes a
                                                Competence
Company’s Future, The Free Press, 2002.          of the Firm
                                               What We’ve Got
                                                                                   11-5
Relationships between Strategy
and Structure
Strategy and structure have a reciprocal relationship:
    Structure follows the selection of the firm’s
     strategy, but…
    …once in place, structure can influence current
     strategic actions as well as choices about future
     strategies




                                                         11-6
Evolutionary Patterns of
Strategy and Structure
Firms grow in predictable patterns:
    First by volume
    Then by geography
    Then integration (vertical, horizontal)
    And finally through product/business
     diversification
A firm’s growth patterns determine its structural form




                                                         11-7
Evolutionary Patterns of
Strategy and Structure – cont’d
All organizations require some form of organizational
structure to implement and manage their strategies
Firms frequently alter their structure as they grow in
size and complexity
Three basic structure types:
    Simple structure
    Functional structure
    Multidivisional structure (M-form)




                                                         11-8
Agenda
1. Introduction to Organizational Structure
2. Simple Structure
3. Functional Structure
4. Multidivisional Structure
5. International




                                              11-9
Simple Structure
Owner-manager
    Makes all major decisions directly
    Monitors all activities
Staff
    Serves as an extension of the manager’s
     supervisor authority
Matched with focus strategies and business-level
strategies
    Commonly compete by offering a single product
     line in a single geographic market


                                                     11-10
Simple Structure: Growth Problems
Growth creates:
   Complexity
   Managerial and structural challenges
Owner-managers
   Commonly lack organizational skills and
    experience
   Become ineffective in managing the specialized
    and complex tasks involved with multiple
    organizational functions




                                                     11-11
Agenda
1. Introduction to Organizational Structure
2. Simple Structure
3. Functional Structure
4. Multidivisional Structure
5. International




                                              11-12
Functional Structure
Chief Executive Officer (CEO)
   Limited corporate staff
Functional line managers in dominant organizational
 areas of:
   Manufacturing    Marketing      Engineering
   Accounting       R&D            Human resources
Supports use of business-level strategies and some
 corporate-level strategies
   Single or dominant business with low levels of
    diversification


                                                      11-13
Functional Structure for Cost
Leadership Strategy
                       Notes: • Operations is the main function
                              • Process engineering is emphasized
                                rather than new product R&D
                              • Relatively large centralized staff
                                coordinates functions
                              • Formalized procedures allow for
                                emergence of a low-cost culture
                              • Overall structure is mechanical; job
                                roles are highly structured




                                                              11-14
Functional Structure: Assessment
Differences in orientation among organizational
functions can:
    Facilitate career paths and professional
     development in specialized functional areas
    Impede communication and coordination
    Cause functional-area managers to focus on local
     versus overall company strategic issues
    Increase the need for CEO to integrate decisions
     and actions of business functions




                                                        11-15
Agenda
1. Introduction to Organizational Structure
2. Simple Structure
3. Functional Structure
4. Multidivisional Structure
5. International




                                              11-16
Variations of Multidivisional
Structure




                         Competition between units

    Synergies


                                                     11-17
Multidivisional Structure: Benefits
Three Major Benefits:
  1. Corporate officers are able to more accurately
     monitor the performance of each business, which
     simplifies the problem of control
  2. Facilitates comparisons between divisions, which
     improves the resource allocation process
  3. Stimulates managers of poorly performing
     divisions to look for ways of improving
     performance




                                                        11-18
Cooperative Form of
Multidivisional Structure
                       Related-constrained
                            strategy!




                                       11-19
SBU Form of Multidivisional
Structure
                        Related-linked
                          strategy!




                                     11-20
Competitive Form of
Multidivisional Structure
                            Unrelated
                            strategy!




                                        11-21
          International Strategy (IS)
        &Worldwide (WW) Structure                       (Cont’d)


Three (3) Primary International Strategies:
1. WW geographic area structure to implement the multidomestic
strategy
    Multidomestic Strategy: international strategy in which
     strategic and operating decisions are decentralized to the
     strategic business-unit (SBU) in each country to allow the units
     to tailor products to local markets
    Worldwide (WW) Geographic Area Structure: organizational
     structure emphasizing national interests and facilitates efforts
     to satisfy local or cultural differences (used to implement the
     multidomestic strategy)




                                                                    11-22
Worldwide Geographic Area Structure for
Implementing a Multidomestic Strategy




                                          11-23
        International Strategy (IS)
      &Worldwide (WW) Structure               (Cont’d)


Three (3) Primary International Strategies:
2. WW product divisional structure to implement global
strategy
    Global Strategy: International strategy whereby firm
     offers standardized products across country markets,
     with the competitive strategy being dictated by the
     home office
    Worldwide Product Divisional Structure:
     Organizational structure with centralized decision-
     making authority in the WW division headquarters to
     coordinate and integrate decisions and actions
     among divisional business units (used to implement
     the global strategy)
                                                            11-24
Worldwide Product Divisional Structure for
     Implementing a Global Strategy




                                             11-25
           International Strategy (IS)
         &Worldwide (WW) Structure                            (Cont’d)


Three (3) Primary International Strategies:
3. Combination structure to implement transnational strategy
    Transnational Strategy: International strategy through which the firm
     seeks to achieve both global efficiency and local responsiveness; usually
     implemented through global matrix structure and hybrid global design
    Combination Structure: Organizational structure in which characteristics
     and mechanisms are drawn from both the worldwide geographic area
     structure and the worldwide product divisional structure (used to
     implement transnational strategy)




                                                                           11-26
Hybrid Form of the Combination Structure for
  Implementing a Transnational Strategy




                                          11-27

								
To top