Organizing for Action Chapter 9 Learning Objectives Develop programs budgets and procedures to implement strategic change Understand the importance of achieving synergy during strategy implementation ID: 719272
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StrategyImplementation:Organizing for Action
Chapter 9Slide2
Learning ObjectivesDevelop programs, budgets and
procedures to
implement strategic change
Understand the importance of achieving synergy during strategy implementationList the stages of corporate development and the structure that characterizes each stageIdentify the blocks to changing from one stage to another
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Learning ObjectivesConstruct matrix and network structures to support flexible and nimble
organizational strategies
Decide
when and if programs such as reengineering, Six Sigma and job redesign are appropriate methods of strategy implementationUnderstand the centralization versus decentralization issue in multinational corporations
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Strategy ImplementationStrategy implementationthe sum total of all activities and choices required for the execution of a strategic plan
Who
are the people to carry out the strategic plan?
What must be done to align company operations in the intended direction?How is everyone going to work together to do what is needed?
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Common Strategy Implementation Problems
Took more time than planned
Unanticipated major problems
Ineffective coordinationCompeting activities and crises created distractionsEmployees with insufficient capabilitiesLower-level employees were inadequately
trainedUncontrollable external environmental factors
Poor departmental leadership and direction
Inadequately defined implementation tasks and activities
Inefficient information system to monitor activities
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Developing Programs, Budgets and Procedures
Program
a
collection of tactics where a tactic is the individual action taken by the organization as an element of the effort to accomplish a planThe purpose of a program or a tactic is to make a strategy action-oriented.Copyright © 2015 Pearson Education, Inc.
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Timing Tactics: When to CompeteTiming tactic
deals
with
when a company implements a strategyFirst moverfirst company to manufacture and sell a new product or serviceLate movers may be able to imitate the technological advances of others, keep risks down by
waiting until a new technological standard or market is established and take advantage of
the first
mover’s natural inclination to ignore market segments
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Market Location Tactics: Where to Compete
Market location tactic
deals with where a company implements a strategy.
Offensive tactic usually takes place in an established competitor’s market locationDefensive tactic usually takes place in the firm’s own current market position as a defense against possible attack by a rivalCopyright © 2015 Pearson Education, Inc.
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Offensive Tactics
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Defensive TacticsRaise structural barriersIncrease expected retaliationLower the inducement for attack
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Developing Programs, Budgets and Procedures
Planning a
budget
is the last real check a corporation has on the feasibility of its selected strategy.Proceduresdetail the various activities that must be carried out to complete a corporation’s programsStandard operating proceduresCopyright © 2015 Pearson Education, Inc.
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Achieving SynergySynergyexists for a divisional corporation if the return on investment is greater than what the return would be if each division were an independent business
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Forms of Synergy
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Structure Follows StrategyStructure Follows Strategychanges in corporate strategy lead to changes in organizational structure
New strategy is created
New administrative problems emerge
Economic performance declinesNew appropriate structure is inventedProfit returns to its previous level
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Factors Differentiating Stage I, II and III Companies
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Stages of Corporate Development
Simple Structure
Flexible and dynamic
Functional StructureEntrepreneur is replaced by a team of managersDivisional StructureManagement of diverse product lines in numerous industriesDecentralized decision makingBeyond SBU’sMatrix
Network
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Blocks to Changing StagesInternalLack of resources
Lack of ability
Refusal of top management to delegate
ExternalEconomic conditionsLabor shortagesLack of market growthCopyright © 2015 Pearson Education, Inc.
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Blocks to Changing Stages(Entrepreneurs)
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Organizational Life CycleOrganizational life cycledescribes how organizations grow, develop and decline
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Advanced Types of Organizational Structures
Matrix structures
functional and product forms are combined simultaneously at the same level of the organization
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Matrix StructureCopyright © 2015 Pearson Education, Inc.
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Figure 9-1Slide22
Advanced Types of Organizational Structures
Conditions for
m
atrix structures include:Ideas need to be cross-fertilized across projects or productsScarcity of resourcesAbilities to process information and to make decisions needs to be improvedCopyright © 2015 Pearson Education, Inc.
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Advanced Types of Organizational Structures
Phases of
m
atrix structure development Temporary cross-functional task forces
Product/brand managementMature matrix
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Advanced Types of Organizational Structures
Network structure
virtual
elimination of in-house business functionsVirtual organization composed of a series of project groups or collaborations linked by constantly changing nonhierarchical, cobweb-like electronic networks
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Network StructureCopyright © 2015 Pearson Education, Inc.
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Figure 9-1Slide26
Cellular/Modular Organization: A New Type of Structure?Cellular/Modular structurecomposed of cells (self-managing teams, autonomous business units, etc.) which can operate alone but which can interact with other cells to produce a more potent and competent business mechanism
Beginning
to appear in firms that are focused on
rapid product and service innovationCopyright © 2015 Pearson Education, Inc.
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Reengineering and Strategy Implementation
Reengineering
the radical redesign of business processes to achieve major gains in cost, service or time
effective program to implement a turnaround strategyCopyright © 2015 Pearson Education, Inc. 9-
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Principles for ReengineeringOrganize around
outcomes
, not tasks
Have those who use the output of the process perform the processSubsume information-processing work into real work that produces informationTreat geographically-dispersed resources as though they were centralized
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Principles for ReengineeringLink parallel activities
instead of integrating their results
Put the
decision point where the work is performed and build control into the processCapture information once and at the sourceCopyright © 2015 Pearson Education, Inc.
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Six SigmaSix Sigmaanalytical method for achieving near perfect results on a production line
emphasis
is on reducing product variance in order to boost quality and
efficiencyLean Six Sigma includes the removal of unnecessary steps in any process and fixing those that remainCopyright © 2015 Pearson Education, Inc.
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Process of Six Sigma
Define
a process where results are
poorer than averageMeasure the process to determine current performanceAnalyze the information to pinpoint where things are going wrong
Improve the process and eliminate the error
Establish
controls to prevent future defects from occurring
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Designing Jobs to Implement Strategy
Job design
the study of individual tasks in an attempt to make them more relevant to the company and to the employees
Job enlargementcombining tasks to give a worker more of the same type of duties to performJob rotationmoving workers through several jobs to increase varietyCopyright © 2015 Pearson Education, Inc.
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Designing Jobs to Implement Strategy
Job characteristics
using task characteristics to improve employee motivation
Job enrichment altering the jobs by giving the worker more autonomy and control over activitiesCopyright © 2015 Pearson Education, Inc. 9-33Slide34
International Issues in Strategy Implementation
Multinational corporation (MNC)
a highly developed international company with a deep involvement throughout the world, plus a worldwide perspective in its management and decision makingCopyright © 2015 Pearson Education, Inc.
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Drivers for Strategic Fit among Alliance Partners
Partners must agree on
values
and visionAlliance must be derived from business, corporate and functional strategy
Alliance must be important to partners, especially top management
Partners must be
mutually dependent
for achieving objectives
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Stages of International Development
Stage 1
: Domestic company
Stage 2: Domestic company with export divisionStage 3: Primarily domestic company with international divisionStage 4: Multinational corporation with multidomestic emphasis
Stage 5: Multinational corporation with global emphasis
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Centralization versus DecentralizationProduct group structure
enables the company to introduce and manage a similar line of products around the world
enables the corporation to
centralize decision making along product lines and to reduce costsGeographic area structureallows the company to tailor products to regional differences and to achieve regional coordinationCopyright © 2015 Pearson Education, Inc.
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Geographic Area Structurefor an MNC
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Figure 9-2Slide39
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