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SCOTT BEARDENJOHN BEDDINGFIELD
LAUREN FRICKPATRICK LEWIS
TREVOR MCDONALD
Foundations of Strategy: Realizing Strategy
Specialization and Division of Labor
Specialization- division of labor into separate tasksSmith’s pin maker example
-produced 4800 pins per person each day compared to 20 pins per person each day
The Cooperation Problem
Agency Relationship-exists when one party (the principal) contracts with another party (the agent) to act on behalf of the principle.
Bureaucratic controls go hand in hand with hierarchy. -Critics of bureaucracy argue that bureaucratic control reduces the extent to which those lower down the organization can exercise their personal judgment.
Performance incentives Shared Values
Coordination Problem
Unless individuals can find ways of coordinating their efforts, production doesn’t happen. Rules and instructions- Range of duties required by their employer Routines- Where activities are performed recurrentlyMutual adjustment - Individuals engaged in related tasks
Organizational Design
Hierarchy and CoordinationHierarchies are a flexible way of coordinating
activities because they allow specialist units to act independently of each other
Organizational Design Cont.
Defining organizational units Tasks
Grouping based on job Maintenance dept, machine shop, etc.
Products Department store
Grocery, Drug, Produce, etc.
Geography Multiple local markets
Process Sequence of interlinked activities Product development, manufacturing, sales, etc.
How to decide which unit to use to define organizational units: The fundamental issue is achieving the coordination necessary to integrate the efforts of different individuals
Alternative Structural Forms
The Functional Structure Single-business firms structured this way Grouping this way promotes learning Different functions create own identity
Limited scope for decentralization Product Expansion problems
The Multidivisional Structure Response to coordination problems of diversification High potential for decentralized decision making Operating decisions made at divisional level
Strategies, Planning, Budgeting at Corporate level
Matrix Structures Multiple dimensions
Multiple products, multiple functions, multiple locations
Beyond Hierarchical Structures
Adhocracies: Flexible, spontaneous coordination and collaboration around
problem solving and other non-routine activities Team-based and project-based organizations:
Project based companies such as construction, consulting, and engineering
Teams must be interacting closely and rely on problem solving and mutual adjustment
Also should follow set rules and routines to ensure consistencyNetworks
Multiple firms located in a small geographic area working closely in their specialized piece of a complex product
Microelectronics in Silicon Valley
Management Systems
Information Systems Key to success in recent push of decentralization of authority in organizations Information on performance of every employee must be readily available
Strategic Planning Systems Statement of the goals Set of assumptions or forecasts Qualitative statement
How the business will be changing in relation to past BP after oil spill
Specific action steps Set of financial projections
Financial Planning and Control Systems Two main budgets created
Capital expenditure budget Operating budget
Human Resource Management Systems Sets goals, creates incentives and monitors performance at the level of the
individual employee
Corporate Culture
Organizational CultureCorporate Culture Describing and Classifying Cultures
Amazon
Diversification Electronics Software Apparel Furniture
Take-Away’s
Strategy formulation and implementation are inextricably linked
Forces cause companies to seek new organizational structures and management systems
Organizational culture plays a role in the way strategy is realized
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