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Strategy & Structure – 13 Nov 10 – Group 3 Strategy and Coordination If a firm’s strategy is to be carried out, or implemented, individuals working within the firm must know about the strategy and its operational requirements of tasks and their coordination. Coordinating people and tasks is difficult even when everyone cooperates. Problems of incentives and controls further complicate the problem of coordinating cooperative agents to carry out the firm’s strategy. Firm’s Strategy Coordination
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SM Sec.1 Dated 13/11/10
STRATEGY & STRUCTUREGroup 3
Strategy and StructureStrategy & Structure – 13 Nov 10 – Group 3
www.themegallery.com
• Organization Structure
• Firm’s Structure
Concerns arrangements, both formal & informal, by which a firm divides up its critical tasks, specifies how its managers and
employees make decisions, establishes routines and information flows to support operations so as to link opportunities in the
environment wit its resources and capabilities.
Reflects the ways in which the firms solve problems of information and coordination implied by its strategic decisions.
Strategy & Structure – 13 Nov 10 – Group 3
Strategy and Coordination
If a firm’s strategy is to be carried out, or implemented, individuals working within the
firm must know about the strategy and its operational requirements of tasks and their
coordination.
Coordinating people and tasks is difficult even when everyone cooperates. Problems of incentives and controls further complicate the problem of coordinating cooperative agents to carry out the firm’s strategy.
Firm’s Strategy
Coordination
Organization DesignStrategy & Structure – 13 Nov 10 – Group 3
Organization Design typically involves 2 steps1. Organize simple tasks for simple work group2. Link work groups and their activities together into
complex hierarchies.
How to structure simple tasks? 1. Individually2. Self-managed Team3. Hierarchy of Authority
How to structure simple task?Strategy & Structure – 13 Nov 10 – Group 3
Individually- Members of the work group are treated as if they were
independent and receive incentives based on individual actions and outcomes.
Self-managed Team- A collection of individuals, each member works with
others to set and pursue common objectives, with individual rewarded, in part, on the basis of group
performance.
Hierarchy of Authority- One member of the group monitors and coordinates the
work of the other members.
Complex HierarchyStrategy & Structure – 13 Nov 10 – Group 3
Large firms require complex hierarchy which is a structure involving multiple groups & multiple levels of groupings.
Complex Hierarchy involves 2 problems: Departmentalization:
-Identify formal groupings in the organization, may be organized by varied dimensions e.g. common tasks or functions, inputs,
outputs, geographic location, time of work, etc. Coordination & control of activities:
-Coordination involves the flow of information to facilitate subunit decisions that are consistent with each other and with
organization objectives.-Control involves the location of decision-making rights an d
rule-making authority within the hierarchy.
How to develop coordination within firm?Strategy & Structure – 13 Nov 10 – Group 3
There are 2 approaches to develop coordination within firms:
Autonomy (Self-containment):-Emphasize autonomy or self-containment of work units to
reduce the needs of coordination across units
Lateral Relations:-Emphasize the importance of strong lateral relations
across work groups.
Centralization vs Decentralization?Strategy & Structure – 13 Nov 10 – Group 3
The allocation of authority within a firm is typically considered in terms of;
Centralization:-As decisions are made at higher levels within a firm’s
hierarchy, the firm is said to be more centralized regarding those decision.
Decentralizations:-As certain decisions are made at lower levels, the firm is
more decentralized regarding those decisions.
4 Basic Types of Large OrganizationsStrategy & Structure – 13 Nov 10 – Group 3
www.themegallery.com
U-FORM
M-FORM
MATRIX
NETWORK
The Unitary Functional Structure
The Multi-Divisional Structure
The Matrix Structure
The Network Structure
The U-Form StructureStrategy & Structure – 13 Nov 10 – Group 3
The U-Form allows a specialization of labor to gain economies of scale in manufacturing, marketing and distribution.
The M-Form StructureStrategy & Structure – 13 Nov 10 – Group 3
The M-Form -Remove top management from involvement in operational details-Allow top management to concentrate on strategic decisions & long range planning-Division managers monitor operations & are rewarded in basis of overall divisional performance
The Matrix StructureStrategy & Structure – 13 Nov 10 – Group 3
The Matrix Structure involves overlapping hierarchies and are
necessary in situations where there are
conflicting decision demands and severe
constraints on managerial resource.
The Network StructureStrategy & Structure – 13 Nov 10 – Group 3
The Network Structure focuses on individuals
rather than positions and is the most flexible type. Recent developments in networking technologies
and modular product designs have greatly
expanded the potential applications of network
organizations.
NotesStrategy & Structure – 13 Nov 10 – Group 3
Only a limited number of structural forms are efficient because the characteristics of structures share
complementarities. Thus, it is difficult to mix and match structural types, and performance may decline
if mixing is attempted.
The best organization structure for a particular firm depends on the specific circumstances it faces,
although managers may differ on the environmental situation facing the firm or hot the firm should address
to it.
NotesStrategy & Structure – 13 Nov 10 – Group 3
The approach that structure follows strategy has been applied to firms that compete internationally.
Multinationals have discovered the need to balance responsiveness to local conditions which centralization to achieve global economics. This is the transnational strategy and it is becoming associated with flexible
organizations that combine matrix and network structures.
SM Sec.1 Dated 13/11/10
THANK YOUGroup 3