1. STRATEGIC MANAGEMENT AND BUSINESS POLICY
Structural implementation
(c) Dr. Azhar Kazmi 2008

2. STRATEGIC MANAGEMENT AND BUSINESS POLICY
Strategy Implementation
Activating Strategies ( Last Session)
Structural Implementation (This Session)
Behavioral Implementation (Next)
Functional and Operational Implementation (4th session)
(c) Dr. Azhar Kazmi 2008

3. Learning objectives - 1
Discuss organisation structure from the viewpoint of strategy implementation
Examine how the different stages of the development of organisations help to determine structure
Describe the different types of structures used for strategy implementation
Observe the emerging forms of structures being devised to meet emerging challenges
Review the subject matter of organisational design and organisational change in the context of strategy implementation
(c) Dr. Azhar Kazmi 2008

4. Learning objectives - 2
Describe the structures used for implementing different types of business strategies
Describe the structures used for implementing different types of corporate strategies
Study the evolution of systems and processes within organisations
Establish linkages between the characteristics of information, control and reward systems that fit the requirements of strategies being implemented
(c) Dr. Azhar Kazmi 2008

5. Structural considerations
From a strategy implementation standpoint, an organisation structure is the arrangement of tasks and sub-tasks required to implement a strategy.
Organisation structure specifies three key components as below.
It identifies formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers.
It specifies the grouping of individuals into departments and of departments into the total organisation.
It consists of design of systems to ensure effective communication, coordination, and integration of efforts across departments.
(c) Dr. Azhar Kazmi 2008

6. Vertical and horizontal structures
Vertical structure dominant:
Specialised tasks
Hierarchy of authority
Rules and regulations
Vertical communication
and formal reporting systems
Centralised decision making
Emphasis on efficiency
Horizontal structure dominant:
Shared tasks
Flexible authority
Few rules and regulations
Horizontal communication and sharing of information
Decentralised
decision-making
Emphasis on learning
(c) Dr. Azhar Kazmi 2008

7. Interrelationship between structure and strategy
determines
affects
(c) Dr. Azhar Kazmi 2008

8. Why is structural implementation needed?
Strategic plan is implemented
New strategies put in place
Performance declines
Effectiveness is reduced
Implementation of new strategies
Structure is changed
Performance improves
Mismatches occur
(c) Dr. Azhar Kazmi 2008

9. Environment, strategy, structure, and effectiveness
(c) Dr. Azhar Kazmi 2008

10. Stages of development of organisations
Stage I organisations-Small scale, owner-manager,
Stage II organisations –bigger than I, bigger scope of business, usually functional based,
Stage III organisations-Large, widely scattered, having plants and units at different places, divisional structure
Stage IV organisations-Huge, multi-product, multi- plant set up, many SBU
(c) Dr. Azhar Kazmi 2008

11. Types of organisational structures
Entrepreneurial
Functional
Divisional
SBU
Matrix
Network
Other types of structures:
Product-based, customer-based, process-based, geographic, and entrepreneurial structures
(c) Dr. Azhar Kazmi 2008

12. Entrepreneurial Structure.
(c) Dr. Azhar Kazmi 2008

13. Functional Structure .
(c) Dr. Azhar Kazmi 2008

14. Divisional Structure .
(c) Dr. Azhar Kazmi 2008

15. SBU Organisational Structure.
(c) Dr. Azhar Kazmi 2008

16. Matrix Structure .
(c) Dr. Azhar Kazmi 2008

17. Network Organization .
(c) Dr. Azhar Kazmi 2008

18. Emerging forms of structures
Horizontal organisations are based on structure that corresponds to the process of providing product or service to the customer rather than the functions that the organisations perform.
Delaminated matrices are combinations of horizontal organisations with functional structure.
Mechanistic structures are rigid, hierarchical, suited to stable conditions while organic structures are flexible arrangements, adapting to conditions of rapid change and innovation.
The structure of an organisation may consist of the characteristics of mechanistic and organic structures in different parts making it an ambidextrous organisation structure
(c) Dr. Azhar Kazmi 2008

19. Interorganisational relationship of a biotechnology consortium
(c) Dr. Azhar Kazmi 2008

20. Organisational design and change
Organisation design has two dimensions:
Structural dimensions-Formalisation, Specialization, Hierarchy, Centralization, personnel ratios,
Contextual dimensions-Environment, Goals& Strategy, Culture, Technology, Size
Organisational change has two dimensions:
Structural changes
Accompanying behavioural changes
(c) Dr. Azhar Kazmi 2008

21. Steps in organisation design
Identification of key activities necessary to be performed for the achievement of objectives and realisation of mission through the formulated strategy.
Grouping of activities that are similar in nature and need a common set of skills to be performed.
Choice of structure that could accommodate the different groups of activities.
Creation of departments, divisions, etc. to which the group of activities could be assigned.
Establishing interrelationship between different departments for the purpose of coordination and communication.
(c) Dr. Azhar Kazmi 2008

22. Organisation design for business strategies
CEO
Fin
HRM
Mktg
Oper
Centralised staff
R&D
Structure for attaining cost leadership
Structure for attaining differentiation
(c) Dr. Azhar Kazmi 2008

23. Suggested structure for implementing related diversification
CEO PR
Legal
Corporate Finance
Corporate HRM
Corporate Marketing
Corporate Operation
Strategic Business Unit D
Strategic Business Unit C
Strategic Business Unit B
Strategic Business Unit A
(c) Dr. Azhar Kazmi 2008

24. Suggested structure for implementing unrelated diversification
CEO
Corporate Finance
Corporate HRM
Corporate Legal
Corporate PR
Division A
Division B
Division C
Division D
(c) Dr. Azhar Kazmi 2008

25. Structures for internationalisation strategy
Global
Strategy
Global Product Structure
International
International division structure
Transnational
Global Matrix Structure
Multidomestic
Global Geographic Structure
Pressures for local responsiveness
Pressures for cost reduction
(c) Dr. Azhar Kazmi 2008

26. Evolution of systems and processes within organisations
Defining the major tasks required to implement a strategy
Grouping tasks on the basis of common skill requirements or activities in value chain
Sub-division of responsibility and delegation of authority to perform tasks
Coordination of divided responsibility
Design and administration of the information system
Design and administration of the control system
Design and administration of the appraisal system
Design and administration of the motivation system
Design and administration of the reward system
Design and administration of the development system
Design and administration of the planning system.
(c) Dr. Azhar Kazmi 2008

27. Generic strategies and key dimensions of computerised information system
Stability
Rigid policy stance
Mainframe computers
Transaction processing systems
Retrenchment 
Growth
Flexible policy stance
Microcomputers
Decision support systems
Adapted from J.C. Camillus and A.L. Lederer "Corporate strategy and the design of computerised information systems" in Sloan Management Review, Spring 1985, pp
(c) Dr. Azhar Kazmi 2008

28. The control cycle
(c) Dr. Azhar Kazmi 2008

29. ____________________________________________________________________________
Predominant system characteristics vis-à-vis strategic continuum and structural alternatives
Nature of economy
===============
Environmental characteristics
Strategic continuum
Structural alternatives
Information system
Control system
Reward system
Controlled, protected, and regulated
===============
Certain, stable, and predictable
Stability / controlled growth
Entrepreneurial / Functional
Efficiency-orientation
Formal-direct / mechanistic
Efficiency-based; monetary, informal, internal focused
Globalised, liberalised, and privatised
=================
Unstable, volatile, and bewildering
Focused expansion / selective divestment
Divisional / SBU / alternate and new forms
Decisional-orientation
Informal-indirect/ organic
Non-monetary, formal, external-focused
(c) Dr. Azhar Kazmi 2008

30. Next Session
Behavioral Implementation Reading: Chapter-12 Case Study: Infosys Technologies
(c) Dr. Azhar Kazmi 2008