1. 1 Strategy Implementation  What must we do to put the strategy in place, execute it proficiently, and produce good results?  Creating FITS between strategy and external environment and creating FITS inside the organization  Control, coordination, and motivation issues

2. 2 Figure 10.1: The Eight Components of the Strategy Execution Process The Action Agenda for Executing Strategy

3. 3 Figure 10.2: The Three Components of Building a Capable Organization

4. 4 Matching Organization Structure to Strategy  Few hard and fast rules for organizing  The One Big Rule: The role and purpose of the organization structure is to support and facilitate good strategy execution!  Each firm’s structure is idiosyncratic, reflecting  Prior arrangements and internal politics  Executive judgments and preferences about how to arrange reporting relationships  How best to integrate and coordinate work effort of different work groups and departments Vice President CEO

5. 5 What is Structure?  How the firm is organized?  Includes  Reporting relationships  How coordination is achieved  Authority  Degree of centralization  Degree of integration  Formalization  Used to control, coordinate, and motivate employees and the activities they perform

6. 6 Figure 10.3: Structuring the Work Effort to Promote Successful Strategy Execution

7. 7 Important Implications of Structure  Appropriate structure depends on the firm’s strategy  Changes in strategy typically require a new structure  New strategy often involves different skills, different key activities, different staffing and organizational requirements  Hence, a new strategy signals a need to reassess the organization structure

8. 8 Perspectives on Organizing  All basic organization designs have strategy- related strengths and weaknesses  No ideal organization design exists  To do a good job of matching structure to strategy  Pick a basic design  Modify as needed  Supplement with appropriate coordinating, networking, and communication mechanisms to support effective execution of the strategy

9. 9 Structural Arrangements: The Basics Simple Functional and process specialization Geographic organization Multidivisional Strategic business units

10. 10 A Traditional Functional Organizational Structure General Manager Research & Development Manufacturing Human Resources EngineeringMarketing Finance & Accounting

11. 11 A Process-Oriented Functional Structure General Manager Foundry & Castings Screw Machining Inspection Customer Service Milling & Grinding Finishing & Heat Treating Loading & Shipping Billing & Accounting

12. 12 Functional Structure for Cost Leadership Strategy General Manager Centralized Staff MarketingPersonnel EngineeringOperations Accounting Operations is main function Operations is main function Process engineering is emphasized over R&D Process engineering is emphasized over R&D Large centralized staff Large centralized staff Formalized procedures Formalized procedures Structure is mechanical, job roles highly structured Structure is mechanical, job roles highly structured

13. 13 Operations HumanResources Functional Structure for Differentiation Strategy General Manager and Limited Staff Marketing New Product R&D Marketing is the main function for tracking new product ideas Marketing is the main function for tracking new product ideas New product R&D is emphasized New product R&D is emphasized Most functions are decentralized Most functions are decentralized Formalization is limited to foster change and promote new ideas Formalization is limited to foster change and promote new ideas Overall structure is organic; job roles are less structured Overall structure is organic; job roles are less structured R&D FinanceMarketing

14. 14 A Geographic Organizational Structure CEO Corporate Staff GM Europe GM Latin America GM North America GM Asia Pacific GM Central Asia & Africa Marketing & Distribution Production Engineering & Prod. Design District Staff

15. 15 A Multidivisional Organizational Structure CEO Corporate Services GM Business B Functional/Process Departments GM Business A Functional/Process Departments GM Business C Functional/Process Departments

16. 16 An SBU Organization Structure CEO Corporate Services Group VP SBU II Strategically Related Business Units Group VP SBU I Strategically Related Business Units Group VP SBU III Strategically Related Business Units

17. 17 Options to Supplement the Basic Organization Structure  Coordinating mechanisms  Cross-functional task forces, special project teams, self-contained work teams, etc…  Instituting networking and communications arrangements that support implementation