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. Components of the Strategy Execution/Implementation Process
The Action Agenda for Implementing Strategy

3. The Strategic Management Process

4. Chapter 11: Organizational Structure (OS) and Controls
Overview:
Define organizational structure and controls
Describe the relationship between strategy & structure
Describe the functional structures for business-
level strategies
Describe three versions of the multi-divisional (M-form) structure for different diversification strategies
Describe structures implementing three international strategies
Describe the differences between strategic, financial and behavioral controls

5. Organizational Structure & Controls
Organizational structure and controls provide framework within which strategies are used
Different structures and controls are required to effectively implement different strategies
Must match structure and controls to strategy and strategy implementation
Fit between strategy and structure affects above average returns and performance
Better fit = Better performance

6. Organizational Structure & Controls
Specifies the firm’s formal reporting relationships, procedures, controls, authority, and decision-making processes
In other words, specifies work to be done and how to do it
Effective use of firm’s strategies facilitated when structure is properly aligned
Structure should allow for both
Structural stability: Capacity firm requires to consistently and predictably manage its daily work routines
Structural flexibility: Opportunity to explore competitive advantages firm will need to be successful in the future
Structure is a critical component of effective strategy implementation

7. Organizational Structure & Controls
Some structural characteristics defined
Specialization
Concerned with the type and number of jobs required to complete work
Centralization
Degree to which decision-making authority is retained at higher managerial levels
Formalization
Degree to which formal rules and procedures govern work
Other structural characteristics
Authority, Responsibility, Degree of Integration, how Coordination is achieved, Reporting relationships, Standardization

8. The Relationship Between Strategy and Structure
Modifying current strategy or selecting a new one calls for changes to organizational structure
Reciprocal relationship - change to one causes change in the other
No one structure is superior to the others
No best or optimal structure for all firms
Strategy-structure fit can lead to a competitive advantage and above average returns
Structure must match strategy
Structural choice should be based on control, coordination, and motivation issues
Several structure forms can be used to implement strategies

9. Strategy and Structure
Three major types of organizational structures
Simple
Owner-manager makes all major decisions and monitors all activities
Informal relationships, few rules, limited task specialization
Matched with focus strategies and business-level strategies
As firm grows more complex, need to add layers and controls
Functional
Multidivisional (M-form)

10. Strategy and Structure Growth Pattern

11. Functional Structure for Implementing a Cost Leadership Strategy

12. Functional Structure for Implementing a Differentiation Strategy

13. Three Variations of the Multidivisional Structure

14. Cooperative Form of the Multidivisional Structure for Implementing a Related Constrained Strategy

15. SBU Form of the Multidivisional Structure for Implementing a Related Linked Strategy
Structural integration among divisions within SBUs, but independence across SBUs
Strategic planning may be the most prominent function in headquarters for managing the strategic planning approval process of SBUs for the president
Each SBU may have its own budget for staff to foster integration
Corporate headquarters staff serve as consultants to SBUs and divisions, rather than having direct input to product strategy, as in the cooperative form

16. Competitive Form of the Multidivisional Structure for Implementing an Unrelated Strategy

17. Additional Characteristics of the Multidivisional Structure (Table 11

18. Worldwide Geographic Area Structure for Implementing a Multidomestic Strategy

19. Worldwide Product Divisional Structure for Implementing a Global Strategy
The HQ circle indicates centralization to coordinate information flow among worldwide divisions
Corporate HQ uses many intercoordination devices to facilitate global economies of scale and scope
Corporate HQ also allocates financial resources in a cooperative way
High formalization, global integration

20. Hybrid Form of the Combination Structure for Implementing a Transnational Strategy
Assets and operations may be centralized/decentralized
Functions may be integrated/nonintegrated
Relationships may be formal/informal
Coordination mechanisms may leverage efficiency/flexibility
Mandates to subsidiaries may be global/specialized-contribution/ localized-implementation
There are competing objectives

21. Matches between Cooperative Strategies and Strategic Network Structures
Network strategy: Partners form several alliances in order to improve the performance of the alliance network itself through cooperative endeavors
Strategic network: Group of firms that form [around core] to create value to participating in multiple cooperative arrangements
Business-level complementary alliances
Vertical and Horizontal CSAs
Used to facilitate product & market diversification
Franchising

22. Organizational Structure & Controls
Organizational Controls
Guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable
Are an important aspect of structure
Help managers recognize when it is time to adjust structure
Firms use strategic, financial, and behavioral controls to support their strategies
The relative use of these types of controls varies by type of strategy
Must properly balance the use of them

23. Organizational Structure & Controls
Strategic Controls: largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company’s competitive advantages
Concerned with fit between what firm might do vs. what it can do
Used to evaluate degree to which firm focuses on the requirements to implement its strategies
Help the firm understand what it takes to be successful
Focus on the content of strategic actions
Emphasized by firms pursuing differentiation at business level, related diversification at corporate level, and using a multidomestic international strategy

24. Organizational Structure & Controls
Financial Controls: largely objective criteria used to measure firm’s performance against previously established quantitative standards
Usually accounting or market-based measures
ROI, ROA, economic value added
Involves comparison of current performance with past performance and with industry averages and competitors’ performance
Focus on short-term financial outcomes
Emphasized by firms pursuing low cost strategy at business level, unrelated diversification at corporate level, and using a global international strategy

25. Organizational Structure & Controls
Behavioral Controls: the regulation of activities and behaviors within organizations
Used to adjust or bring about conformity to specifications or objectives
Can be achieved through the use of culture, structure, rewards, and policies/procedures
Includes controlling ethical behavior