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Strategy Implementation

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.

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Strategy Implementation

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  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. Figure 10.1: The Eight Componentsof the Strategy Execution Process The Action Agenda for Executing Strategy

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

  4. CEO Vice President Vice President Vice President 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

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

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

  10. A Traditional FunctionalOrganizational Structure General Manager Research & Development Manufacturing Human Resources Engineering Marketing Finance & Accounting

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

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

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

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

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

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

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

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