Foundations of Strategy: Realizing Strategy

1. Foundations of Strategy: Realizing Strategy Scott bearden John Beddingfield Lauren frick Patrick lewis Trevor Mcdonald

2. Specialization and Division of Labor Specialization- division of labor into separate tasks Smith’s pin maker example-produced 4800 pins per person each day compared to 20 pins per person each day

3. The Cooperation Problem Agency Relationship-exists when one party (the principal) contracts with another party (the agent) to act on behalf of the principle. Bureaucratic controls go hand in hand with hierarchy. -Critics of bureaucracy argue that bureaucratic control reduces the extent to which those lower down the organization can exercise their personal judgment. Performance incentives Shared Values

4. Coordination Problem Unless individuals can find ways of coordinating their efforts, production doesn’t happen. Rules and instructions - Range of duties required by their employer Routines - Where activities are performed recurrently Mutual adjustment - Individuals engaged in related tasks

5. Organizational Design Hierarchy and Coordination Hierarchies are a flexible way of coordinating activities because they allow specialist units to act independently of each other

6. Organizational Design Cont. Defining organizational units • Tasks • Grouping based on job • Maintenance dept, machine shop, etc. • Products • Department store • Grocery, Drug, Produce, etc. • Geography • Multiple local markets • Process • Sequence of interlinked activities • Product development, manufacturing, sales, etc. How to decide which unit to use to define organizational units: The fundamental issue is achieving the coordination necessary to integrate the efforts of different individuals

7. Alternative Structural Forms • The Functional Structure • Single-business firms structured this way • Grouping this way promotes learning • Different functions create own identity • Limited scope for decentralization • Product Expansion problems • The Multidivisional Structure • Response to coordination problems of diversification • High potential for decentralized decision making • Operating decisions made at divisional level • Strategies, Planning, Budgeting at Corporate level • Matrix Structures • Multiple dimensions • Multiple products, multiple functions, multiple locations

8. Beyond Hierarchical Structures • Adhocracies: • Flexible, spontaneous coordination and collaboration around problem solving and other non-routine activities • Team-based and project-based organizations: • Project based companies such as construction, consulting, and engineering • Teams must be interacting closely and rely on problem solving and mutual adjustment • Also should follow set rules and routines to ensure consistency • Networks • Multiple firms located in a small geographic area working closely in their specialized piece of a complex product • Microelectronics in Silicon Valley

9. Management Systems • Information Systems • Key to success in recent push of decentralization of authority in organizations • Information on performance of every employee must be readily available • Strategic Planning Systems • Statement of the goals • Set of assumptions or forecasts • Qualitative statement • How the business will be changing in relation to past • BP after oil spill • Specific action steps • Set of financial projections • Financial Planning and Control Systems • Two main budgets created • Capital expenditure budget • Operating budget • Human Resource Management Systems • Sets goals, creates incentives and monitors performance at the level of the individual employee

10. Corporate Culture Organizational Culture Corporate Culture Describing and Classifying Cultures

11. Amazon • Diversification • Electronics • Software • Apparel • Furniture

12. Take-Away’s Strategy formulation and implementation are inextricably linked Forces cause companies to seek new organizational structures and management systems Organizational culture plays a role in the way strategy is realized