Podcast
Questions and Answers
What type of organizational structure is typically associated with a dominant business corporate strategy?
What type of organizational structure is typically associated with a dominant business corporate strategy?
- Matrix structure
- Flat structure
- Simple structure (correct)
- Network structure
In a related diversification scenario, what is the nature of decision making within the organizational structure?
In a related diversification scenario, what is the nature of decision making within the organizational structure?
- Completely autonomous
- Decentralized (correct)
- Highly centralized
- Unregulated
Which of the following is a characteristic of an unrelated diversification strategy?
Which of the following is a characteristic of an unrelated diversification strategy?
- Limited global coordination (correct)
- Maximized resource sharing
- High synergies among divisions
- Strong collaborative relationships
What is a typical feature of the organizational structure for a corporation with a unique business strategy?
What is a typical feature of the organizational structure for a corporation with a unique business strategy?
What happens to competition for resources within a related diversification organizational structure?
What happens to competition for resources within a related diversification organizational structure?
What does the matrix structure primarily allow companies to achieve?
What does the matrix structure primarily allow companies to achieve?
In a matrix structure, how is the organizational framework divided?
In a matrix structure, how is the organizational framework divided?
Which of the following is NOT a benefit of the matrix structure?
Which of the following is NOT a benefit of the matrix structure?
Why might a company choose to implement a matrix structure?
Why might a company choose to implement a matrix structure?
Which feature distinguishes the matrix structure from a traditional functional structure?
Which feature distinguishes the matrix structure from a traditional functional structure?
Which organizational structure is generally used with an international strategy?
Which organizational structure is generally used with an international strategy?
What type of decision-making process is primarily associated with a global standardization strategy?
What type of decision-making process is primarily associated with a global standardization strategy?
In which scenario is a transnational strategy most likely to be implemented?
In which scenario is a transnational strategy most likely to be implemented?
Which structure is employed by a multi-domestic strategy to support local adaptations?
Which structure is employed by a multi-domestic strategy to support local adaptations?
Which prominent figure is associated with the implementation of an international strategy through a functional structure?
Which prominent figure is associated with the implementation of an international strategy through a functional structure?
What is considered more important than the analysis or formulation of a strategy?
What is considered more important than the analysis or formulation of a strategy?
How has the implementation of strategies been described by some academics?
How has the implementation of strategies been described by some academics?
What are the components of the AFI framework in strategy?
What are the components of the AFI framework in strategy?
Which of the following elements is part of Block II in Corporate Strategy?
Which of the following elements is part of Block II in Corporate Strategy?
What does an effective competitive and corporate strategy require?
What does an effective competitive and corporate strategy require?
Which company's strategy implementation is cited as an example of failure?
Which company's strategy implementation is cited as an example of failure?
What primary aspect of organizational structure is defined by the level of specialization?
What primary aspect of organizational structure is defined by the level of specialization?
What is the main focus of the strategic control aspect of corporate strategy?
What is the main focus of the strategic control aspect of corporate strategy?
Which characteristic of organizational structure involves the prescribed methods of how teams collaborate?
Which characteristic of organizational structure involves the prescribed methods of how teams collaborate?
What aspect is emphasized as a necessary condition for obtaining a competitive advantage?
What aspect is emphasized as a necessary condition for obtaining a competitive advantage?
Why must organizational structure evolve as a company grows?
Why must organizational structure evolve as a company grows?
What must an organizational structure be consistent with for obtaining and maintaining a competitive advantage?
What must an organizational structure be consistent with for obtaining and maintaining a competitive advantage?
Which type of diversification involves introducing products in new geographic markets?
Which type of diversification involves introducing products in new geographic markets?
What is a key issue for correct strategic implementation?
What is a key issue for correct strategic implementation?
What does hierarchical relationships in an organization define?
What does hierarchical relationships in an organization define?
What aspect of organizational structure is primarily concerned with formal communication channels?
What aspect of organizational structure is primarily concerned with formal communication channels?
What characterizes a simple organizational structure?
What characterizes a simple organizational structure?
What typically prompts a company to transition to a functional structure?
What typically prompts a company to transition to a functional structure?
In a simple organizational structure, who typically makes the strategic decisions?
In a simple organizational structure, who typically makes the strategic decisions?
Which structure is generally characterized by a decentralized manner of operation?
Which structure is generally characterized by a decentralized manner of operation?
What happens to the general manager in a simple structure as the company grows?
What happens to the general manager in a simple structure as the company grows?
Which organizational structure is most suitable for companies offering several unrelated products?
Which organizational structure is most suitable for companies offering several unrelated products?
What type of organizational structure is characterized by the highest level of formalization?
What type of organizational structure is characterized by the highest level of formalization?
Which of the following structures is least effective for a rapidly changing environment?
Which of the following structures is least effective for a rapidly changing environment?
Flashcards
Strategy Implementation
Strategy Implementation
The process of putting a strategic plan into action and ensuring it is carried out effectively.
Strategic Control
Strategic Control
A system for monitoring and evaluating the progress of a strategy, making adjustments as needed to ensure it remains on track.
AFI Framework
AFI Framework
A strategic framework used in business to analyze the external and internal environments of an organization, formulate strategies, and implement and control them.
Analysis Phase (AFI)
Analysis Phase (AFI)
Analyzing the industry, competitors, and internal strengths and weaknesses of an organization.
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Formulation Phase (AFI)
Formulation Phase (AFI)
Developing a strategic plan that identifies the organization's direction and how it intends to achieve its goals.
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Implementation Phase (AFI)
Implementation Phase (AFI)
Putting the strategic plan into action and managing its execution.
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Graveyard of Strategy
Graveyard of Strategy
The stage where a strategic plan is most likely to fail due to poor execution or unforeseen challenges.
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Yahoo as a case study
Yahoo as a case study
A technology company known for its decline despite having a good strategy due to poor implementation.
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Unique Business
Unique Business
A corporate strategy where a company focuses on a single product or service in one market.
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Dominant Business
Dominant Business
A corporate strategy where a company focuses on a few related products or services within a specific market.
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Related Diversification
Related Diversification
A corporate strategy where a company expands into new products or services that are related to its existing business.
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Unrelated Diversification
Unrelated Diversification
A corporate strategy where a company expands into unrelated businesses.
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Multidivisional Structure
Multidivisional Structure
A type of organizational structure that is commonly used for companies engaged in related diversification. Features include decentralized decision-making and cooperation between business units.
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Simple organizational structure
Simple organizational structure
A structure used by smaller companies with low complexity, a single product or service, and operating in a few geographic markets. The CEO makes key decisions, and communication is decentralized. It is also characterized by a flat hierarchy, low formalization, and reduced specialization.
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Functional organizational structure
Functional organizational structure
A structure that emerges as companies grow, involving specialization in different functional areas like marketing, finance, and production. It is typically more hierarchical and formalized compared to simple structures.
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Multidivisional organizational structure
Multidivisional organizational structure
A structure suitable for larger, diversified companies. It divides the organization into semi-autonomous units based on product lines, geographical regions, or customer segments. Each unit operates independently and has its own leadership and functions.
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Matrix organizational structure
Matrix organizational structure
A structure that combines the benefits of functional and divisional structures, creating a matrix of reporting relationships. Employees report both to a functional manager and a divisional manager, allowing for both specialization and flexibility.
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Matrix Structure
Matrix Structure
A corporate structure where employees report to two managers: a product/business unit (BU) manager and a geographic area manager.
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Benefits of Matrix Structure
Benefits of Matrix Structure
The matrix structure combines the benefits of the M-form (expertise in each unit, economies of scale, efficient information processing) with the benefits of the functional structure (responsiveness, decentralized approach).
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When is a matrix structure suitable?
When is a matrix structure suitable?
A company uses a matrix structure when it has diverse products and operates in multiple geographic locations.
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How does the matrix structure enhance flexibility?
How does the matrix structure enhance flexibility?
The matrix structure allows a company to quickly identify and respond to problems or opportunities related to a specific product or geographic area.
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Is the matrix structure centralized or decentralized?
Is the matrix structure centralized or decentralized?
The matrix structure creates a more decentralized approach, empowering teams to make decisions related to their geographic area and product.
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Organizational Structure & Strategy Fit
Organizational Structure & Strategy Fit
Ensuring the right organizational structure aligns with the company's chosen strategy, enabling efficient execution.
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Centralization
Centralization
The overall level of autonomy and decision-making authority within the organization.
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Specialization
Specialization
The extent to which tasks are divided and specialized within the organization.
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Formalization
Formalization
The formal channels through which information flows within the organization.
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Strategic Leadership
Strategic Leadership
The leadership style and decisions taken by those in positions of authority to influence the strategic direction and implementation.
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Corporate Governance
Corporate Governance
The framework of rules, processes, and accountability that governs how the company operates and makes decisions.
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Dynamic Structure
Dynamic Structure
The ability to adapt and evolve the organizational structure as the company grows and changes.
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Internationalization Strategy
Internationalization Strategy
A business strategy to expand operations across international borders, balancing global coordination with local adaptation.
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Global Standardization Strategy
Global Standardization Strategy
Focuses on efficiency and consistency across all markets, with centralized decision-making and standardized products or services.
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Multi-domestic Strategy
Multi-domestic Strategy
Adjusts products, marketing, and operations to fit individual country markets, with decentralized decision-making.
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Transnational Strategy
Transnational Strategy
Aims for both global efficiency and local responsiveness, incorporating elements of both global standardization and multi-domestic strategies.
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Topic 6: Strategy Implementation and Control
- The formulation of a good competitive and corporate strategy is crucial for gaining and maintaining a competitive advantage
- Effective strategy implementation and control are even more important than the analysis and formulation stages.
- Some academics refer to implementation as the "graveyard of strategy" (e.g., Yahoo)
- Strategy formulation is about what to do, while implementation is about how to put it into practice
- Strategic proposals that are not implemented are merely plans, not strategies
- Strategic implementation involves organizing, coordinating and integrating work to execute the formulated strategy
- This is vital for obtaining and maintaining competitiveness and the survival of a company
- Analysis, formulation and implementation are interconnected and interdependent processes
6.1 Implementation of the Strategy
- Implementing a successful strategy requires a company to have:
- The correct organizational structure
- Strong strategic leadership
- Effective corporate governance
- Key issues in correct strategy implementation include
- Organizational structure
- Strategic leadership
- Corporate governance
- Organizational structures and strategic positioning:
- The structure details what work is done, how it's done, specializations, levels of hierarchy and formal communication
- Formalization levels and centralization
- Structure must fit the company's competitive and corporate strategies; adapting to growth and diversification (Market Penetration, Product Diversification, Geographic Diversification, Vertical Integration, and Unrelated Diversification)
- Organizational structures include
- Simple (smaller companies with one or few products/markets, flat structure, CEO makes major decisions, less formalization)
- Functional (companies with increasing sales and a single or a few related products, specialized employees grouped by functions, centralized coordination by CEO, more specialization, can lead to bottlenecks as growth increases)
- Multidivisional (highly diversified, more than one BU, each BU is autonomous, led by a CEO)
- Matrix (highly diversified both in product and geographic areas)
- The relationship between corporate strategies (unique business, dominant business, related diversification, unrelated diversification) and the organizational structure
- The functional structure is recommended when the company has little product diversification and a small geographic footprint.
- The form of internationalization strategy (International strategy, Multi-domestic strategy) influences the organizational structure
### 6.2 Strategic Control
- Organizational controls are essential for a successful strategy implementation and (re)formulation
- Effective organizational controls provide clear information for improvement
- Applying a balanced scorecard (financial and strategic objectives) assesses the company's situation
- ERPs (Enterprise Resource Planning) offer multidimensional, real-time information for strategic control
6.2 Strategic Control: The Balanced Scorecard (Advantages)
- Translate vision into measurable objectives, design and plan business processes
- Complement financial metrics with operational metrics (customer satisfaction, internal processes, innovation)
- Adaptability to modifications (re-formulation) through feedback mechanisms
6.2 Strategic Control: The Balanced Scorecard (Example)
- The example examines a strategic map (Zara) that considers Financial Perspective, Customer Perspective, Internal Processes Perspective, and Learning & Growth Perspective
- The interconnectedness of these perspectives enhances understanding and adaptation
Strategic Leadership
- Leaders need to set and communicate a clear vision, mission, and values, particularly in organizations with new leadership
- Good leaders understand and engage all their employees
- The actions and values of senior management impact organizational success.
- Key skills: desire for achievements, ambition, initiative, energy, tenacity, self-confidence, emotional stability, cognitive ability, psychological resistance, communication, ability to influence, motivation, eloquence, honesty, and integrity
- Effective leaders foster institutionalization of positive changes for improved performance
- The pyramid structure (Level 1: Highly Capable Individual, Level 2: Contributing Team Member, Level 3: Competent Manager, Level 4: Effective Leader, Level 5: Executive) illustrate leadership levels.
Importance of Corporate Governance
- Ownership and control are often separated in companies.
- Agency relationships arise from this separation and need to be managed
- Corporate governance aligns managers’ actions with shareholders' interests, influencing strategy implementation.
- Key Governance Mechanisms are
- Ownership Concentration
- Board of directors (composed of internal, related, and unrelated external members)
- Executive Compensation (to align executive interests with shareholder interests)
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