Strategy in Action 12: Organising for Success. Exploring Corporate Strategy 8e, © Pearson Education 2008 12-2 Learning Outcomes (1) Identify key challenges.
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Strategy in Action 12: Organising for Success
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-2
Learning Outcomes (1)
Identify key challenges in organising for success, including ensuring control, managing knowledge, coping with change and responding to internationalisation
Analyse structural types of organisations in terms of strengths and weaknesses
Recognise how important organisational processes need to be designed to fit their circumstances
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-3
Learning Outcomes (2)
Appreciate how internal and external relationships can integrate knowledge and resources within and between organisations
Recognise how the three stands of structure, processes and relationships should reinforce each other in organisational configurations and the managerial dilemmas involved
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-4
What is Configuration?
An organisation’s configuration consists of the structures, processes and relationships through which the
organisation operates.
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-5
Exhibit 12.1 Organisational Configurations
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-6
Key Challenges for Organisations
The speed of change and the increased levels of uncertainty
The importance of knowledge creation and knowledge sharing
The rise of internationalisation
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-7
Structural Types
Functional Multidivisional
Matrix Transnational
Project-based
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-8
Exhibit 12.2 A Functional Structure
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-9
Functional Structures
Advantages
CEO in touch with all operations
Reduces/simplifies control mechanisms
Clear definition of responsibilities
Specialists at senior and middle management
Disadvantages
Overburdened with routine issues
Neglect strategic issues
Difficulty coping with diversity
Coordination between functions
Failure to adapt
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-10
Exhibit 12.3 A Multidivisional Structure
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-11
Multidivisional Structures
Advantages
Flexible
Control by performance
Ownership of strategy
Specialisation of competences
Training in strategic view
Disadvantages
Duplication of central and divisional functions
Fragmentation and non-cooperation
Danger of loss of central control
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-12
Exhibit 12.4 A Matrix Structure
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-13
Matrix Structures
Advantages
Integrated knowledge
Flexible
Allows for dual dimensions
Disadvantages
Length of time required for decision making
Unclear job and task responsibilities
Unclear cost and profit responsibilities
High degrees of conflict
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-14
Exhibit 12.5 Multinational Structures
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-15
What is a Project-Based Structure?
A project-based structure is one where teams are created, undertake
the work, and then are dissolved.
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-16
Exhibit 12.6 Comparison of Structures
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-17
Design Tests for Checking Structural Solutions
Market-Advantage
Parenting Advantage
People
Feasibility
Specialised Cultures
Difficult Links
Redundant Hierarchy
Accountability
Flexibility
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-18
Exhibit 12.7 Types of Control Processes
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-19
What is a Balanced Scorecard?
Balanced scorecards combine both qualitative and quantitative measures,
acknowledge the expectations of different stakeholders and relate an
assessment of performance to choice of strategy.
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-20
Exhibit 12.8 An Example of the Balanced Scorecard
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-21
What is Devolution?
Devolution concerns the extent to which the centre of an organisation delegates decision making to units and managers lower down
in the hierarchy.
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-22
Exhibit 12.9 Relating Internally and Externally
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-23
Strategy Styles for Division of Responsibility
Strategic planning style
Financial control style
Strategic control style
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-24
Exhibit 12.10 Strategic Planning Style
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-25
Exhibit 12.11 Financial Control
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-26
Exhibit 12.12 Strategic Control
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-27
Methods of Relating Externally
Outsourcing Strategic Alliances
Networks Virtual organisations
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-28
Exhibit 12.14 Dilemmas in Organising for Success
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-29
Chapter Summary (1)
Organising for success is about an organisation’s configuration, built on three related strands: structures, processes, and relationships
Successful organising means responding to the key challenges facing the organisation: control, change, knowledge and internationalisation
There are many structural types, each with its own strengths and weaknesses
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-30
Chapter Summary (2)
There are a range of different organisational processes, direct or indirect and focused on input or outputs, to facilitate strategy
Relationships are important for success
Separate organisational strands should come together to form a coherent reinforcing cycle
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-31
Key Debate: Does Structure Follow Strategy?
Hall and Saias suggest that organisational structures can influence the kinds of strategies that management teams will pursue.
What kinds of organisations might be particularly susceptible to structural constraints on their strategies?
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-32
Case Example: Hurricane Katrina
Exploring Corporate Strategy 8e, © Pearson Education 2008 12-33
Case Example: Hurricane Katrina
What was the strategy of the Department of Homeland Security in the period immediately before Hurricane Katrina?
In the light of this strategy, what if any changes should be made to the Department’s organisational structure?
Who was responsible for the organisational failures surrounding the response to Katrina?
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