1. Implementing Strategy in Companies That Compete in a Single Industry12
Implementing Strategy in Companies That Compete in a Single Industry

2. Overview Strategy implementation
How a company should create, use, and combine organizational structure, control systems, and culture to pursue strategies that lead to a competitive advantage and superior performance
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3. Organizational structure
Implementing Strategy Through Organizational Structure, Control, and Culture
Organizational structure
Assigns employees to specific value creation tasks and roles and specifies how those are linked to increase efficiency, quality, innovation, and responsiveness to customers
To coordinate and integrate the efforts of all employees
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4. Implementing Strategy Through Organizational Structure, Control, and Culture (cont’d)
Control system
A set of incentives to motivate employees to increase efficiency, quality, innovation, and responsiveness to customers
Provides feedback on performance so corrective action can be taken
Organizational culture
The collection of values, norms, beliefs, and attitudes shared within an organizations and that control interactions within and outside the organization
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5. Implementing Strategy
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6. Building Blocks of Organizational Structure
Grouping tasks, functions, and divisions
Organizational structure follows the range and variety of tasks that an organization pursues
Companies group people and tasks into functions and then functions into divisions
Bureaucratic costs
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7. Building Blocks of Organizational Structure (cont’d)
Allocating authority and responsibility
Hierarchy of authority (chain of command)
Span of control (number of subordinates)
Tall and flat organizations
Drawbacks of taller organizations
Less flexibility and slower response time
Communication problems
Distortion of commands
Expense
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8. Tall and Flat Structures
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9. Allocating Authority and Responsibility (cont’d)
The minimum chain of command
To combat an organization that is too tall
Hand responsibility up and empower those below
Centralization or decentralization?
Delegating responsibility reduces information overload and enables managers to focus on strategy
Empowering lower-level managers increases motivation and accountability
Empowering employees requires fewer managers
Centralized decisions allow easier coordination of activities
Centralization means that decisions fit broad organizational objectives
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10. Building Blocks of Organizational Structure (cont’d)
Integration and integrating mechanisms
Direct contact among managers across functions or divisions
Liaison roles
Gives one manager in each function or division the responsibility for coordinating with the other
Teams
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11. Strategic Control Systems
Four basic building blocks
Control and efficiency
Control and quality
Control and innovation
Control and responsiveness to customers
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12. Steps in Designing an Effective Control System
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13. Levels of Organizational Control
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14. Types of Strategic Control System
Personal control
Face-to-face interaction
Output control
Performance goals for each division, department, and employee
Behavior control
Rules and procedures to direction actions or behaviors of divisions, functions, and individuals
Operating budget
Standardization
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15. Using Information Technology
Behavior control
IT standardizes behavior through the use of a consistent, cross-functional software platform
Output control
IT allows all employees or functions to use the same software platform to provide information on their activities
Integrating mechanism
IT provides people at all levels and across all functions with more information
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16. Strategic Reward Systems
Based on strategy managers must decide which behaviors to reward
A control system measures those behaviors and links the reward structure to them
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17. Organizational Culture
Culture and strategic leadership
Traits of strong and adaptive corporate cultures
Bias for action
Nature of the organization’s mission (sticking with what the organization does best)
How to operate the organization (motivating employees to do their best)
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18. Building Distinctive Competencies at the Functional Level
Grouping by function: functional structure
Grouping people on the basis of their expertise or because they use the same resources
Advantages
People can learn from one another
People can monitor each other
Managers have greater control
With different functional hierarchies, the company can avoid becoming too tall
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19. Functional Structure
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20. The Functional Level The role of strategic control Developing culture
Managers and employees can monitor and improve operating procedures
Easier to apply output control
Developing culture
Managers must implement functional strategy and develop incentive systems to allow each function to succeed
Manufacturing: TQM
R&D: innovation to bring products quickly to market
Sales: output and behavior controls
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21. Functional Structure and Bureaucratic Costs
Communications problems
Measurement problems
Customer problems
Location problems
Strategic problems
The outsourcing option
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22. Implementing Strategy in a Single Industry
Implementation begins at the functional level, however, managers must coordinate and integrate across functions and business units
Effective strategy implementation at the business level
Increases differentiation, adds value for customers, allows for a premium price
Reduces bureaucratic costs
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23. How Organizational Design Increases Profitability
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24. Implementing Strategy in a Single Industry (cont’d)
Implementing a cost-leadership approach
Reducing costs across all functions
Continuously monitoring for effective operation
Implementing a differentiation approach
Design structure around the source of distinctive competency, differentiated product, and customer groups
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25. Implementing Strategy in a Single Industry (cont’d)
Implementing a broad product line—product structure
Group the overall product line into product groups
Centralize support value chain functions to lower costs
Divide support functions into product-oriented teams of functional specialists who focus on the needs of one specific product group
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26. Kodak’s Product Structure
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27. Implementing Strategy in a Single Industry (cont’d)
Increasing responsiveness to customer groups—market structure
Group people and functions by customer or market segments
Different managers are responsible for developing products for each group of customers
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28. Market Structure
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29. Implementing Strategy in a Single Industry (cont’d)
Expanding nationally—geographic structure
To be responsive to needs of regional customers
To reduce transportation costs
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30. Geographic Structure
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31. Implementing Strategy in a Single Industry (cont’d)
Competing in fast-changing, high-tech environments—product-team and matrix structures
Matrix structure
Value chain activities are grouped by function and by product or project
Flat and decentralized
Promotes innovation and speed
Norms and values based on innovation and product excellence
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32. Matrix Structure
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33. Implementing Strategy in a Single Industry (cont’d)
Competing in fast-changing, high-tech environments—product-team and matrix structures (cont’d)
Product-team structure
Tasks divided along product or project lines
Functional specialists are part of permanent cross-functional teams
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34. Product-Team Structure
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35. Implementing Strategy in a Single Industry (cont’d)
Focusing on a narrow product line
Tends to have higher production costs because output is lower, reducing opportunity for scale economies
Has to develop some form of distinctive competency
Functional structure is appropriate
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36. Restructuring and Reengineering
Restructuring involves
Streamlining hierarchy of authority and reducing number of levels
Downsizing the workforce to reduce costs
Reasons
Change in the business environment
Excess capacity
Organization grew too tall and inflexible; bureaucratic costs
To improve competitive advantage and stay on top
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37. Restructuring and Reengineering (cont’d)
Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements
Focuses not on functions, but on processes (which cut across functions)
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