1. Strategy and Structure
Chapter 11

2. Learning Objectives
How strategy is implemented through the company's structure.
Types and characteristics of the most common organization structures.
Mechanisms to coordinate activities in structured organizations.
Whether strategy and structure are aligned.

3. The Challenge of Strategy
Coordination of…..
Large employee workforce
Dispersed geographically
Working on multiple products / services
Separated into functional departments (Marketing, Finance, Operations, etc.)
Separated by layers of management

4. Structural Facets of Organizations
Specialization
Tendency to specialize as firms grow
Creates efficiency
Centralization
Arises when Specialization occurs
Someone must have the "big picture"
Formalization
Rules and procedures emerge to guide disparate departments

5. Structure Creates Challenges
Communication
Top down, bottom up, lateral
Coordination
"Left hand, right hand"
Effects on other parts of the organization
Control
Location of decision making
Type of decisions allowed

6. Five Coordinating Mechanisms

7. Mutual Adjustment Small group of people Tasks are well-known
Employees are cross-trained
Innovation may be required
Means to success not clear

8. Standardization
Where mutual adjustment among small group is no longer possible
Work processes
Flow of activity is important
Employees are "interchangeable"
Work skills
Employee qualifications & certifications
Work output
Variation in effective approaches is possible

9. Direct Supervision Three conditions simultaneously Work process, and
Work skills, and
Work output is predictable & consistent

10. Coordination and Business Strategy
Structure should support strategy!
Determine business strategy approach
Identify type of coordination needed
Structure design allows for that coordination

11. Organizational Structures
Simple structure
Functional structure
M-Form (Multidivisional structure)
Business unit organization
Geographic region organization
Matrix structure
Adhocracy

12. Simple Structure Single product / service
New company / entrepreneurial orientation

13. Functional Structure Specialization is needed
Allows for differing coordination methods within each department
Sales & Marketing Department
Research & Development Department
Engineering Department
Production & Operations Department
Finance & Accounting Services
Quality Assurance Department
Corporate Planning Department
President

14. M-Form (Multidivisional) Structure
By strategic business units (SBUs)
Similar functions within each SBU

15. M-Form (Multidivisional) Structure
By customer type or geographic region
Depends on how value is created within each unit

16. Matrix Structure Combines both functional & divisional forms
Efficiency and effectiveness across units
Complicated – decisions, resource sharing

17. Adhocracy (Holacracy) Structure
Goals well-understood, but means unknown
Creativity highly valued
Duration of task is well-defined
No real supervisors