QUESTION 1: WHAT ARE THE MAIN PRINCIPLES INVOLVED IN DESIGNING AN

ORGANIZATION’S STRUCTURE TO IMPLEMENT ITS STRATEGY? WHAT

SPECIAL CONSIDERATIONS APPLY WHEN SEEKING INNONATIVE STRATEGIES

AND HOW ARE MANAGERS SELECTED AND MOTIVATED TO IMPLEMENT

STRATEGIES?

Introduction

Organization has been defined in several ways. Leavitt (1962) defines it as a specific

configuration of structure, people, task and techniques. Structure describes the form of

departments, hierarchy and committees. It influences the organization's efficiency and

effectiveness. People refer to the skills, attitudes and social interaction of the members of the

organization. Task refers to the goals of the individual and the organization. Techniques refer to

the methodical approach used to perform tasks. Organizational structure thus refers to the

institutional arrangements and mechanisms for mobilizing human, physical, financial and

information resources at all levels of the system.

Designing organizational structures

Some important considerations in designing an effective organizational structure are:

Clarity: The structure of the organization should be such that there is no confusion about

people's goals, tasks, style of functioning, reporting relationship and sources of

information.

Understanding: The structure of an organization should provide people with a clear

picture of how their work fits into the organization.

De-centralization: The design of an organization should compel discussions and decisions

at the lowest possible level.

Stability and adaptability: While the organizational structure should be adaptable to

environmental changes, it should remain steady during unfavorable conditions.

Principles of organization structure

Modern organizational structures have evolved from several organizational theories, which have

identified certain principles as basic to any organization.

1. Specialization

Specialization facilitates division of work into units for efficient performance. According to the

classical approach, work can be performed much better if it is divided into components and

people are encouraged to specialize by components. Work can be specialized both horizontally

and vertically. Vertical specialization in a research organization refers to different kinds of work

at different levels, such as project leader, scientist, researcher, field staff, etc. Horizontally, work

is divided into departments like genetics, plant pathology, administration, accounts, etc.

Specialization enables application of specialized knowledge which betters the quality of work

and improves organizational efficiency. At the same time, it can also influence fundamental

work attitudes, relationships and communication. This may make coordination difficult and

obstruct the functioning of the organization. There are four main causal factors which could

unfavorably affect attitudes and work styles. These are differences in:

Goal orientation;

Time orientation;

Inter-personal orientation; and

The formality of structure (Lawrence and Lorsch, 1967).

2. Coordination

Coordination refers to integrating the objectives and activities of specialized departments to

realize broad strategic objectives of the organization. It includes two basic decisions pertaining

to:

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Which units or groups should be placed together; and

The patterns of relationships, information networks and communication (Anderson,

1988).

In agricultural research institutions, where most of the research is multidisciplinary but involves

specialization, coordination of different activities is important to achieve strategic objectives.

Efficient coordination can also help in resolving conflicts and disputes between scientists in a

research organization.

Hierarchy facilitates vertical coordination of various departments and their activities.

Organizational theorists have over the years developed several principles relating to the

hierarchy of authority for coordinating various activities. Some of the important principles are

discussed below:

Unity of Command: Every person in an organization should be responsible to one superior and

receive orders from that person only. Fayol (1949) considered this to be the most important

principle for efficient working and increased productivity in an organization.

The Scalar Principle: Decision making authority and the chain of command in an organization

should flow in a straight line from the highest level to the lowest. The principle evolves from the

principle of unity of command. However, this may not always be possible, particularly in large

organizations or in research institutions. Therefore Fayol (1949) felt that members in such

organizations could also communicate directly at the same level of hierarchy, with prior

intimation to their superiors.

The Responsibility and Authority Principle: For successfully performing certain tasks,

responsibility must be accompanied by proper authority. Those responsible for performance of

tasks should also have the appropriate level of influence on decision making.

Span of Control: This refers to the number of specialized activities or individuals supervised by

one person. Deciding the span of control is important for coordinating different types of

activities effectively.

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3. Departmentalization

Departmentalization is a process of horizontal clustering of different types of functions and

activities on any one level of the hierarchy. It is closely related to the classical bureaucratic

principle of specialization (Luthans, 1986). Departmentalization is conventionally based on

purpose, product, process, function, personal things and place (Gullick and Urwick, 1937).

Functional Departmentalization is the basic form of departmentalization. It refers to the grouping

of activities or jobs involving common functions. In a research organization the groupings could

be research, production, agricultural engineering, extension, rural marketing and administration.

Product Departmentalization refers to the grouping of jobs and activities that are associated with

a specific product. As organizations increase in size and diversify, functional departmentalization

may not be very effective. The organization has to be further divided into separate units to limit

the span of control of a manager to a manageable level (Luthans, 1986). In an agricultural

research institution, functional departments can be further differentiated by products and purpose

or type of research.

Departmentalization by Users is grouping of both activities and positions to make them

compatible with the special needs of some specific groups of users.

Departmentalization by Territory or Geography involves grouping of activities and positions at a

given location to take advantage of local participation in decision making. The territorial units

are under the control of a manager who is responsible for operations of the organization at that

location. In agricultural research institutions, regional research stations are set up to take

advantage of specific agro-ecological environments. Such departmentalization usually offers

economic advantage.

Departmentalization by Process or Equipment refers to jobs and activities which require a

specific type of technology, machine or production process.

Other common bases for departmentalization can be time of duty, number of employees, market,

distribution channel or services.

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4. De-centralization and Centralization

De-centralization refers to decision making at lower levels in the hierarchy of authority. In

contrast, decision making in a centralized type of organizational structure is at higher levels. The

degree of centralization and de-centralization depends on the number of levels of hierarchy,

degree of coordination, specialization and span of control. According to Luthans (1986),

centralization and de-centralization could be according to:

Geographical or territorial concentration or dispersion of operations;

Functions

Extent of concentration or delegation of decision making powers.

Every organizational structure contains both centralization and de-centralization, but to varying

degrees. The extent of this can be determined by identifying how much of the decision making is

concentrated at the top and how much is delegated to lower levels. Modern organizational

structures show a strong tendency towards de-centralization.

5. Line and Staff Relationships

Line authority refers to the scalar chain, or to the superior-subordinate linkages, that extend

throughout the hierarchy (Koontz, O'Donnell and Weihrich, 1980). Line employees are

responsible for achieving the basic or strategic objectives of the organization, while staff plays a

supporting role to line employees and provides services. The relationship between line and staff

is crucial in organizational structure, design and efficiency. It is also an important aid to

information processing and coordination.

In an agricultural research organization, scientists and researchers form the line. Administrative

employees are considered staff, and their main function is to support and provide help to

scientists to achieve organizational goals

It is the responsibility of the manager to make proper and effective use of staff through their

supportive functions. The staff may be specialized, general or organizational (Anderson, 1988).

Specialized staff conducts technical work that is beyond the time or knowledge capacity of top

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management, such as conducting market research and forecasting. General staff consists of staff

assistants to whom managers assign work. Organization staff (such as centralized personnel,

accounting and public relations staff) provides services to the organization as a whole. Their role

is to integrate different operations across departments.

Line and staff personnel have different functions, goals, cultures and backgrounds.

Consequently, they could frequently face conflict situations. A manager has to use his skills in

resolving such conflicts.

Special considerations when seeking innovation strategy

First, an innovation strategy needs to be truly inspiring and should describe a desirable future

state for the company. This is a high bar as it rules out a single-minded focus on incremental

add-ons to the business. Rather, it requires the organization to aim higher.The innovation

strategy should be derived from the corporate strategy to clearly define how the organization sees

opportunities for growth and makes explicit choices about the role of innovation. However,

Opportunities and possibilities formulated in an innovation strategy should actually provide input

and shape the overall corporate strategy. 

Second, the innovation strategy needs to be ambitious in terms of providing the basis to break

away from the competition, beat the competition, and create new spaces. Too many innovation

strategies tend to be “me too” (and mostly incremental). Even if executed according to plan, they

fail to deliver the truly sustainable competitive advantages that can only be derived by

performing above the overall market growth level and exceeding average profit margins.

Again, the innovation strategy should aim higher and help the company outpace anybody else in

a contested space. If the so-called strategy does not seek to push those boundaries, the strategy in

all practicality is probably just a product roadmap of business extensions, not an innovation

strategy.

Third, the process of developing the strategy needs to be open.Open means bringing the outside

in and working under the assumption that people may have insights that do not exist within a

particular company’s boundaries. It is often hard for companies to open up and avoid merely

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settling. At the same time, this should not be mistaken as an excuse for failing to come up with a

great innovation strategy based on internal ideas and conviction. Being open is just a great way

to raise the bar in terms of ambition and to more quickly get to more mature plans. By the way,

as opening up the innovation pipeline is not just a matter of mindset, new technologies play an

important role in making openness commercially feasible.

Fourth, an innovation strategy must also be specific to the time in which it is developed, as it is

grounded in the reality of a company’s environment, and it reflects the available capabilities,

technologies and gaps that may need to be filled. It is important to describe with great precision

which specific innovation initiatives should be pursued, and where to invest and compete.

Finally, an innovation strategy needs to be adaptive and to evolve over time, i.e. incorporate

learning, allow adjustments to the desired course and maybe even allow an organization to cut its

losses if required. This typically does not fit with the classic annual corporate planning cycle. An

innovation strategy and the respective execution should be capable of adapting the moment there

are new insights, even if that requires moving in multiple directions to raise the aspiration you

had at the beginning. Innovation sometimes requires more time than originally estimated.

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QUESTION 2: DOES A SMALL COMPANY NEED A FORMAL STRATEGIC PLAN?

WHY AND WHY NOT?

Introduction

Many small companies are aware of strategic planning but have a notion that it is only useful for

larger businesses or organizations. Most entrepreneurs have their ideas and plans in their heads

and since they are the ones running the business, they often feel there is no need to waste time

putting it to paper. That kind of thinking can bring a small business down. Planning is essential

to the success of small businesses. Small businesses need to recognize that in order to reach their

desired level of success it is necessary to create a plan.

Strategic planning

According to Wikipedia, strategic planning is an organization’s process of defining its strategy or

direction and making decisions on allocating its resources to pursue this strategy. In order to

determine the future direction of the organization, it is necessary to understand its current

position and possible avenues through which it can pursue particular courses of action.

Strategic planning is also an organizational management activity that is used to set priorities,

focus energy and resources, strengthen operations, ensure that employees and other stakeholders

are working towards common goals, establish agreement around intended outcomes/results and

assesses and adjust the organization’s direct response to a changing environment.

A strategic plan however is a document used to communicate with the organizational goals, the

needed actions to achieve those goals and all of the other elements developed during the

planning exercise.

Key components of strategic planning

The key components of 'strategic planning' include an understanding of an entity's vision,

mission, values and strategies.

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Vision: outlines what the organization wants to be, or how it wants the world in which it operates

to be (an "idealized" view of the world). It is a long-term view and concentrates on the future. It

can be emotive and is a source of inspiration. For example, a charity working with the poor

might have a vision statement which reads "A World without Poverty."

Mission: defines the fundamental purpose of an organization or an enterprise, succinctly

describing why it exists and what it does to achieve its vision. For example, the charity above

might have a mission statement as "providing jobs for the homeless and unemployed".

Values: beliefs that are shared among the stakeholders of an organization. Values drive

an organization's culture and priorities and provide a framework in which decisions are

made. For example, "Knowledge and skills are the keys to success" or "give man bread and

feed him for a day, but teach him to farm and feed him for life". These example maxims may

set the priorities of self-sufficiency over shelter.

Strategy: defines as a means to the end and these ends concerns the purpose and objectives of

the organization. They are the things that businesses do, the path they follow, and the

decisions they take, in order to reach certain points and levels of success. A strategy is

sometimes called a roadmap - which is the path chosen to plow towards the end vision. The

most important part of implementing the strategy is ensuring the company is going in the

right direction - defined as towards the end vision.

Why small businesses need a formal strategic plan

A strategic plan helps the various people and work units within an organization to align

themselves with common goals. But perhaps most importantly, the strategic planning process

provides managers, owners and entrepreneurs the necessary framework for developing sound

business strategy.

Also managers and business owners need a well-developed strategic plan in order to effectively

establish expectations for their employees. Without a plan, expectations are developed in a void

and there is little or no alignment with common goals and strategies. A good strategic plan looks

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out 2 to 5 years and describes clearly what market, product/service; pricing, marketing and other

strategies will be followed. 

Another reason is that, during tough economic times, the need for a solid strategic direction and

plan is even more pronounced because the margin for error generally becomes much smaller for

most businesses. When the economy turns down, the absence of a well-designed and effectively

implemented strategic plan will often be felt in a dramatic manner. Because sound goals,

objectives, strategies, and tactics have not been integral to the daily operations, the business will

not be well positioned to withstand the hits delivered by a struggling economy. Conversely,

organizations with solid plans that are being implemented effectively stand a far better chance of

surviving tough economic times. Why? Because sound strategic direction provided by a strategic

plan lays a strong foundation that will support a business during these economic downturns.

More so, all employees need to understand the guiding principles of the business and what

everyone should be aiming to achieve. A strategic plan that is well developed, properly

communicated, and carefully implemented can launch struggling or underperforming businesses

to new heights.

Furthermore, with a strategic plan in place, day-to-day decision making and problem solving will

be directly related to long-range and short-term goals. Planning reduces stress by making

decisions easier. When choices are made within the context of a strategic framework, the

organization’s direction is clearly defined. If there is no strategic framework, the future of the

organization is in the hands of whoever is making choices. Strategic decision making and

problem solving assure that the organization’s vision will be achieved.

Why small businesses do not need a strategic plan

Strategic planning is inappropriate for small companies because:

The strategic planning process is one which is very daunting and requires various data to arrive a

comprehensive strategic plan. Most small business owners have no time and or the resources to

invest in days of planning.

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Also, developing a strategic plan requires senior managers to make time and spend days in

meetings to formulate. This comes at a big cost for small businesses because most of the top

team members usually lead their sales and marketing efforts and taking them off the road to sit in

meetings for days formulating a strategic plan has immediate negative impact on revenues.

More so, the payoff of strategic planning is often measured in millions of dollars rather than

hundreds of dollars, so it makes no financial sense for small businesses to over invest in the

effort.

Furthermore, small business must continually adjust their strategy so the strategies they develop

during a strategic planning session are usually short-lived. Most small businesses win because

they are more nimble, quicker to seize unexpected opportunities than their larger competitors.

Long term planning can slow them down and kill this advantage.

Conclusion

Despite the fact the one can somehow argue for the fact the small businesses might not

necessarily need a strategic plan due to the cost and time involved in developing one I will

conclude by saying that every business really needs a strategic plan no matter how small the

business is. This is because the plan will keep the business focus and the objectives developed

from the plan can serve as a guide for performance to be measured and monitored.

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QUESTION 3: IN WHAT STRATEGIC CIRCUMSTANCES SHOULD A LEADER BE

DOMINANT AND IN WHAT CIRCUMSTANCES SHOULD A LEADER WORK WITH

A SHARED VISION? GIVE EXAMPLES TO SUPPORT YOUR VIEWS AND SHOW

HOW OTHER FACTORS CAN ALSO INFLUENCE LEADERSHIP STYLE.

Introduction

Taking a team from ordinary to extraordinary means understanding and embracing the difference

between management and leadership. Managers are facilitators of their team members’ success.

They ensure that their people have everything they need to be productive and successful; that

they’re well trained, happy and have minimal roadblocks in their path; that they’re being

groomed for the next level; that they are recognized for great performance and coached through

their challenges.

Conversely, a leader can be anyone on the team who has a particular talent, who is creatively

thinking out of the box and has a great idea, who has experience in a certain aspect of the

business or project that can prove useful to the manager and the team. A leader leads based on

strengths.

A dominant leader is a leader who is in charge and has total authority and control over decision

making. By virtue of their position and job responsibilities, they not only control the efforts of

the team, but monitor them for completion –often under close scrutiny. It is the most common

form of leadership. This style is reminiscent of the earliest tribes and empires. Obviously, our

historical movement toward democracy brings a negative connotation to autocracy, but in some

situations, it is the most appropriate type of leadership. That, of course, doesn’t mean a blank

check to ignore the wellbeing of his subordinate.

Circumstances where a leader should be dominant

A dominant leadership is characterized by a clear line of authority that gives the leader the power

of delegation and the power to control the subordinates’ level of participation in decision making

process.

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The dominant leadership style is best used in situations where control is necessary, often where

there is little margin for error. When conditions are dangerous, rigid rules can keep people out of

harm’s way. Many times, the subordinate staff is inexperienced or unfamiliar with the type of

work and heavy oversight is necessary.

Rigid organizations often use this style. It has been known to be very paternalistic, and in highly-

professional, independent minded teams, it can lead to resentment and strained morale.

Good fits for dominant Leadership:

Military

Manufacturing

Construction

It’s easy to see the immediate goal of this type of leadership: use your expertise to get the job

done. Make sure that everyone is exactly where they need to be and doing their job, while the

important tasks are handled quickly and correctly.

In many ways this is the oldest leadership style, dating back to the early empires. It’s very

intuitive to tell people what needs to be done by when.

It is difficult balancing the use of authority with the morale of the team. Too much direct scrutiny

will make your subordinates miserable, and being too heavy handed will squelch all group input.

Being an effective autocratic leader means being very intentional about when and how demands

are made of the team.

Here are some things to keep in mind to be an effective when acting as a dominant leader:

Respect your Subordinates: It’s easy to end up as rigid as the rules you are trying to enforce.

It’s important that you stay fair and acknowledge that everyone brings something to the table,

even if they don’t call the shots. Making subordinates realize they are respected keeps moral

up and resentment low; every functional team is built on a foundation of mutual respect.

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Explain the rules: Your people know they have to follow procedure, but it helps them do a

better job if they know why.

Be consistent: If your role in the team is to enforce the company line, you have to make sure

you do so consistently and fairly. It’s easy to respect someone objective, but hard to trust

someone who applies policy differently in similar circumstances.

Educate before you enforce: Having everyone understand your expectations up front will mean

less surprises down the road. Being above board from the outset prevents a lot of

miscommunications and misunderstandings.

Listen, even if you don’t change: We all want to feel like our opinions are appreciated, even if

they aren’t going to lead to immediate change and being a leader means that your team will

want to bring their opinions to you. It’s important to be clear that they are heard, no matter the

outcome.

Circumstance where a leader should work with a shared-vision

This leadership style is a very open and collegial style of running a team. Ideas move freely

amongst the group and are discussed openly. Everyone is given a seat at the table, and discussion

is relatively free-flowing.

This style is needed in dynamic and rapidly changing environments where very little can be

taken as a constant. In these fast moving organizations, every option for improvement has to be

considered to keep the group from falling out of date.

The democratic leadership style means facilitating the conversation, encouraging people to share

their ideas, and then synthesizing all the available information into the best possible decision.

The democratic leader must also be able to communicate that decision back to the group to bring

unity the plan is chosen.

When situations change frequently, democratic leadership offers a great deal of flexibility to

adapt to better ways of doing things. Unfortunately, it is also somewhat slow to make a decision

in this structure, so while it may embrace newer and better methods; it might not do so very

quickly.

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Democratic leadership style can bring the best out of an experienced and professional team. It

capitalizes on their skills and talents by letting them share their views, rather than simply

expecting them to conform.

If a decision is very complex and broad, it is important to have the different areas of expertise

represented and contributing input – this is where democratic leader shines.

Good fits for Democratic Leadership:

Creative groups (advertising, design): ideas need to flow in creative environments to find

create new concepts and designs.

Consulting: when paid to explore problems and find solutions, your role will be to explore the

possibilities in depth, and that means there has to be a great deal of exploration and open

discussion.

Much of the Service industry: new ideas allow for more flexibility to changing customer

demands.

Education: few places need to be open to different ideas than education, both by educators and

their students.

How to be effective with this position:

Keep communication open: If the marketplace of ideas is going to be open for business,

everyone needs to feel comfortable enough to put their ideas on the table. The democratic

leadership style thrives when all the considerations are laid out for everyone to examine.

Focus the discussion: It’s hard to keep unstructured discussion productive. It’s the

leader’s job to balance being open to ideas and keeping everything on-topic. If the

conversation begins to stray, remind everyone of the goal on hand and then steer it back. Make

sure to take note of off-topic comments and try to return to them when they are pertinent.

Be ready to commit: In the democratic leadership style, you get presented with so many

possibilities and suggestions that it can be overwhelming and difficult to commit. But as the

leader, when the time comes, you have to choose and do so with conviction. The team depends

on the clear and unambiguous mandates to be committed.

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Respect the ideas: You and your team might not agree with every idea, and that’s ok. It is

important, however, that you create a healthy environment where those ideas are entertained

and considered --not maligned-- or the flow of ideas will slow to a trickle.

Explain, but don’t apologize: You want the advocates of the solutions that were not

selected to understand that their thoughts were considered and had validity, but that ultimately

you had strong reasons to go a different direction. It’s important that the decision be

communicated, but you should not apologize for deciding on what you think.

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QUESTION 4: IF EMERGENT APPROACHES TO CORPORATE STRATEGY HAVE

ANY SIGNIFICANCE, WHY DO COMPANIES INSIST ON DEFINING AND

STICKING RIGIDLY TO PRESCRIPTIVE CORPORATE OBJECTIVES

A strategy is a set of guiding principles that, when communicated and adopted in the

organization generates a desired pattern of decision making. A strategy is therefore about how

people throughout the organization should make decisions and allocate resources in order to

accomplish key objectives.

Strategy is a series of plans and decisions developed to enable a company to reach goals and

settle objectives. All organizations have a set of objectives that they are aiming to achieve and

this is the case whether the organization is small, large, profit seeking or not. Virtually every

organization will have a set of objectives that will require some form of strategic planning in

order to achieve.

Business strategy implicitly or explicitly draws on deliberate strategy, which means clear and

fully formed intentions for where a business should go and how to get there. Most businesses

accept and act on this by establishing very structured two-, three- and even five-year plans to

expand market share or distribution. In some cases, discrete decisions made by numerous, mid-

level employees unintentionally move an entire organization in a new direction, which results in

an emergent strategy.

Emergent strategies are characterized by patterns of actions within a business that occur without

a clear relationship to, or even in spite of, the stated goals or mission of the business. The pattern

typically becomes apparent only after the fact, but businesses often adopt the change as the new

business strategy. A simple example of this might be a comic book shop owner setting a strategy

for dominating comic book sales in given city. The manager, however, notes that profits from

tabletop gaming products far exceed that of the comics and shifts resources to beef up gaming

inventory. Profits rise and owner recasts the strategy to become the dominant gaming shop in a

given city.

In most cases, emergent strategies arise from individuals in an organization responding directly

to market forces. Their decisions reflect shifts in consumer tastes, order sizes and practices of

competitor businesses. In essence, the advantage of emergent strategy is that it leads a business

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to provide what the market actually wants, rather than what the owner or executive thinks or

believes the market wants. Effective emergent strategy does require that the organization

maintain the flexibility, particularly at the owner or executive level, to embrace the new strategy.

Advantages of emergent strategy

Consistent with actual practice in organizations

Considers people issues such as motivation

Allows experimentation about the strategy to take place

Opportunity for inclusion of culture and politics of organization

Flexibility to respond to market changes

Criticisms of emergent strategy approach

There is a danger of “strategic drift” as objectives is not clear

It is more difficult to assess performance as targets are less well defined

Impracticable to expect board members to allow business to function without objectives.

Group resources need to be allocated between demands of competing operating

companies.

Removes aspects of rational thinking from decision making.

Management control becomes unclear as actions to be undertaken are not planned in

advance.

By nature, emergent strategy occurs as part of ongoing organizational activity. While a business

could forgo a deliberate strategy and rely on an emergent strategy to develop, the odds of such

order manifesting from pure, unstructured business activities remains slim. As such, emergent

strategy does not offer a genuine alternative to more traditional deliberate strategy, especially for

new businesses operating on narrow margins. At best, it serves to complement and serve as a

corrective measure for deliberative strategy.

Despite the significance of the emergence approach to corporate strategy, some companies do

insist on defining and sticking rigidly to prescriptive corporate objectives because of the reasons

discussed below.

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Prescriptive strategic planning is the term given to a strategy whereby the objectives of the

strategy are defined in advance and the main elements are designed and developed prior to the

strategy implementation (Lynch, 2003).

Businesses do insist on defining and sticking to rigid corporate objectives because clear

objectives provide focus on the Business. A business is lost without goals and that is what

corporate objectives are. Goals provide the clearest way to measure the success of the company.

A company with clear established goals will know how well the company is doing at different

stages to meet the overall objective of the company and provide focus. By stating or defining the

company's goals in specific, measurable ways, it gives direction to the company's efforts and

allows every person in the company the chance to work towards those goals. It is the main

function of the business objectives to provide direction to the company to guide them towards

whatever goal has been specified for whatever time period has been listed in the objective.

Also, businesses do insist on defining and sticking to rigid corporate objectives because

objectives can be translated into targets against which performance can be measured and

monitored. These set targets monitored and measured ensures the organization does not veer off

course and at each point in time can assess how well the organization is performing and what

sets to take to ensure the organization performs better to achieve the overall corporate vision.

More so, businesses do insist on defining and sticking to rigid corporate objectives because

resources can be allocated to specific objectives and efficiency can be judged. Because resources

are usually scarce or never enough organizations have to plan on how to allocate these scarce

resources to specific objectives to enable the business reach its full potential.

Furthermore, businesses do insist on defining and sticking to rigid corporate objectives because

of cohesion. Business objectives allow everyone to be a cohesive unit and be on the same page.

If the business objectives are written out and clear, then everyone will know what the goals are

and be able to pursue them to the greater extent. Business objectives are a great tool for

communication with the company and a way to make sure everyone is working together.

In addition, some businesses do insist on defining and sticking to rigid corporate objectives

because it gives complex information, defines and focuses business objectives, establishes

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controls, and sets targets that performance can be measured. This approach makes it possible to

organize complex activities and exercise a greater degree of control over different business units.

For example, Tesco's planning process resulted in well-defined long-term goals and clear

boundaries for its UK core business, retail service, non-food and international sectors.

Last but not the least, businesses do insist on defining and sticking to rigid corporate objectives

because the approach is logical and rational. The approach views strategy formulation and

implementation as a logical, rational and systematic process. After analysis of the business and

its environment, strategists set well-defined corporate and business objectives, formulate, select

and implement strategies that will allow objectives to be achieved.

Conclusion

For most companies that use strategy to help manage and improve their company’s performance,

strategy is a periodic deliberate planning process that is loosely tied to its day-to-day business

and resource allocation processes. The basic premise of using strategy within a company is that

the effective allocation of resources to the right areas of the company for the correct purposes

will yield a stronger competitive position and provide overall better returns.

The increasing pace of change in the business landscape, driven by the rapid cycling of consumer

interests and technical innovation, suggest that tolerance for emergent strategy may need to

become inherent for all businesses. Business owners and executives do need to remain cautious

about reading emergent strategy into patterns of behavior. Shifts in the strategic position of the

business due to mid-level decisions may come about as the result of poor or uninformed

decision-making at that level.

However, businesses do insist on defining and sticking to rigid corporate objectives because, the

approach is logical, objectives allow the business to be cohesive. Also, businesses do insist on

defining and sticking to rigid corporate objectives because objectives can be translated into

targets against which performance can be measured and monitored.

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QUESTION 5: WHAT ARE THE PROBLEMS WITH USING ALLIANCES AND JOINT

VENTURES IN INTERNATIONAL STRATEGY DEVELOPMENT? HOW MIGHT

THEY BE OVERCOME?

Introduction

Joint ventures and strategic alliances are a proven tactic for management to secure faster and

lower risk growth. The alternatives are to grow organically (100% control but generally slower

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growth); or with acquisitions (faster growth but demanding on capital and challenging to

integrate post-acquisition and secure the forecast benefits).

Strategic alliances can be effective ways to diffuse new technologies rapidly to enter new

market, to bypass governmental restrictions expeditiously and to learn quickly from the leading

firms in the industry. However, strategic alliances are not simple or easy to create, develop and

support. Strategic alliance projects often fail because of tactical errors made by management.

Joint ventures and strategic alliances allow faster growth by accessing markets and technology,

and sharing and controlling risks. The main catalysts for the growth in such alliances are: the

increasing internationalization of markets; the growing importance of innovation management

(with rapid technology transfer and shorter product lives); and, the increasing costs of R&D

(with the complexity of technology and convergence of it).

With such benefits, there are also potential downsides. 40% of joint ventures result in divorce

within three years – which is not necessarily a sign of failure. But, when joint ventures are not

properly managed over their life time, then the exit costs can be huge.

For example, after ten years of operating in China with its local partner, the French company

Danone accepted an exit settlement of 21% below its book value as payment by its local partner

of $450m for the 51% majority ownership of their joint venture. The divorce took place because

Danone accused its joint venture partner (Wahaha) of setting up at least 96 parallel companies,

with production and sales networks that competed with the joint venture. Danone also believed

its local partner was in breach of confidentiality agreements. While Danone ‘controlled’ the joint

venture at board level, the Chinese partner had almost total day-to-day control.

It is essential that companies enter into strategic alliances arrangements with a comprehensive

plan outlining detailed expectations, requirements and expected benefits.

Problems associated with using joint ventures and strategic alliance

Lack of trust

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Building trust is the most important and yet most difficult aspect of a successful alliance. Only

people can trust each other, not the company. Therefore, alliances need to be formed to enhance

trust between individuals. Many alliances fail due to the lack of trust causing unsolved problems,

lack of understanding and despondent relationships. In many alliance cases one company will

point the failure finger at the partnering company. Shifting the blame does not solve the problem

but increases the tension between the partnering companies and often leads to alliance ruin.

Lack of coordination between management teams

Action taken by subordinates that are not congruent with top-level management can prove

particularly disruptive, especially in instances where companies remain competitors in spite of

their strategic alliance. If it were to happen that one company would go off on its own and do its

own marketing and sell its own product while in alliance with another company it would for sure

be grounds for the two to break up, and they would most likely end up in a legal battle which

could take years to solve if it were settled at all.

Lack of clear goals and objectives

Many strategic alliances are formed for the wrong reasons. Some companies enter into alliances

to combat industry competitors. The alliance may put the companies in the spotlight causing

more competition. Many strategic alliances, although entered into for all the right reasons do not

work. Dissimilar objectives, inability to share risks and the lack of trust lead to an early alliance

demise.

Clash of cultures

Cultural clash is probably one of the biggest problems that companies in alliances face. These

problems consist of language, egos and different attitudes to business can all make the going

rough. The first thing that can cause problems is language barrier that a company might face.

Also different cultures operate in different ways. When the partnering companies do not manage

culture well it can also cause problems for the alliance.

Difference in operating procedures and attitudes among partners

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Other problems that occur between companies in trade alliances are different attitudes among the

companies, one may deliver its goods or services behind schedule or do a bad job producing their

goods and service which may lead to distrust among the two companies. When problems like this

occur it usually makes the other company angry and this could lead to a takeover. An example is

Publicis Communication and Foote, Cone and Belding (FCB) case. The deal was designed to fill

strategic needs of each. An alliance in Europe would finally give FCB the international reach it

needed while Publicis could use FCB’s experience in North and South America to serve its

multinational clients. The venture officially ended earlier after bitter and expensive divorce

proceedings. True North Communications Inc., the holding company for Foote Cone and the

world’s no.8 agency group is fighting off a $28-a-share hostile takeover attempt by its ex-partner

Publicis which still owns 18.5 percent (Melcher and Edmundson, 1997)

Future local or global competitor

One partner for example might be using the alliance to test a market and prepare the launch of a

wholly owned subsidiary. By declining to cooperate with others in the area of its core

competency, a company can reduce the likelihood of creating a competitor that would threaten

its main area of business.

Performance risk

Performance risk is the probability that an alliance may fail even when partner firms commit

themselves fully to the alliance. The sources of performance risk according to a study by Das and

Tend (1999) include environmental factors such as government policy changes, war and

economic recession; market factors such as fierce competition and demand fluctuations; internal

factors such as lack of competence in critical areas or sheer bad luck.

How to overcome the problems associated with strategic alliance

Senior management commitment

The commitment of the senior management of all companies involved in a strategic alliance is a

key factor in the alliances ultimate success. Indeed for alliances to be truly strategic, they must

have a significant impact on the companies’ overall strategic plans and must therefore be

formulated, implemented, managed and monitored with a full commitment of senior

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management. Without senior management commitment, alliances’ will not receive the resources

they need. Senior management commitment to alliances’ is important not only to ensure the

alliances receive the necessary resources but also to convince others throughout the organization

of the importance of the alliance.

Clearly defined, shared goals and objectives

In forming a strategic alliance the question must be asked: ‘how integrated will the alliance be

with the parent company? Some alliance are highly integrated with one or more of the parent

organization and share such resources as manufacturing facilities, management staff and support

functions . Top management must articulate a clear link between where it expects the industry ‘s

future profits pools will be, how to capture a large share of those and where if at all alliance fit in

the plan (Ernst and Stern 1996).

Developing key objectives and goals that reflect what both parties expect to gain is critical. Be

sure that expectations are realistic in light of the resources both parties are willing to put forth,

and make adjustments as needed. Nothing sours an alliance faster than the notion that one party

is giving everything while the other is getting a free ride. Strategic alliances have to foster an

environment in which both parties gain something; otherwise, they're not partnerships.

Build on Trust

Strategic alliances are built on trust, dedication and mutual interests. They require the respect and

interaction of people in each organization. And, like good personal relationships, they require

effort to build. Once they're in place, however, you can count on them.

Each party has to feel that he or she is giving something and getting something in return. If you

haven't taken the time to think through how both sides will benefit, don't pursue an alliance at

this time.

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Evaluate Potential Partners

Even when you get a referral from a trusted advisor, researching a prospective partner is crucial.

You must feel comfortable with the strategies and tactics of any company you’re considering an

alliance with. Find out about the business' key strengths, market position and if possible financial

status. Once you’ve narrowed the field on paper, the detailed analysis begins. It's critical that you

look objectively at management styles, work ethics and values, and identity where potential

clashes could occur. Key questions to ask:

How are decisions made?

How controlling is management of its employees?

At what pace do employees work?

How competitive or aggressive is the company?

Answering these questions honestly leads to a better match. Some companies, for instance, are

known for their tight rein on employees or the long hours they keep; if your work style isn't

similar to theirs, you could be headed for problems. It's also smart to get references from people

who have worked with your potential strategic partner. This will also help overcome the problem

where a partner can later become a local or global competitor.

Develop a Good Communications Process

Clear communication is important to creating an enduring partnership. Disappointments and

misunderstandings can be avoided by establishing an effective process for working with your

partner. The relationship must be developed to the point where both parties can be honest when

evaluating progress and offering recommendations for improvement – both of which should be

done on a regular basis. For example: you might want to exchange weekly sales reports. And by

learning and understanding the culture of the partners involved, they can communicate better.

Define Roles and Responsibilities

 Assess each company's strengths, and define responsibilities accordingly – especially in the area

of management. Many alliances fail because of poor management relationships, so document

clearly what's expected. Be specific: decide how many people will be involved in the alliance

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from each company and what their specific roles will be. Each party has to dedicate resources to

the relationship, and both parties need someone within their organization who will champion the

cause. Also consider all the accounting, tax and legal ramifications of the alliance. Form a game

plan for how the alliance will operate from the beginning to the end of the relationship

Conclusion

Strategic alliances and Joint ventures are important tools for attaining and maintaining

competitive advantage. In addition, strategic alliances concept is growing in appeal to

organizations because of the cost savings achieved in executing operations. Though strategic

alliances can pay off, no business should form partnership just because alliances are trendy.

Companies sometimes enter into alliances without thoroughly analyzing their options. This is the

primary reason why alliances fail so it is imperative that companies make sure that an alliance is

the best option for their needs.

Alliances entered into with comprehensive plan outline, detailed expectations, requirements and

an expected benefit is likely to succeed.

QUESTION 6: WHY IS IT SOMETIMES DIFFICULT FOR AN ORGANIZATION TO

ACT UPON THE CHANGES THAT IT SEES TAKING PLACE IN THE

ENVIRONMENT? WHAT CAN IT DO TO OVERCOME SUCH PROBLEMS? GIVE

EXAMPLES TO SUPPORT YOUR VIEWS.

Organizational change occurs when a company makes a transition from its current state to some

desired future state. Managing organizational change is the process of planning and

implementing change in organizations in such a way as to minimize employee resistance and

cost to the organization, while also maximizing the effectiveness of the change effort.

Today’s business environment requires companies to undergo changes almost constantly if they

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are to remain competitive. Factors such as globalization of markets and rapidly evolving

technology force businesses to respond in order to survive. Such changes may be relatively

minor as in the case of installing a new software program or quite major as in the case of

refocusing an overall marketing strategy. Organizations must change because their environments

change.

How to overcome change problems in an organization

Build new relationships.

A crucial first step in any change process is to build relationships. It means forming

relationships, organizing, and claiming collective responsibility for a given issue or situation.

This can range from highly organized management meetings to a few teams getting together to

discuss their concerns. In some cases, building new relationships may only be possible by

fundamentally changing relationships that are already in place. The key is to develop a sense of

group identity as well as a sense of agency. Being associated with, and committed to, others

gives people a feeling that they are equal to their problems. It is therefore an essential

prerequisite to bringing about desired changes.

Discuss and deliberate.

All effective change strategies hinge on discussion and deliberation. At a minimum, discussion

allows the issues to be named and framed. It also helps individuals develop a shared perspective.

As Robert Theobald points out, "most fundamental change activities break down because those

involved in them do not take the time to gain a shared model of reality." At a more fundamental

level, dialogue allows for what physicist David Bohme calls a "higher social intelligence." One

of the chief obstacles to change, he says, is that "we've organized our societies by algorithms —

that is, by sets of rules by which we try to affect each other like parts of a machine. The result is

that we can't talk with each other about things that are really important." Dialogue helps to

eliminate false divisions among people, builds common ground, and allows for the emergence of

a more systemic perspective.

Develop shared visions and goals.

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Setting new directions for the future is one of the most powerful ways of effecting change. When

people come together in such a way that their individual visions can start to interact, a creative

tension is established that gives focus, direction, and context to changes as they occur. Some

techniques for developing common visions include futures commissions, search conferences, and

visioning meetings in which participants develop "best case" scenarios and articulate common

goals. This process is very different from such perfunctory strategies as writing "vision"

statements. It often involves a great deal of reflection, listening, and mutual understanding.

Foster social capital.

Robert Putnam and others have used the term "social capital" to denote the networks and norms

of trust and reciprocity that characterize healthy social orders. The term suggests that capital can

be measured in social as well as economic terms, that relationships have an inherent value. Scott

Fosler, author of The Public/Private Partnership, has studied the nature of community

collaboration in cities across the United States. "If you look back at what it was that was key in

the development of civic and political institutions," he says, "it was trust that was based on

personal relationships." Building networks and relationships within and between individuals and

groups is not something that can be done overnight, but it is no doubt one of the most effective

change strategies available to communities and organizations.

Ensure broad participation and diversity.

Fundamental change is impossible without the participation of everybody with a stake in the

problem or issue. Without the full participation of all concerned, perspectives will be missing

and there is a good chance that some of the issues involved will go unaddressed. Another aspect

of this is the inherent value of diversity. Research in anthropology, sociology, and biology shows

that homogeneity fosters stability, while diversity invariably produces change. It follows that

planned change is best achieved by promoting diversity.

Determine leadership roles.

There are many types of leaders, from presidents and mayors to teachers, neighborhood activists,

and even parents. But no matter what form they take they lend cohesion to a group and act as

spark-plugs for change. Their vision, drive and personal commitment can be keys to galvanizing

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a group into action. Leaders are also able to champion and protect those within groups who are

most willing to risk change.

Identify outside resources.

Fundamental change tends to be difficult and painful and always involves uncertainty and risk.

Since most communities and organizations that embark on the journey need outside help from

foundations, consultants, civic organizations, trade associations, government departments, etc.

they need to develop linkages to outside sources of capital and information. These linkages not

only facilitate the process of change they often provide opportunities for lateral learning and

growth.

Set clear boundaries.

When planning for specific kinds of change, it is important to operate within clearly defined

boundaries for both psychological and practical reasons. Boundaries provide frameworks for

measuring change and give focus and direction to one's efforts. They also provide a sense of

what is feasible. On a practical level, clearly defined goals allow one to make realistic plans.

Draw on the examples of others.

Change takes place in an infinite variety of ways and there is no single strategy that will work for

every individual or group. Still, those seeking to effect change may take comfort and inspiration

from the examples of others. Not only does this provide mentors from whom they can learn, it

offers them conviction that their goal is attainable.

Adopt a change mindset.

Nothing precipitates change like a crisis. Necessity, after all, is the mother of invention. The

question is whether it is possible to adopt a crisis-perspective without a crisis, or at least a

mindset that is constantly attuned to change. Many innovators and change agents insist that it is

possible. What is required, they say, is a shift of perception from seeing change as dis-

equilibrium to seeing it as a constant. Strategizing for change ultimately comes down to whether

individuals are motivated to change, learn, and grow.

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QUESTION 7: IF STRATEGIC CHANGE IS IMPORTANT, WHY DO SOME PEOPLE

FIND IT DIFFICULT TO ACCEPT AND WHAT ARE THE CONSEQUENCES OF THIS

FOR THE CHANGE PROCESS? HOW CAN THESE DIFFICULTIES BE OVERCOME

GIVEN THE PROBLEMS ASSOCIATED.

Introduction

Organizational change is often stimulated by a major external force, for example, substantial cuts

in funding, decreased market opportunity and dramatic increases in services. Typically,

organizations undertake technical, structural or strategic shifts in the organization to evolve to a

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different level in their life cycle, for example changing from a highly reactive organization to a

more stable proactive environment

Education and the media are transforming the expectations of the workforce, so that many

employees are seeking different rewards from work and different kinds of relationships from

those at work.

To manage within the changing environment, a company must adapt, and adaptation means

change. An organization cannot just replicate yesterday’s practices and expect to achieve the

success it has had in the past. Yesterday’s assumptions and practices may no longer be valid and

may no longer work. Consequently, if an organization wants to maintain its competitive

advantage, deliver on strategic objectives, attract and retain the brightest minds, it must respond

to new circumstances in a proactive, measured and agile manner.

Despite the need for organizations to change in order to survive in business, people tend not to

take kindly to change in any form.

Why people resist change

There are several reasons why changes might be resisted and certain circumstances where the

implementation of change will have to be planned carefully and the needs of the people

considered.

Resistance is likely to be forthcoming where there are perceived flaws or weaknesses in

the proposal. Change decisions may be by the strategic leader and then delegated for

implementation. Managers who are closer to the market may have some justified

reservations if they have not been consulted during the formulation process.

Some resistance can also be expected where people have worked out ways of doing

things which are beneficial to them in terms of their objectives and preferences. They

may see change as a threat. Similarly when people have mastered tasks and feel in control

of their jobs and responsibilities, they are likely to feel relatively safe and secure

personally.

The organization itself or particular managers may resist external pressures if the change

involves considerable expense, investment in new equipment and the associated risks.

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This issue can be exacerbated where there has previously been substantial investment in

plant and equipment which technically is still satisfactory. Although demand may be

falling there may be a reluctance to sell or close.

More so, it is not unusual for people to have some fear of the unknown and to feel

comfortable with situations, policies and procedures that they know. Awareness and

understanding is therefore an important aspect of change.

Furthermore, where particular policies, behavior patterns and the ways of doing have

been established and accepted for a long time and in effect have become part of the

culture of the organization, change will require careful implementation. The need for the

change may not be accepted readily.

Overcoming resistance to change

Effective change occurs when managers and employees modify their behaviors in a desired way

and when the important changes are lasting rather than temporary. Below are some ways of

overcoming resistance to change.

Education and communication

Communication the logic of a change can reduce employee resistance on two levels. First, it

fights the effects of the misinformation and poor communication; if employees receive the full

facts and clear up misunderstanding, resistance should subside. Second, communication can help

‘see’ the need for change by packaging it properly.

Participation

It’s difficult to resist a change decision in which we have participated. Assuming participants

have expertise to make a meaningful contribution; their involvement can reduce resistance,

obtain commitment and increase the quality of the change decision. However, against these

advantages are the negatives: potential for a poor solution and great consumption of time.

Building support and commitment

When employees’ fear and anxiety are high, counseling and therapy, new-skills training or a

short paid leave of absence may facilitate adjustment. When managers or employees have low

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emotional commitment to change, they favor the status quo and resist it. So firing up employees

can also help them emotionally commit to the change rather than embrace the status quo.

Negotiation and agreement

Negotiation and agreement are normally linked to incentives and rewards. Where the resistance

stems from a perceived loss as a result of the proposed change, this can be useful particularly

where the resisting force is powerful. However, offering rewards every time changes in behavior

are desired is likely to prove impractical.

Manipulation and cooptation

Manipulation refers to covert influence attempts. Twisting facts to make them more attractive,

withholding information and creating false rumors to get employees to accept changes are all

examples of manipulation. If management threatens to close a manufacturing plant whose

employees are resisting an across-the –board pay cut, and if the threat is actually not true,

management is using manipulation. Cooptation on the other hand, combines manipulation and

participation. It seeks to ‘buy off’ the leaders of a resistance group by giving them a key role,

seeking their advice not to find a better solution but to get their endorsement.

Conclusion

The role of a manager in clarifying direction is even more important during times of change. It is

the role of the direct supervisor to translate the change around the team into clear identifiable

outcomes and expectations for individual roles. These outcomes need to be managed and

supported throughout the change process. If anything, managers need to communicate more and

meet more frequently with their team members during times of change to ensure staff member’s

efforts stay focused and constructive towards the new change vision.

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