SCOTT BEARDENJOHN BEDDINGFIELD

LAUREN FRICKPATRICK LEWIS

TREVOR MCDONALD

Foundations of Strategy: Realizing Strategy

Specialization and Division of Labor

Specialization- division of labor into separate tasksSmith’s pin maker example

-produced 4800 pins per person each day compared to 20 pins per person each day

The Cooperation Problem

Agency Relationship-exists when one party (the principal) contracts with another party (the agent) to act on behalf of the principle.

Bureaucratic controls go hand in hand with hierarchy. -Critics of bureaucracy argue that bureaucratic control reduces the extent to which those lower down the organization can exercise their personal judgment.

Performance incentives Shared Values

Coordination Problem

Unless individuals can find ways of coordinating their efforts, production doesn’t happen. Rules and instructions- Range of duties required by their employer Routines- Where activities are performed recurrentlyMutual adjustment - Individuals engaged in related tasks

Organizational Design

Hierarchy and CoordinationHierarchies are a flexible way of coordinating

activities because they allow specialist units to act independently of each other

Organizational Design Cont.

Defining organizational units Tasks

Grouping based on job Maintenance dept, machine shop, etc.

Products Department store

Grocery, Drug, Produce, etc.

Geography Multiple local markets

Process Sequence of interlinked activities Product development, manufacturing, sales, etc.

How to decide which unit to use to define organizational units: The fundamental issue is achieving the coordination necessary to integrate the efforts of different individuals

Alternative Structural Forms

The Functional Structure Single-business firms structured this way Grouping this way promotes learning Different functions create own identity

Limited scope for decentralization Product Expansion problems

The Multidivisional Structure Response to coordination problems of diversification High potential for decentralized decision making Operating decisions made at divisional level

Strategies, Planning, Budgeting at Corporate level

Matrix Structures Multiple dimensions

Multiple products, multiple functions, multiple locations

Beyond Hierarchical Structures

Adhocracies: Flexible, spontaneous coordination and collaboration around

problem solving and other non-routine activities Team-based and project-based organizations:

Project based companies such as construction, consulting, and engineering

Teams must be interacting closely and rely on problem solving and mutual adjustment

Also should follow set rules and routines to ensure consistencyNetworks

Multiple firms located in a small geographic area working closely in their specialized piece of a complex product

Microelectronics in Silicon Valley

Management Systems

Information Systems Key to success in recent push of decentralization of authority in organizations Information on performance of every employee must be readily available

Strategic Planning Systems Statement of the goals Set of assumptions or forecasts Qualitative statement

How the business will be changing in relation to past BP after oil spill

Specific action steps Set of financial projections

Financial Planning and Control Systems Two main budgets created

Capital expenditure budget Operating budget

Human Resource Management Systems Sets goals, creates incentives and monitors performance at the level of the

individual employee

Corporate Culture

Organizational CultureCorporate Culture Describing and Classifying Cultures

Amazon

Diversification Electronics Software Apparel Furniture

Take-Away’s

Strategy formulation and implementation are inextricably linked

Forces cause companies to seek new organizational structures and management systems

Organizational culture plays a role in the way strategy is realized