strategy and ict

7/28/2019 Strategy and Ict

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Strategy and ICT


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ICT

acceptance

ICT and Strategy

Competition and strategy

Competitive advantage

Companies as drivers of change

Transaction costs, value chain

The Information Society

The New Capitalism


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So far Developments in society

Developments in economy

Companies as drivers of change

The existence/size/limits of companies:

- Transaction costs

- Value chain


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To do

Explain the form of companies

Explain the conduct of companies


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Company structure (Morgan and Mintzberg)


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Basic Concepts

Organizational Structure: The formal

configuration between individuals and groups

with respect to the allocation of tasks,responsibilities, and authorities within

organizations.

Organizational Chart: A diagram representing

the connections between the variousdepartments within an organization: a graphic

representation of organizational design.


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Sample Organizational Chart


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Structure Concepts I

Hierarchy of Authority: A configuration of thereporting relationships within organizations; thatis, who reports to whom.

Division of Labor: The process of dividing themany tasks performed within an organizationinto specialized jobs.

Span of Control: The number of subordinatesin an organization who are supervised by anindividual manager.


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Modern Trends: Delayering

As todays organizations restructure, the middle layers oforganizational hierarchies tend to get removed. The result is aflatter organizational structure, which puts managers closer to

the issues about which they have to make decisions.


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Division of Labor


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Tall vs. Flat Organizations


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Structure Concepts II

Line Positions: Positions in organizations in which peoplecan make decisions related to doing its basic work.

Staff Positions: Positions in organizations in which people

make recommendations to others but who are notthemselves involved in making decisions concerning theorganizations day-to-day operations.

Decentralization: The extent to which authority anddecision making are spread throughout all levels of an

organization rather than being reserved exclusively for topmanagement (centralization).


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Decentralization


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Departmentalization

The process of breaking up organizations intocoherent units.

Functional Organization: The type of

departmentalization based on the activities orfunctions performed (e.g., sales, finance).

Product Organization: The type ofdepartmentalization based on the products (orproduct lines) produced.

Matrix Organization: The type ofdepartmentalization in which a product orproject form is superimposed on a functionalform.


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Functional Organization


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Product Organization


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Matrix Organization


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Organizational Design

The process of coordinating thestructural elements of an organization in

the most appropriate manner.Approaches include

Classical and Neoclassical Approaches The Contingency Approach

Mintzbergs Framework The Boundaryless Organization


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Classical vs. Neoclassical Theory

Classical Organizational Theory: The approach thatassumes that there is a single best way to designorganizations. This approach assumes that managers need to have close

controlover their subordinates and calls for designingorganizations with tall hierarchies and a narrow span ofcontrol.

Neoclassical Organizational Theory: An attempt toimprove on the classical organizational theory that arguesthat not only economic effectiveness, but also employeesatisfaction, should be goals of an industrial organization. This approach assumes that managers do not have to

carefully monitor their subordinates and calls for designingorganizations with flat hierarchies and a wide span ofcontrol.


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Classical vs. Neoclassical Theory


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Typology (Morgan)

Machines

Organism

Brains

Culture

Political systems

Psychic prisons

Flux & transformation

Instruments of domination


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The machine

Bureaucracy

Functional specialisation

Scientific management (Taylor)


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The organism

Adjust to environment

Organisation as an open system

Mintzberg


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Henry Mintzberg


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Mintzbergs Framework

Mintzberg claims that

organizations are

composed of five basic

elements, or groups of

individuals, any of which

may predominate in an

organization.

The element thatpredominates will determine

the most effective design in

that situation.


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Mintzberg: Five Basic Elements

Operating Core: Employees who perform the basic workrelated to an organizations product or service.

Strategic Apex: Top-level executives responsible forrunning an entire organization.

Middle Line: Managers who transfer information betweenhigher and lower levels of the organizational hierarchy.

Technostructure: Organizational specialists responsiblefor standardizing various aspects of an organizationsactivities.

Support Staff: Individuals who provide indirect supportservices to an organization.


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Five parts of an organisation

1. Strategic apex

2. Middle line

3. Support staff

4. Technostructure

5. Operating core

Illustrations borrowed from

presentations of Bolman and

Deal (Wiley Interscience)


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Coordination

Mutual adjustment

Direct supervision

Standardisation of work processes

Standardisation of work outputs

Standardisation of skills

Standardisation of norms


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Mintzberg: Organizational Designs I

Simple Structure: An organization characterized asbeing small and informal, with a single powerfulindividual, often the founding entrepreneur, who is in

charge of everything.Machine Bureaucracy: An organizational form in whichwork is highly specialized, decision making isconcentrated at the top, and the work environment isnot prone to change (e.g., a government office).

Professional Bureaucracy: Organizations (e.g.,hospitals and universities) in which there are lots ofrules to follow, but employees are highly skilled and freeto make decisions on their own.


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Mintzberg: Organizational Designs II

Divisional Structure: The form used by many large

organizations, in which separate autonomous units are

created to deal with entire product lines, freeing top

management to focus on large-scale, strategic decisions.Adhocracy: A highly informal, organic organization in

which specialists work in teams, coordinating with each

other on various projects (e.g., many software

development companies).


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Simple structure


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Machine bureaucracy


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Professional bureaucracy


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Divisional form


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Adhocracy


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Mintzberg: A Summary


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Boundaryless Organization

An organization in which chains of command areeliminated, spans of control are unlimited, and rigiddepartments give way to empowered teams.

Modular Organization: An organization thatsurrounds itself by a network of other organizationsto which it regularly outsources noncore functions.

Virtual Organization: A highly flexible, temporaryorganization formed by a group of companies that

join forces to exploit a specific opportunity.Affiliate Networks: Satellite organizations affiliatedwith core companies that have helped themdevelop.


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Boundaryless Organization


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Modular Organization


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Virtual Organization


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Strategic Alliances

Mutual Service Consortia: A type of strategic alliance inwhich two similar companies from the same or similarindustries pool their resources to receive a benefit that

would be too difficult or expensive for either to obtainalone.

Value-Chain Partnerships: Strategic alliances betweencompanies in different industries that havecomplementary capabilities.

Joint Ventures: Strategic alliances in which severalcompanies work together to fulfill opportunities thatrequire the capabilities of one another.


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Back to Morgan: Brains

Self learning system

Cybernetics

Negative feed back


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Culture

Shared values and norms

Institutionalisation


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Political systems

Interest groups

Power/influence


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Instruments of domination

The multinational


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Strategy


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2007 Wolters-NoordhoffOrganisation and Management


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SWOT

Structure Conduct Performance Resource Based View


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The strategy perspective

Structure-Conduct-Performance model(Porter, 1980, 1985)


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Porters five forces model

2007 Wolters-Noordhoff Organisation and Management


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Question

Are there industry characteristics (based

on the five forces model) which explain

the use of the Internet as a channel?


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Disappearance of barriers of

entry

Economies of scale

Product differentiation

Switching costsAccess to distribution channels

(Shin, 2001; Lucas, 2002)


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Existing rivalry

Winner takes all

First mover advantage

(Source: Coltman, 2001)


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Strategies

? + +

- 0 +

- - ?

Relative resource-produced value

Lower Parity Higher

Relative

resource

costs

Lower

Parity

Higher


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Strategies to realize competitive

advantage (Porter, Treacy and Wiersema)

Cost leadership/operational excellence

Differentiation/product leadership

Focus/customer intimacy


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Question

Mention examples of companies that use

the Internet to create a competitive

advantage


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Boston Consultancy Group Portfolio Matrix

2007 Wolters-Noordhoff Organisation and Management


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Growth according to Ansoff(1965)

PRODUCT

Existing New

MARKET

Existing

New

Penetration

Market development

Product development

Diversification


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Strategy (2)

Horizontal integration

Forward vertical integration

Backward vertical integration


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The role of ICT in companies

Strategic Alignment Model


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Business Strategy

Organizationalinfrastructure

Infrastructure andprocesses

ICT Strategy

Alignment

Impact

Business ICT

Alignmentmodel Venkatraman & HendersonStrategic Alignment: levering Information Technology for Transforming Organisations

IBM Systems journal, 32 (1) 1993, p 4-16


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Strategic Alignment Model


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Four dominant alignment perspectives

1. Strategy execution

2. Technology transformation

3. Competitive potential 4. Service level

strategy and ict

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