...Implementing Strategy in Companies That Compete in a Single Industry SYNOPSIS OF CHAPTER Chapter 12 examines how managers can best implement their strategies in single-industry firms in order to achieve a competitive advantage and superior performance. First, the main elements of strategy implementation—structure, control systems, and culture—are analyzed in detail, focusing on the way they work together to create an organizing framework. Then the chapter turns to the topic of using structure, control, and culture at the functional level to build distinctive competencies. After that, the chapter addresses the challenges of implementing the generic business strategies of cost leadership or differentiation in a single industry. The final section covers restructuring and reengineering, two strategies that single-business firms can use to improve corporate performance. The next chapter takes up where this one leaves off and examines strategy implementation across industries and across countries—that is, implementing corporate and global strategy in firms that compete in more than one industry. TEACHING OBJECTIVES 1. Introduce the main elements of strategy implementation—structure, control systems, and culture—and their relationships to each other. 2. Demonstrate how structure, control, and culture can build distinctive competencies at the functional level. 3. Describe the use of structure, control, and culture in implementing a single-business firm’s generic business strategy. 4...
Words: 7232 - Pages: 29
...Chapter Twelve CORPORATE SINGLE INDUSTRY STRATEGY - This chapter is related to organizational control, structure and culture. Learning Objectives * Understand how organizational design requires the right combination of structure, control, and culture. * Discuss how effective organizational design enables company to increase product differentiation, reduce costs, & build competitive advantage. * Explain importance of flat hierarchy & factors determining centralization/decentralization * Explain advantages of functional structure & why/when necessary to move to more complex structure. * Differentiate between complex forms of structure used for specific business-level strategies. - What comes first strategy or structure? During the 60s and 70s the strategy should follow your structure. The debate continues. Look at it based on the industry characteristics and the type of organization you are in. In the 90s researches argued that your structure should follow your strategy. As the strategy is more comprehensive than the structure, then structure should follow the strategy. The business environment is independent and the company is the dependent. Then we should follow the business environment. When we do the strategy, we examine the macro business environment the micro business environment the competitors analysis and understand...
Words: 4577 - Pages: 19
...CHAPTER 12 Implementing Strategy in Companies That Compete in a Single Industry Synopsis of Chapter Chapter 12 examines how managers can best implement their strategies in single-industry firms in order to achieve a competitive advantage and superior performance. First, the main elements of strategy implementation—structure, control systems, and culture—are analyzed in detail, focusing on the way they work together to create an organizing framework. Then the chapter turns to the topic of using structure, control, and culture at the functional level to build distinctive competencies. After that, the chapter addresses the challenges of implementing the generic business strategies of cost leadership or differentiation in a single industry. The final section covers restructuring and reengineering, two strategies that single-business firms can use to improve corporate performance. The next chapter takes up where this one leaves off and examines strategy implementation across industries and across countries—that is, implementing corporate and global strategy in firms that compete in more than one industry. Teaching Objectives 1. Introduce the main elements of strategy implementation—structure, control systems, and culture—and their relationships to each other. 2. Demonstrate how structure, control, and culture can build distinctive competencies at the functional level. 3. Describe the use of structure, control, and culture in implementing a single-business...
Words: 5509 - Pages: 23
...Organizational Architecture? * Organizational architecture is the totality of a firm’s organization including: 1. Organizational structure * the formal division of the organization into subunits * the location of decision-making responsibilities within that structure - centralized versus decentralized * the establishment of integrating mechanisms to coordinate the activities of subunits including cross-functional teams or pan-regional committees 2. Control systems and incentives * control systems - the metrics used to measure performance of subunits * incentives - the devices used to reward managerial behavior 3. Processes, organizational culture, and people * Processes - the manner in which decisions are made and work is performed within the organization * Organizational culture - the norms and value systems that are shared among the employees of an organization * People - the employees and the strategy used to recruit, compensate, and retain those individuals and the type of people they are in terms of their skills, values, and orientation Figure of Organization Architecture What Are The Dimensions Of Organizational Structure? * Organizational structure has three dimensions: 1. Vertical differentiation - the location of decision-making responsibilities within a structure 2. Horizontal differentiation - the formal division of the organization into sub-units 3. Integrating mechanisms - the...
Words: 1392 - Pages: 6
...determining structure. This report aims at applying classroom concepts to tackle real life situations in an organization. 1 Table of Contents Abstract 1 Introduction 2 Strategy & Other factors affecting Structure 2.1 Strategy 2.2 Environment 2.3 Stage in the Life Cycle 3 Evolution of Structure 3.1 Problems in the Current Structure 4 Culture and Control 4.1 Preliminary Observations 4.2 Survey Analysis Results 4.3 Team Wise Trends 5 Structural Recommendations 6 Conclusion Author Details Appendix References 2 2 3 3 4 4 5 5 5 5 6 6 6 7 7 8 13 2 Abstract This article contains the brief analysis of the evolution of structure and culture of a rapidly growing entrepreneurial venture-Adodis Technologies, founded in 2008. The vision and mission perceived by the CEO has helped this web technology start-up to quickly carve a niche for itself in the market and to go international within only 3 years of its inception. Low start-up and operational costs for companies operating in the web development area have created an extremely competitive market, in which Adodis is still a new player. Thus, although its primary role and image in the market is still that of a low-cost player, the CEO has been taking several measures to build an early innovation culture as well ever since the company’s inception. The amount of social capital built into the organization and the learning culture is reflective of the firm’s strategy. Our primary aim was to understand how this dual strategy could operate...
Words: 3144 - Pages: 13
...Implementing Strategy in Companies That Compete Across Industries and Countries 13 - 1 Managing Corporate Strategy Through the Multidivisional Structure • Functional or product structures are not sufficient when a company enters new industries • Multidivisional structure innovations – Divisions (operating responsibility) – Corporate headquarters staff to monitor divisions (strategic responsibility) – Each division may be organized 13 - 2 Multidivisional Structure 13 - 3 Advantages of a Multidivisional Structure • • • • Enhanced corporate financial control Enhanced strategic control Growth Stronger pursuit of internal efficiency 13 - 4 Problems in Implementing a Multidivisional Structure • Establishing the divisional-corporate authority relationship • Distortion of information • Competition for resources • Transfer pricing • Short-term R&D focus • Duplication of functional resources 13 - 5 Structure, Control, Culture, and Corporate-Level Strategy • Unrelated diversification – Easiest and cheapest strategy to manage – Allows corporate managers to evaluate divisional performance easily and accurately – Divisions have considerable autonomy – No integration among divisions is necessary 13 - 6 Structure, Control, Culture, and Corporate-Level Strategy (cont’d) • Vertical integration – More expensive than unrelated diversification – Multidivisional structure provides necessary controls to achieve benefits from the control of resource transfers...
Words: 783 - Pages: 4
...Organizational architecture—(organization structure, control systems, incentives, processes, organizational culture and people) Organizational Structure • Organizational structure has three dimensions: 1. Vertical differentiation - determines where decision-making power is concentrated within a structure 2. Horizontal differentiation - the formal division of the organization into sub-units 3. The establishment of integrating mechanisms - the mechanisms for coordinating sub-units Vertical Differentiation: Centralization • Facilitates coordination of activities Eg. A firm has a component manufacturing operation in Taiwan and an assembly operation in Mexico • Ensure decisions consistent with organization’s objectives • Allows top-level managers to bring about organizational change • Avoids duplication of activities Eg. Many international firms centralize their R&D functions into one or two locations to ensure the R&D work are not duplicated. Decentralization • Takes advantage of local information, which may result in better and faster decisions • Can motivate employees • Relieves top management • Can increase control in self-contained subunits • It can be worthwhile to centralize some decisions and decentralize others, e.g., centralizing control over core competencies while decentralizing operating decisions Horizontal Differentiation: The Design Of Structure • Horizontal differentiation is concerned...
Words: 1728 - Pages: 7
...Operations Perspective: 2 1.1.4. Innovation and Learning Perspective: 2 1.2. Balanced Scorecard efficacy as a strategic control tool: 2-3 1.3. Conclusion: 3 Question 2: Coca-Cola’s Strategies: 4-5 2. Introduction: 4 2.1. Coca-cola’s Strategies: 4-5 2.1.1. Generic strategies: 4 2.1.2. Grand strategies: 5 2.1.3. Conclusion:...
Words: 4747 - Pages: 19
...corporation's structure and culture be internal strengths or weaknesses? If a corporation's structure is compatible with present and potential strategies, it can be viewed as an internal corporate strength. If, however, the structure is not compatible with either present or potential strategies, it is a definite weakness and will act to constrain strategy formulation. For example, if a corporation is structured on the basis of function, this may be a weakness if the firm wishes to grow by acquiring other profitable corporations. In order to implement such a strategy, the strategy formulators may have to reorganize on a divisional basis. To the extent that top and middle managers have no experience with such a structure, a lot of unforeseen problems can emerge which may seriously affect the success of the strategy. Corporate culture, a collection of beliefs, expectations, and values shared by a corporation's members, acts to shape the behavior of people in a corporation. Since corporate culture has a powerful influence on the behavior of managers as well as other employees, it may strongly affect a corporation's ability to shift its strategic direction. Acting in a manner similar to structure, to the extent that a corporation's culture is compatible with present and potential strategies, it can be viewed as an internal corporate strength. To the extent that it is not compatible, it may spell disaster for a strategic change in the implementation stage. A strategy that contradicts...
Words: 265 - Pages: 2
...MBA: STRATEGIC MANAGEMENT Company Mission, Social Responsibilities and Ethics External Environment Internal Environment Strategic Analysis and Choice Possible? Desired? Long Term Objectives Generic & Grand Strategies Short Term Objectives Functional Tactics Policies Organizational Structure, Leadership and Culture Strategic Control and Innovation IMPLEMENTATION OF STRATEGY TOPIC: STRATEGY IMPLEMENTATION WAMBUGU JOHN KAMAU STRATEGY IMPLEMENTATION THROUGH SHORT-TERM OBJECTIVES, FUNCTIONAL TACTICS, REWARD SYSTEMS, AND EMPLOYEE EMPOWERMENT Introduction Strategy implementation is the manner in which an organization should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance. Steps in Implementing the Firms Strategies Managers shift focus from strategy formulation to implementation successfully by doing the following right: * Identify short-term objectives: * Initiate specific functional tactics. * Outsourcing nonessential functions * Communicate policies that empower people in the organization. * Design effective rewards. How are Short-Term objectives used in Strategy Implementation? Short-term objectives are measurable outcomes achievable in one year or less. Short-term objectives provide much more specific guidance for what is to be done, a clear delineation of impending actions needed,...
Words: 4634 - Pages: 19
...13-1 13-2 Organization architecture and profitability Totality of a firm’s organization, including structure, control systems, incentives, processes, culture and people. Superior organization profitability requires three conditions: An organization’s architecture must be internally consistent. Strategy and architecture must be consistent. Strategy, architecture and competitive environments must be consistent. McGraw-Hill/Irwin International Business, 5/e Organizational architecture Fig 13.1 To maximize profitability a firm must achieve consistency between the various components of its architecture McGraw-Hill/Irwin International Business, 5/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 13-3 13-4 Organizational architecture Organizational structure: Location of decisionmaking responsibilities within the structure (vertical differentiation) Formal division of the organization into subunits e.g. product divisions (horizontal differentiation) Establishment of integrating mechanisms including cross-functional teams and or pan-regional committees Organizational architecture Incentives: Devices used to reward appropriate employee behavior Closely tied to performance metrics Control systems : metrics used to measure performance of subunits and judge managerial performance McGraw-Hill/Irwin International Business, 5/e © 2005 The McGraw-Hill Companies, Inc., All Rights...
Words: 2331 - Pages: 10
...Organizational Culture Name of Student Student Number Institution Course Code Name of Lecturer Date of Submission Corporate Culture and Strategy The corporate leadership council (2003) defines organizational culture as the values, behavior and the political environment in a company. Employee motivation, communication patterns, decision-making strategies, operating methodologies, structure of an organization and its philosophy constitute the elements of a company’s corporate structure. With an organization having an effective culture, the outcome may be a company which accepts and appreciate diversity, shows concern and treats all employees fairly. Further, employees portray utmost satisfaction and pride working for the organization, their (employees) full potential is given equal consideration to allow for the realization of individual goals. Subsequently, communication and collaboration among employer and employee concerning policy making is adequate and the employees are respected and motivated. This paper aims at explaining how companies utilize corporate culture as a key component in organizational change and how these cultures, when applied, may impact on the productivity of the company in question. The effect of organizational cultures, when not aligned with corporate business strategies, will also be discussed. Organizational culture is the distinctive norms, beliefs, principles and behavioral ways in...
Words: 1107 - Pages: 5
...------------------------------------------------- Corporate Strategy Critically examine how the success of Ikea has been supported by its organisational culture Mona Thorvaldsen, Kate Mulvana, Joan Kawalewale, Tom A. Trosterud, Jodie Evans MA Public Relation Management & MA Business Studies Semester Two Module Leader: Lawrence Bellamy Contents Page No Chapter 1 – Introduction | 3 | | | | | Chapter 2 – Background | 3 | | | | | Chapter 3 - Appraisal | 4 | | | | | Chapter 4 – Analysis | 9 | | | | | Chapter 5 – Conclusion | 14 | | | | | Bibliography | 15 | Executive summary This report examines the corporate culture of the global furniture leader IKEA and discusses the link between Ikea’s culture and its performance. The cultural web is used as a device for breaking up the complexity of organisational culture and for demonstrating that Ikea enjoys a strong and consistent culture. The report identifies synergy between Ikea’s culture and strategy, arguing that culture has given the organisation competitive advantage. Furthermore it points to the complex set of factors influencing performance, and how Ikea’s culture is one of several components in its success-formula. 1.0 Introduction Organisational culture is built on the assumptions and beliefs that construct purpose, guidelines and collectivism. In effect strategy reflects the organisational culture in the sense that it represents...
Words: 3872 - Pages: 16
...A. Compare the cultures of the two companies using the relevant values in the attached “Competing Values Framework.” The Competing Values Framework model was developed for cultural assessments of organizations that shows the effectiveness in a two dimensional layout. In the Competing Values Framework model, there are four culture representations, Adhocracy, Clan, Market and Hierarchy. The Symphony and the Opera fit into one of the categories as individual organizations. More will be discussed on which category each belongs in, plus a comparison with each of the other three cultures. Included in the Competing Values map is two other cultural dimensions. The Horizontal dimension is located on the left of the model and maps out the inward or internal focus and integration. The primary attention focuses inward within the company or organization. When environments are less competitive and focused on the customer, internal focus is the most important dimension element. The outward or external focus and differentiation is located to the right of the model. The focus is primarily outwards, to the external environment, customers and suppliers. The Vertical dimension is located at the top and bottom of the model. This lower axis has more to do with who makes the decisions. At the bottom of the model, is Stability and Control which is geared more to management control. While at the top is Flexibility and Discretion which empowers employees to make decisions...
Words: 2430 - Pages: 10
...the relationship of organizational structure, control and culture? When would a company decide to change from a functional to a multidivisional structure? Between the structures, the controls and the culture is a relationship that works like a chain that is locked to itself. Organizational structure specifies procedures, controls, and decision-making authority. It is critical to match organizational structure to the company strategy. The structure have the purpose of manage the firm’s daily work routines, explore new resources and competitive possibilities, distribute resources. This is a chain because every company is made by employees of different levels, background, and history and believes. Thru the interaction between them and the company structure and function is where we can find the culture. The controls are created by the structure that the organization have created with the purpose of motivate employee's. Organizational controls provide guide strategy implementation, identify differences between actual & expected results, suggest which corrective actions to take. The organizational culture is shaped by the people through shared values and norms. The controls are used for example in the interaction with internal and external resources. There are different control establish in different areas that the structure have design and in must company’s you can observe and notice the difference in culture thru the organization structure and which controls are presented...
Words: 593 - Pages: 3
