business strategy 2e

8/2/2019 Business Strategy 2e

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Student Name: Vaidas Bilkis

Course of Year: 2011-2012

Module: Business Strategy

Assignment title: Strategic Environment

Assignment Number: 2

Tutor Kieran Alcock

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Table of Content

Section 1 3Section 2 10

Section 3 15

Section 4 19

Section 5 23

Appendix 27

Bibliography 51

Sections

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Section 1 Organisational structure

The theories of organisational structure is on Appendix 2 and the theories of the

Managing at different level of the organisation is on Appendix 3

Mark & SpenceSince the 1900s Mark & Spenser company had applied “Simple organisational

structure” here are the evidence from the case study to support my proposition:

“Throughout most of the 1900s M&S was led by family members, who favoured close

control and meticulous attention to detail. Central edict was given for purchasing,

merchandising, layout etc. Hence every M&S was identical, resulting in consistent

image and guarantee of standard. “ From the evidence that have been demonstrated

from the case study, I will lay down the small hints and facts that support my

justification. As the above evidence has shown that the company was led by “ family

members, who favoured close control ” and “Central edict was given for purchasing,

merchandising, layout.” These facts lead us to the conclusion that was a small

company, because of how the company was led and controlled. This leads that the

leader of the company’s has wide span of the control over the decisions she/he made.

This supports the theory of Simple organisational structure. According to theory

“Simple organisation structure is characterized by low degree of differentiation of

subtasks, and leaders are having wide span of control. This means that the authority

often is centralized in a single person, who is often the boss of the company.

Formalization will also be low, and work will often be structured through direct

control and supervision.” ( Linehan M 2007:71) The simple organisational structure

according to the theory “The simple organisational structure is widely practiced in

small companies or organisations”(Linehan M 2007:71) As the evidence mentioned in

the case study that the company was led by the family member and comparing to the

organisational theory, I could justify that the company is small and uses Simple

organisational structure at that time. There are two theories of organisational structure

“Flat (small companies) and Tall (big companies)” in terms of the span of control and

division of labour. As the theory of the simple organisational structure mentioned “The

simple structure is referred to as flat structure.” (Linehan M 2007:71) And the above

case study supported this flat structure theory “who favoured close control and

meticulous attention to detail. Central edict was given for purchasing, merchandising,

layout” This means that the chain of the command from the top to the bottom is short

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and the spam of the control is wide. The role of the family members in the M&S is to

running the whole organisation in terms of the running the whole organisation to make

organisation’s goals, overall strategy and also operating policies. They are also have to

monitoring and coordinating the operational activities and how people are working,

they are also dealing with complains of the customers. The CEO of the company

responsible for the meeting the customer needs and wants and also guarantee for the

standards of the products and customer service for the pricing of the product.

Since 1900s the company has been growing in to bigger company, the previous

“Simple organisational structure is no longer suitable for the big company in terms of

coordination of work the direct control and supervision as the Simple theory states

“Simple organisation structure is nor relevant when the business or organisation grows

in size, and when surrounding environment of the company grows in

complexity”(Linehan M 2007:71) As the theory has stated that “Simple structure” is no

longer relevant to the bigger companies and M&S no exception. According to the

evidence from the case study I came up with the conclusion that M&S has applied

“Bureaucratic organisational structure” in 1990. Here is the following evidence from

the case study to support my proposition:

1. “The Bureaucracy hasn’t really changed. They had a go at it, but now it’s gone

back to the old ways.”

2. Holmes created an executive committee to deliver the board’s plans. Finally, he

promised a tightening of logistics, store refurbishments, downsizing of

headquarter staff. Rose also thought the process from drawing board to shop

floor was too slow.

3. “Rose brought with him colleagues Charles Wilson to run Logistics and Steven

Sharp to oversee operation”

4. In reacting Rose halved the board, to himself, Wilson and Ian Dyson (replacing

the ousted finance director), his aim being to move closer to the operating units,

get more control and increase speed and flexibility, as he admitted turnaround

was an uphill task.

According to the Bureaucratic organisational theory “bureaucratic structure maintains

strict hierarchies when it comes to people management. And it also helps when the

organisation is growing in complex and also large, bureaucratic structures are

required for management. This structure is suitable for tall organisations.” (Linehan M

2007:71) And also “The Weberian characteristics of bureaucracy are: Clear defined

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roles and responsibilities, hierarchical structure, Respect for merit.” (Linehan M

2007:71) The insider of the company has clearly defined the structure of the M&S in

the following sentence “The Bureaucracy hasn’t really changed”. There is also hinted

as hierarchical structure of the company “ Holmes created an executive committee to

deliver the board’s plans” and “ Rose brought with him colleagues Charles Wilson to

run Logistics and Steven Sharp to oversee operation” These two evidences from the

case study support the hierarchical structure, because everybody knows what are they

doing in the company, and also what are the responsibilities they have it. As I

mentioned in the previous sentence, M&S using bureaucratic organisational structure

and they are also clearly defined the roles of the people and also the responsibilities the

evidence from the case study is “ Holmes created an executive committee to deliver the

board’s plans” and “ Rose brought with him colleagues Charles Wilson to run Logistics

and Steven Sharp to oversee operation” From the support evidence there is clearly

defined the roles and responsibilities:

• Holmes is run CEO

• Charles Wilson is run Logistics

• Steven Sharp is run operation

Holmes is responsible for controlling the whole organisation. This means that his

responsibilities are to create the organisation’s goals, overall strategy and operating

policies. Charles Wilson responsabilities are to planning, implementing and controlling

the efficient, effective flow and storage of good and also service. Steven Sharp

responsibilities are to monitoring and coordinate the activities of operating employees.

Sony Corporation

Since the 1946 Sony company had applied “Simple organisational structure” here is the

evidence from the case study to support my proposition: “1946. Sony was started as

Tokyo Tsuchin Kyogo by Masaru Ibuka and Akio Morita in war ravaged Japan.

Initially, the company had 20 employees and capital of 190000 yen.” From the

evidence that have been demonstrated from the case study, I will lay down the small

hints and facts that support my justification. As the above evidence has shown that the

company was led by two founders of the company “ Masaru Ibuka and Akio Morita

“and they employed 20 people. These facts lead us to the conclusion that was a small

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company, because of how the company was led and controlled. This leads that the

leader of the company’s has wide span of the control over the decisions she/he made.

This supports the theory of Simple organisational structure. According to theory

“Simple organisation structure is characterized by low degree of differentiation of



Formalization will also be low, and work will often be structured through direct

control and supervision.” (Linehan M 2007:71) The simple organisational structure

according to the theory “The simple organisational structure is widely practiced in

small companies or organisations” (Linehan M 2007:71) As the evidence mentioned in

the case study that two partners led the company and comparing to the organisational

theory, I could justify that the company is small and uses Simple organisational

structure at that time. There are two theories of organisational structure “Flat (small

companies) and Tall (big companies)” in terms of the span of control and division of

labour. As the theory of the simple organisational structure mentioned “The simple

structure is referred to as flat structure.” (Linehan M 2007:71) Event there is no

mentioned in the case study about the company’s span of control and division of labour,

but we can come logically to conclusion that the company’s chain of the command

from the top to the bottom is short and the spam of the control is wide, because they are

using “Simple organisational structure” and if they are using simple organisational

structure the theory of simple organisational structure stated “The simple structure is

referred to as flat structure”. (Linehan M 2007:71) The role of Masaru Ibuka and Akio

Morita are running the whole organisation in terms of the running the whole

organisation to make organisation’s goals, overall strategy and also operating policies.

They are also have to monitoring and coordinating the operational activities and how

people are working, they are also dealing with complains of the customers. The CEO of

the Sony was responsible for product innovation, high quality and meeting the customer

needs.

Since 1946s the company has been growing in to bigger company, the previous

“Simple organisational structure is no longer suitable for the big company in terms of

coordination of work the direct control and supervision as the Simple theory states

“Simple organisation structure is nor relevant when the business or organisation grows

in size, and when surrounding environment of the company grows in complexity”

(Linehan M 2007:71) As the theory has stated that “Simple structure” is no longer

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relevant to the bigger companies and Sony no exception. According to the evidence

from the case study I came up with the conclusion that Sony has applied “Divisional

structure” in 1996. Here is the following evidence from the case study to support my

proposition: “1996 Sony was organised into 10- company structure.” According to the

Divisional organisational theory “divisional structure, the teams are organised in set of

divisions, where each division corresponds to the end product or service provided by

organisation. Each division has its own set of functional units like research,

manufacturing, marketing etc. and is completely self-contained .” (Linehan M 2007:72)

There is no much mentioned about the “10-company structure” in Sony case, but we

can come to the conclusion used by the theory mentioned above about the divisional

structure. We can logically make a guess using the case why Sony has restructured the

company from “Simple” to “Divisional”. The CEO of the Sony’s company were

focusing on the strategic orientation, they are also made a better performance

accountability to the CEO. The divisional organisational structure allowed to Sony

Company to focus upon single product, with a leadership structure that supports its

major strategic objectives. Having its own president or vice president makes it more

likely the division will receive the resources it needs from the company. Role and

responsibility in the divisional structure in Sony was: the company had 10 different

product/service divisions within the company, and this means that they are targeting

with 10 different product different segments. Within the one division there are sales,

engineering and marketing department.

1. The role of the CEO is to run and control the whole organisation. The

responsibilities of CEO are the organisation’s goals, overall strategy and also

operating policies. (Linehan M 2007:3)

2. The role and responsibilities of sales manager are to meeting the sales target of

organisation through effective planning and budgeting. Sales manager

responsibility is to achieve the company’s goals and to develop the people

reporting to them. Sales manager responsible for motivating and also building a

strong team. The Sales manager is accountable to the company’s CEO

3. Role and responsibilities of Marketing manager are to develop the department’s

marketing strategy. They are estimating the demand for the product or service

offered by the firm. Developing pricing strategy to help the department to

maximise profits. They are also responsible to work with the advertising and

promotion. Marketing manager is accountable to the Sony’s CEO

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4. Role and responsibility of engineer marketing is to allocating engineering

resources to the project. Participating in managing and developing the

engineering personnel. Engineering department manager is accountable to the

Sony’s CEO

Until 2003 Sony Corporation has been used “Divisional organisational structure”, but in

October 2003, Idei came up with another restructuring plan called “Transformation 60”

this is 3 years transformation. According to the evidence from the case study I came up

with the conclusion that Sony has applied “Strategic Business unit” as the structure of

the Sony’s company. Here is the following evidence from the case study to support my

proposition: “The company was reorganised into seven business entities four network

companies and three business groups. Above plans were not successful mainly due to

the significant drop in sales of conventional televisions and portable audio products.

Games division also did not fare well with sales of PlayStation 2 consoles falling

rapidly. In March 2005 Stringer became CEO to lead Sony. Stringer was head of

Sony’s North American business”. According to the Strategic business unit theory

“Strategic business is understood as business unit within the overall corporate identity

which distinguishable from other business because it serves a defined external market

where management can conduct strategic planning in relation to product and markets.

When the company or organisation becomes large, they are best thought of as being

composed of number of businesses. These organisation entities are large enough to

exercise control over most strategic factors affecting their performance.” ( Linehan M

2007:72) In the case study there are mentioned that the company “reorganised into

seven business entities”, and according to the exhibit 1 in the case study, the company

consist of four levels. According to the organisation structure in terms of the span of

control and division of labour, this is tall organisational structure. The theory of tall

organisational structure states, “Tall structured organisation has many levels of

management and supervisors. There is long chain of command running from the tops

(CAO) to the bottom (Employees)”. ( Linehan M 2007:69p) According to the matrix

organisational structure “The organisational structure is very

flat”(http://www.slideshare.net) and matrix organisational structure is not suitable for

Sony organisation, and there is only one option left and this is Strategic business unit.

Strategic business units are small enough to be flexible and large enough to exercise

control over most of the factors affecting its long-term performance. Sony’s strategic

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business units have different missions and objectives, they allow the owning

conglomerate to respond fast to changing economic or market situations. Roles and

responsibilities

• The role of the CEO is to run and control the whole organisation. The

responsibilities of CEO are the organisation’s goals, overall strategy and also

operating policies (Linehan M 2007:3)

• Vice president or middle manager of the business unit is responsible for

applying the policies and also the plans developed by the group of executives

and monitoring and coordinating the activities of lower level managers.

(Linehan M 2007:3)

• Operational manager of the business unit is responsible for monitoring and

coordinate the activities of operating employees. Operational manager most of

the time spends supervising the work of subordinates. (Linehan M 2007:3)

• Staffs of the business unit are ensure machinery are safe and that safe systems

of work are set and followed, they are also have to make sure the workplace

safe and eliminated or control risks to health.

On 2005 Sony organisation decided to reorganise the SBU from 7 business units to

5 business units. According to the case study 5 business units are: ”the Electronics

Business Group, Games Business Group, Entertainment Business Group the Personal

Solutions Business Group, and the Sony Financial Holdings Group.” The whole

organisation structure still remains “Strategic business unit organisational structure”

the evidence of the remained organisational structure is “On 2005 March 7, Sony

announced new organisational structure. Stringer assumed responsibility as chairman,

group CEO and Representative Corporate Executive Officer, Sony Corporation, to run

Sony’s overall group business operation. We are battling on many fronts against many

competitors a number of whom have at times proved more agile and more nimble. We

can and will compete vigorously. We are going to achieve our goals by breaking down

the existing silo walls and eliminating the highly decentralized structure we’ve

maintained in the past. Sony adopted the new organisational structure from 1 st of

October 2005. Sony was reorganised into five business groups, which included the

Electronics Business Group, Games Business Group, Entertainment Business Group

the Personal Solutions Business Group, and the Sony Financial Holdings Group.”

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Sony since 2003 has been using decentralised “Strategic business unit” this means that

daily operations and decision making responsibilities are delegated by top management

to middle and lower level managers within the organisation, allowing the top

management to focus more on major decisions. But Stringer has decided to centralise

“Strategic business unit” this means that the top management will retain the major

responsibilities and power.

Comparison

• Similarities

At the beginning of the M&S and Sony Corporation, both companies have been using

Simple organisational structures. Both of the companies were small at that time and

most suitable structure for them was to use simple organisational structure.

• Differences

As the companies have started to grow, M&S and Sony corporation decided to apply

different organisational structures. M&S has applied bureaucratic organisational

structure were there are clear defined roles and responsabilities, hierarchical structure

within the company and decisions were made very slowly. Sony has applied 2 different

structures such divisional and SBU. Divisional structure helped to Sony to organised

the teams in the divisions, where divisions corresponds to the end product or service

provided by organisation. Sony applied SBU because they become very large

organisation, and they thought of as being composed of number of businesses.

Section 2 Organisational cultures

The theories of organisational culture is on Appendix 5

Mark & Spencer

During the period 1990s-1998, I have identified different organisational cultures

within M&S and these organisational cultures are:

• Routine culture

The evidence of the routine culture within M&S organisation is: “St Michael working

with suppliers to ensure quality control, and providing a friendly, helpful service.” The

theory of routine culture states “Ways members behave toward one another and

towards outsiders “the way we doing things around here.” (Jason Martin 2006:1) The

behavior of the members of the M&S toward the outsiders of the company is according

to the evidence from the case study to” Ensure quality, providing a friendly and helpful

service”

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• Collaborative

The evidence of the collaborative culture within M&S organisation from the case study

is: “This was enhanced by close-knit family atmosphere in the stores, which was

compounded by employing staff whom M&S believed “fit in”. The theory of collaborative culture states “very friendly place to work where people share a lot of

themselves. It is like and extended family” (Jason Martin 2006:2) According to the case

study there was “Close knit family atmosphere” within the organization. This means

that M&S has been using collaborative culture within organization to design a friendly

place to work for the employees.

• Conservative culture

The evidence of the conservative culture within of M&S organisation from the case

study is: “ M&S no longer understood its customer needs, was preoccupied with its

traditional risk averse formula thus ignoring changes in the marketplace.” According

to the literature conservative is “holding to traditional attitude and values and cautious

about change or innovation’ (Soanes C, Stevenson A 2005: 300p) According to the

case study there was “was preoccupied with its traditional risk averse formula thus

ignoring changes in the marketplace” within the organisation. This means that M&S

had conservative culture according to the case study and they had difficulty to be more

innovating according to the changes in the market.

• Routine culture

The evidence of the routine culture within M&S organisation is: “ M&S had inward

culture as executive were promoted internally, after immersion in M&S’s routine and

tradition”. The theory of routine culture states “Ways members behave toward one

another and towards outsiders “the way we doing things around here.” (Jason Martin

2006:1) The behavior of the members of the M&S toward the outsiders of the company

is according to the evidence from the case study to “ M&S had inward culture as

executive were promoted internally” M&S has the routine of promotion someone

within the organisation, instead of hiring someone to the executive position outside the

company.

During the period 2002-2006, I have identified three different organisational

cultures within M&S and these organisational cultures are:

• Conservative

The evidence of the conservative culture within of M&S organisation from the case

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study is: ” Holmes had spoken to customer and was struck by how inwardly focused

M&S had remained.” According to the literature conservative is “holding to traditional

attitude and values and cautious about change or innovation’ (Soanes C, Stevenson A

2005: 300p) According to the case study there was “how inwardly focused M&S had

remained” This means that M&S had conservative culture according to the case study

and they had difficulty to change and instead of organization is customer focused, but

they are more inwardly focused. Holmes had stated his conclusion in the case study

“ His conclusion was to return to passion for product.” This means that the company

had no innovation to attract the customers. According to the case study Holmes had

tried to change culture by “ Injected innovation into food ranges”

• Control system culture

The evidence of the control system culture within of M&S organisation from the case

study is: “He began by making culture changes improving decision-making

accountability.” The theory of control system culture states, ” Performance

measurement and reward, this means that there is supervisor who checks the

performance.” (Jason Martin 2006:2) This means that Rose has changed the culture

within the organization to improve the decision-making accountability.

• Hierarchical culture

The evidence of the control culture within of M&S organisation from the case study is:

“ In reacting Rose halved the board, to himself, Wilson and Ian Dyson (replacing the

ousted finance director), his aim being to move closer to the operating units, get more

control and increase speed and flexibility, as he admitted turnaround was an uphill

task.” The theory of control system culture states: “ Hierarchical organization share

similarities with stereotypical large, bureaucratic corporation. As in the value matrix,

they are defined by stability and control as well as internal focus and integration. They

value standardization, control, and a well-defined structure for authority and decision-

making. Effective leaders in hierarchical cultures are those that can organize

coordinate, and monitor people and process. In other word hierarchical culture is very

formalized structured place to work.” (Jason Martin 2006:2) As we discussed in the

previous section on the organization structure, we have identified that M&S have used

bureaucratic organizational structure. Hierarchical culture as the theory stated can be in

“ share similarities with stereotypical large, bureaucratic corporation”. According to

the case study there was well-defined structure for authority in the organization “ Rose

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halved the board, to himself, Wilson and Ian Dyson (replacing the ousted finance

director).” There is also well defined authority for decision making “ his aim being to

move closer to the operating units, get more control and increase speed and flexibility”

this means that the Rose has completely authority to make decisions and apply these

decisions in the organisation.

• Ritual culture

The evidence of the ritual culture within of M&S organisation from the case study is:

“ He wanted them to understand M&S implemented a 10 million training initiative

aimed at creating a “can do” attitude.” The theory of ritual culture states “ An event

through which organization emphasizes what is important. Example of this is the

company provides an open days or graduation.” (Jason Martin 2006:1) This means

that the company has provided the formal training on the attitude. As the theory of

rituals continues states “This can be formal training and recruitment or informal such

as drinks in the pub or gossip in the canteen” According to the case study M&S

company has provided 10 million pounds to provide the formal trainings to the

employees and staff. This is my justification why I think they have used ritual culture in

the M&S organization.

Sony Corporation

During the period 1946-2006, I have identified different organisational cultures within

Sony and these organisational cultures are:

• Complete culture

The evidence of the complete culture within of Sony organisation from the case study

is: “Sony planned to reduce the costs by downsizing and consolidating manufacturing,

distribution, customer service and also by streamlining procurement .” The theory of

complete culture states “The complete or market culture organizations are similar to

the control cultures in that they value stability and control. The organizations with the

complete culture are focusing on the external orientation and they value differentiation

over integration. Complete culture organizations are focusing on relationship more

specifically, transactions with suppliers, customers, contractors, unions, legislators.”

(Jason Martin 2006:2) There is solid evidence from the case study related to complete

culture and this is “and consolidating manufacturing, distribution, customer service

and also by streamlining procurement .” This means that the company is focusing more

on external relationship and building a stronger relationship with customers, through

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customer service also with suppliers, manufacturers etc. This means that Sony is major

concern is with getting the job done and also people are more competitive and goal

orientated.

•

Create or Adhocracy cultureThe evidence of Adhocracy culture within of Sony organisation from the case study is:

“Stringer brought with him new leadership style. On the whole he felt that being an

outsider was an advantage. According to Stringer: In the end there was an advantage

to being an outsider. Sony is built up on a web of interpersonal relationship that go

back to the dawn of history. The old boys never go away. But that also makes it very

difficult for the insider who has to attack the problems of too much management, and

turning around .” The theory of adhocracy culture states ” dynamic entrepreneurial,

and creative place to work. People stick their necks out and take risks." Good evidences

from the case study of Adhocracy culture in the Sony is “ But that also makes it very


turning around” (Jason Martin 2006:2) This means Stringer has set up a creative place

to work for the employees and staff. In other word Stringer gives them an opportunity

to solve the problems by themselves and take some risks in making decisions in the

company. As in the next section (Leadership style) I have mentioned that Stringer is

using laissez faire style of leadership within Sony organisation. This means that

Stringer gives the general instruction and set the objectives for the company and

delegates decision making to the staff and allows them to handling the problems in their

own way.

• Routine culture

The evidence of the routine culture within Sony organisation is “Stringer identified five

main challenges for Sony. These were getting rid of silo (underground) culture in

Sony.” “We are going to achieve our goals by breaking down the existing silo walls

and eliminating the highly decentralized structure we’ve maintained in the past.” The

theory of routine culture states “Ways members behave toward one another and

towards outsiders “the way we doing things around here.” (Jason Martin 2006:1) This

means that Sony organization run in silos they are not looking at other aspects and the

cause and effect of various activities.

Comparison

• Similarities

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Similarities between M&S and Sony Corporation in terms of organisational culture

were on routine culture. M&S was considering that routine culture is important,

because it shows how they behave toward each other and also toward the outsiders such

customers, unions etc. Sony had silo culture within the organisation that Springer

decided to get rid of.

• Differences

Differences between M&S and Sony Corporation in terms of organisational culture

were that these companies had different understanding of the cultures. M&S were more

cultural company, because they had variety of culture within the organisation such

hierarchical culture, rituals, control systems etc that shapes the organisation. Sony had 3

cultures within the organisation that shapes organisation. In comparison M&S is more

cultural company than Sony Corporation.

Section 3 Leadership style

The theory of leadership style is on Appendix 6

Mark & Spencer

1900-1998

Since the 1900s the CEO of the M&S Company’s had applied Autocratic leadership

style. From the case study there is the evidence supporting my proposition:

“Throughout most of the 1900s M&S was led by family members, who favoured close

control and meticulous attention to detail. Central edict was given for purchasing

merchandising layout.” The theory of Autocratic leadership style states:” Autocratic

leadership is characterized by individual who controls over all decision and little input

from group members. The autocratic leader is commonly making all the decisions on

their own ideas and judgments and rarely accepts any advice from the employees or

outsiders. This means that the autocratic leader has an absolute control over a group

of employees. The autocratic leader is dictates all the work methods and process. There

is no trust to the group members with decision or important tasks.” ( Linehan 2007:54-

56) From the evidences mentioned above in the case study we can determine small

hints that’s leads me to the conclusion that there was Autocratic leadership style. As I

mentioned in the section 1 organisational structure, M&S structure at that time was

Simple. This means that the company is small enough for the CEO to take all the

responsibilities and determine the goals, objectives etc. As the theory of the Simple

structure states, “Simple organisation structure is characterized by low degree of

15



differentiation of subtasks, and leaders are having wide span of control. This means

that the authority often is centralized in a single person, who is often the boss of the

company” this leads to the evidence from the case study to support my conclusion

“Central edict was given for purchasing merchandising layout.” In other words the

boss of M&S makes all the decisions in terms of the coordination, span of control and

division of labour.

1999-2003

Since 1900s M&S Company has changed the structure of organisation, but the style of

leadership has not changed and still remains autocratic leadership. From the case study

there is the evidence supporting my proposition: “Senior and middle management were

reported to be disappointed with the lack of progress. Holmes was seen as the problem:

blamed for being too nice, taking too long to make decisions, and lacking relevant

experience.” The theory of Autocratic leadership style states:” Autocratic leadership is

characterized by individual who controls over all decision and little input from group

members. The autocratic leader is commonly making all the decisions on their own

ideas and judgments and rarely accepts any advice from the employees or outsiders.

This means that the autocratic leader has an absolute control over a group of

employees. The autocratic leader is dictates all the work methods and process. There is

no trust to the group members with decision or important tasks.” ( Linehan 2007:54-56)

From the evidences mentioned above in the case study we can determine small hints

that’s leads me to the conclusion that there was Autocratic leadership style. The

evidence that justify my proposition is “blamed for being too nice, taking too long to

make decisions, and lacking relevant experience”. The evidence has shown that

Holmes was using autocratic leadership style, he makes all the decisions as Senior and

middle managers have stated. To support my proposition I am going to use part of the

theory of autocratic leadership style “The autocratic leader is commonly making all the

decisions on their own ideas and judgments”

2004-2006

Since 1999 M&S Company has not changed the structure of organisation, and the style

of leadership has not changed and still remains autocratic leadership. From the case

study there is the evidence supporting my proposition: “Colleagues described him

(Rose) as “nice, quiet and ruthless”. “Rose acknowledged there had been little

communication with employees, as he had undertaken action without debate.” The

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theory of Autocratic leadership style states:” Autocratic leadership is characterized by

individual who controls over all decision and little input from group members. The

autocratic leader is commonly making all the decisions on their own ideas and

judgments and rarely accepts any advice from the employees or outsiders. This means

that the autocratic leader has an absolute control over a group of employees. The

autocratic leader is dictates all the work methods and process.” ( Linehan 2007:54-56)

From the evidences mentioned above in the case study we can determine small hints

that’s leads me to the conclusion that there was Autocratic leadership style. The first

hint is that Rose as described their colleagues was “ruthless”, the second hint was

““Rose acknowledged there had been little communication with employees, as he had

undertaken action without debate” The second hint gives very good description, that

Rose did not communicate with the employees about the decisions he made, this leads

that Rose made all decisions by himself and also there was no trust to the employees

with decision or important tasks. The first hint gives a good concern about his

behaviour toward the employees in terms of completing the tasks.

Sony Corporation

1946-2004

Since the 1946s the CEO of the Sony Company’s had applied democratic leadership

style. From the case study there is the evidence supporting my proposition: “1946. Sony

was started as Tokyo Tsuchin Kyogo by Masaru Ibuka and Akio Morita in war ravaged

Japan. Initially, the company had 20 employees and capital of 190000 yen. Since

inception, Sony focused on product innovation and high quality” The theory of

democratic leadership style states:” Democratic leadership is characterized by the

individual who allows the members of the group take a more participative role in the

decision making process. 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 very good adapted in the dynamic and rapidly changing environment

where little can be taken as a constant.” ( Linehan 2007:56-58) From the evidences

mentioned above in the case study we can determine small hint that’s leads me to the

conclusion that there was democratic leadership style. The evidence I will use is this

from the case study “Sony focused on product innovation and high quality” This means

to be innovative make changes in something established or introducing new methods,

ideas or products. In autocratic leadership style the boss of the company cannot be

always innovative especially in the high technology. This means to be more innovative

17



you need to generate new ideas to create or design the product. Democratic leadership

helps the members of the company to sit at the table and share the ideas and discuss

openly these ideas.

2005-

Since the 2005 the CEO of the Sony Company’s had applied laissez faire leadership

style. From the case study there is the evidence supporting my proposition: “Stringer

brought with him new leadership style. On the whole, he left that being outsider was an

advantage. In the end there was an advantage to being an outsider. Sony is built up on

a web of interpersonal relationship that go back to the dawn of history. The old boys

never go away. But that also makes it very difficult for the insider who has to attack the

problems of too much management, and turning that around.” The theory of democratic

leadership style states: ” Laissez faire leadership is known as delegate leadership style

in which leaders are hands-off and let the group members to make the decisions

themselves. The leader gives a little instructions and complete freedom to the followers

to came and make the decision.” ( Linehan 2007:59-61) From the evidences mentioned

above in the case study we can determine small hint that’s leads me to the conclusion

that there was laissez faire style. The evidence I will use is this from the case study “ In

the end there was an advantage to being an outsider.” and “ But that also makes it very


turning that around.” The first and second hints from the case study are very clear

described, that the CEO of the Sony company does not really make all the decisions, he

makes the general decisions and set the clear objectives and goals of the company, but

gives the freedom to make the decisions themselves. This means that the leader of the

company gives the general instruction and complete freedom to followers to came and

makes the decision.

Comparison

• Similarities

As I comparing two different styles of leadership I did not fin any similarities between

M&S style of leadership of the company’s and Sony style of leadership of the

18



company’s.

• Differences

Sony and M&S has applied different style of leadership throughout the organisational

existence. M&S from the beginning has applied the autocratic style of leadership andhas remained until present time. Sony has applied different style of leadership

throughout the existence of the company. At the beginning of the Sony existence the

company applied democratic style of leadership and remained until 2005 when Springer

become the CEO of Sony’s company. Springer has applied laissez fare style of

leadership, when the member of Sony has to solve the problems, instead of all decision

making left to the CEO.

Section 4 Strategic Approaches

Theory of strategic approach is in Appendix4

Mark & Spencer

1900s-1998

During this period I have identify two strategic approaches that M&S has been using.

• Differentiation and cost leadership

The evidences of differentiation and cost leadership from the case study is: “ M&S

stocked generic essential clothing and priced its products at reasonable level, while

emphasising their high quality.” The theory of differentiation states: “To be different, is

what organisations strive for. Having a competitive advantage, which allows the

company and its products ranges to stand out, is crucial for their success. With a

differentiation strategy the organisation aims to focus its effort on particular segments

and charge for the added differentiated value.” ( Jain C S 2000:24-39) The theory of

cost leadership states “This strategy involves the organisation aiming to be the lowest

cost producer within their industry. The organisation aims to drive cost down through

all the elements of the production of the product from sourcing, to labour costs”. ( Jain

C S 2000:24-39) M&S has been using hybrid strategic approaches; this means that two

strategies are applied to have competitive advantage with the rivals. The M&S tries to

pricing the product logically to the customers, this means that they are trying to lower

the price for the product to win over the customers to buy the products. The other aim

of the company is to differentiate themselves from the competitors, and they trying this

by emphasising on high quality of the product.

• Growth strategy (Acquisition)

19



The evidence of growth strategy (acquisition) from the case study is: “To counter these

problems successive CEOs implemented many strategies, including refurbishment,

store acquisition, restricting, new ranges, overseas sourcing.” The theory of

acquisition states: “One firm purchasing part or all of another firm” ( Jain C S 2000:24-

39) M&S has been using acquisition strategy to grow by purchasing the store, there is

no mention in the case study what store they have purchase, but the evidence from the

case study that they bought the store.

1998-2003

During this period I have identify three strategic approaches that M&S has been using.

• Cost leadership

The evidence of cost leadership from the case study is: “Continuing the turnaround

Holmes streamlined M&S logistics by halving its contractors, and sourcing directly

rather than through third parties.” The theory of cost leadership states: “This strategy

involves the organisation aiming to be the lowest cost producer within their industry.

The organisation aims to drive cost down through all the elements of the production of

the product from sourcing, to labour costs” ( Jain C S 2000:24-39). Holmes have

realised that sourcing directly is cheaper than sourcing through the third parties,

because they are adding the cost of supplying and the product price is increased.

Holmes came to conclusion to apply the cost leadership strategy; they have to sourcing

directly the products from first parties instead of sourcing through the third party.

• Product differentiation

The evidence of product differentiation from the case study is: “Hence he planned to

renew the food ranges, and promote them based on their unique qualities.” The theory

of differentiation states: “To be different, is what organisations strive for. Having a

competitive advantage, which allows the company and its products ranges to stand out,

is crucial for their success. With a differentiation strategy the organisation aims to

focus its effort on particular segments and charge for the added differentiated value.”

( Jain C S 2000:24-39) According to the case study M&S have focused to promote the

product based on their unique qualities. This means that M&S aim is to differentiate the

product from the rivals product based their quality.

2004-2006

During this period I have identify three strategic approaches that M&S has been using.

• Acquisition

20



The evidence of growth strategy (acquisition) from the case study is: “ Acquiring Per

Una from Davies for 125m.” The theory of acquisition states: “One firm purchasing

part or all of another firm” ( Jain C S 2000:24-39)M&S has purchased Per Una shop,

and this is Horizontal unrelated acquisition. The theory of horizontal unrelated

acquisition states: “ Acquire a firm in unrelated industry” According to the case study

Per Una is “Women’s wear shop”. M&S is working in the food industry, but they

purchased Per Una shop which works in the clothes industry, this is unrelated

industries.

• Retrenchment

The evidence of Retrenchment from the case study is: “Cancelling more than 500food

products”. and “Closing or upgrading stores, which likened to hospitals.” The theory

of retrenchment states: “The company applying retrenchment strategy is seeking to

reduce the size of organisation in terms of employees, production or assets.” ( Jain C S

2000:24-39) According to the case study M&S has been cancelled 500 products and

also closing or upgrading stores, this is very clear description of the retrenchment. The

theory stated that the company reduces “Production or assets” and the case study clearly

stated that M&S reduced the number of products and also closed stores.

• Restructuring (downsizing)

The evidence of restructuring (downsizing) from the case study is: “ Restructuring and

redundancy.” The theory of restructuring (downsizing) states: “Wholesale reduction of

employees.” M&S is using downsizing strategy to reduce the number of employees

within the company.

Sony Corporation

1946-1998

During this period I have identify one strategic approach that Sony has been using.

• Prospector strategy

The evidence of prospector strategy from the case study is: “Since its inception, Sony

focused on product innovation and high quality.” The theory of prospector strategy

states: “this means that the company is focuses on new product development,

innovation and market opportunities and typically has number of product lines.” ( Jain

C S 2000:24-39) Sony at that time developed prospector strategy, because as the

21



company started, they have to take high risk to expand in the new market. As we looked

at the evidence from the case study, that Sony focuses on the product innovation and

high quality of the product. As the theory stated that the company applied the

prospector theory is focusing on the new product development and innovation, and this

is what Sony was focusing on.

1999-2006

During this period I have identify three strategic approaches that Sony has been using.

• Restructuring (Downsizing)

The evidence of Restructuring (downsizing) from the case study is: “ In October 2003,

Idei came up with yet another restructuring plan called Transformation 60.

Transformation plan was three year restructuring plan, which Sony to lay off 13% of its

workforce or about 20000 people by March 2006. Sony planned to reduce costs by

downsizing and consolidating manufacturing, distribution, customer service facilities

and also by streamlining procurement.” The theory of restructuring (downsizing)

states: “Wholesale reduction of employees. The outcomes in the short term are to

reduce labour costs. Outcome in the long term is to loss of human capital and lower

performance.” ( Jain C S 2000:24-39) As we looked at the evidence in the case study, I

found that Sony “which Sony to lay off 13% of its workforce or about 20000 people by

March 2006.” This was restructuring in terms of reduction of employees and this is the

evidence that supports my proposition that was downsizing restructuring.

• Restructuring (downsizing and down scoping)

The evidence of Restructuring (downsizing) from the case study is: “ In September 2005

Stringer announced restructuring plan for Sony. As part of the plan, Sony announced

reduction of the global workforce by 6.6% and sales of non-core assets valued at 120bn

yen.” The theory of restructuring (downsizing) states: “Wholesale reduction of

employees. The outcomes in the short term are to reduce labour costs. Outcome in the

long term is to loss of human capital and lower performance.” ( Jain C S 2000:24-39)

Sony has applied two restructuring strategies such downsizing and down scoping. As

the evidence has shown that downsizing take a place by reducing of the global force by

6.6%. As the theory stated the company applying this strategy is reducing the number

of employees in the organisation.

• Strategic alliance

The evidence of strategic alliance from the case study is: “Sony planed to invest around

22



240bn yen in the chip business over a span of two years. A new division being

developed in association with IBM and Toshiba Corporation was created cell chips.”

The theory of strategic alliance states: “Strategic Alliance- corporation between two or

more firms in a selected venture” ( Jain C S 2000:24-39) As the evidence cleared shown

that Sony and other two companies participate in creating cell chips; this means that

Sony has applied strategic alliance strategy to especially consortia strategy. This means

that Sony Company is participating with Toshiba and IBM to work on particular

venture.

Section 5 BSG

The theory of BSG is on Appendix 1

Sony Corporation

Stars

Based on the information from the case study and I compared with the theory of stars

that states “Stars have high market share and high growth in the market. Company has

to invest a lot of money into this product and also requires an investment on the

product advertisement. After a while the product growth will slow down and they will

turn into cash cows.” ( Jain C S 2000: 251-252p) I have not recognised any star

products from Sony case study.

Cash cows

Based on the information provided in the case study I have recognised cash cow

product of Sony’s Corporation “ During 2000-2001, despite the increase in revenue due

to higher sales of the PlayStation, net income dropped to 16.75bn yen from 121.83b

yen.” The theory of cash cows states: “Cash cows have low growth in the market, but

have high market share of the products. Company does not have to invest a lot of

money in product advertisement to hold their share market” ( Jain C S 2000: 251-252p)

There is no mentioned that Sony’s Corporation has investing the money to advertising

or promoting the PlayStation to attract the customers to buy. And as it mentioned in the

case study their revenue has been increased.

Based on the information provided in the case study I have recognised cash cow

product of Sony’s Corporation “Sony planned to introduce the PlayStation 3 and

position it as the ultimate portable entertainment player, through which Sony aimed at

increasing its market share in the computer entertainment market.” According to

23



theory of cash cow mentioned above, I have recognised that PlayStation 3 is cash cow.

PlayStation 3 helped to the Sony Corporation increased their market share in the

computer entertainment market. As we know that PlayStation had significant increase

in the market share as the computer entertainment and also increased revenue to Sony

Corporation. Because of the PlayStation was popular among the people and also

recognised, this leads to the conclusion and the evidence support from the case study

that PlayStation 3 was cash cow as well.

Question mark

Based on the information from the case study and I compared with the theory of

question marks that states “Question marks are low share business units in high growth

markets. They require cash to hold their share, let alone increase it.” ( Jain C S 2000:

251-252p) I have not recognised any star products from Sony case study.

Dogs

According to the evidence from the case study I have recognised that Trinitron TV was

a dog “ In 1968, it introduced Trinitron Colour TV, which was highly successful .” The

theory of dog states, “ Dogs have low market rate and also low market share of the

product.” ( Jain C S 2000: 251-252p) According to the case study Trinitron colour TV

was highly successful at that time, but there was development in the TV industry.

Trinitron Colour TV is old fashion TV and compare to the new flat screen, 3d, there is

significant different. Old fashion type TV is no longer popular among people, because

of the wider variety of newer TV’s sets.

Section 5a Ansoff Matrices

The theory of Ansoff Matrices is on Appendix 1

Sony Corporation

Market penetration

According to the evidence from the case study market penetration is “Sony started off

manufacturing telecommunications and measuring equipment and went on to

manufacture transistor radio and tape recorders” The theory of Market penetration

states “ Market penetration is a strategy for company growth by increasing sales of

current products to current market segments without changing the product.” (Kotler,

24



Armstrong, Wong, Saunders 2008:146p) Sony has already manufacturing

telecommunication equipment. Tape recorder is type of telecommunication product that

helps people transfer the message to others. This means that Sony has not came with

new products in the same market, but same product in the same market.

Product development

According to the evidence from the case study product development is “The key

underlying theme was the need to create convergence between separate products.

Example in the electronics business, converging television and games” The theory of

product development states “ Product development is strategy for company growth by

offering modified new products to current market segments.” (Kotler, Armstrong,

Wong, Saunders 2008:146p) According to the evidence from the case study, that Sony

wants to make hybrid product in the electronic business. This means that Sony wans to

make a new product for the existing market.

According to the evidence from the case study product development is “ PlayStation

portable, which was released in December 2004.” The theory of product development

states “ Product development is strategy for company growth by offering modified new

products to current market segments.” (Kotler, Armstrong, Wong, Saunders

2008:146p) According to the case study, that PlayStation was introduced in 1994. In

2004 Sony has developed PlayStation into PlayStation portable, this leads that Sony has

already supply PlayStation to this market. This means that in 2004 PlayStation Portable

is modified product or in other word this is new product supplied at the current market.

According to the evidence from the case study product development is “Sony planned

to introduce the PlayStation 3” and “ Playstation3 was the first product where cell

chips were used” The theory of product development states “ Product development is

strategy for company growth by offering modified new products to current market

segments.” (Kotler, Armstrong, Wong, Saunders 2008:146p) According to the evidence

form the case study, we already know that PlayStation was introduced in 1994.

PlayStation 3 was developed product.

My Action Plan

Last week of Dec-Jan Searching the theory

11th

of January First draft of Section 1-5 checked by Tutor 12th of January Meeting with Tutor

25



13th of Jan Submission day

Appendix 1

BSG

Definition of Business Portfolio: The collection of businesses and products that make

up the company.

(Kotler, Armstrong, Wong, Saunders 2008:139p)

Business portfolio is a link between general strategy of the business or company and

those its parts. The company should:

• Analyse its current business portfolio and decide which businesses should

receive more, less or even no investment

26



• Develop growth strategies for adding new products

Portfolio analysis will help the managers to assess the businesses making up the

company. The company’s manager desire to invest the good resources into its more

profitable businesses and to drop its weaker ones. Management’s first step is to identifythe key businesses making up the company. These are strategic business units.

Definition of strategic business units: SBU is unit of company that has a separate

mission and objectives, and which can be planned independently from other company

businesses. An SBU can be a company division, a product line within a division, or

sometime jus a single product or brand.


The next is important step in business portfolio analysis calls for management to assess

the attractiveness of its various SBUs and decide how much support each deserves. This

means that the leaders will look at company’s collection of products and uses judgment

to decide how much each SBU should contribute and receive.

The best-known portfolio planning methods are from Boston Consulting Groups, a

leading management consulting firm, and by General Electric and Shell. By using the

Boston consulting group approach, the company could classify all its SBUs according

to the growth-share matrix. Market growth is on vertical axis and provides the

measurement of market attractiveness. Market share is on horizontal axis and provides

the measurement of company’s strength in the market. There are 4 types of SBU are on

the BCG matrix.

Stars

Stars have high market share and high growth in the market. Company has to invest a

lot of money into this product and also requires an investment on the product

advertisement. After a while the product growth will slow down and they will turn into

cash cows.

Cash Cows

Cash cows have low growth in the market, but have high market share of the products.

Company does not have to invest a lot of money in product advertisement to hold their

share market. Cash cow product produce cash for the company that they could pay their

bill, taxes and also support other SBUs that requires investment.

Question Marks

27



Question marks are low share business units in high growth markets. They require cash

to hold their share, let alone increase it. The company’s management have to consider

about the question marks, which one of them should be build as the stars and which one

of them should be phase out.

Dogs

Dogs have low market rate and also low market share of the product. Dogs could

generate enough money to maintain themselves, but not promise to generate large

source of cash.

Table 1.1

( Jain C S 2000: 251-252p)

Ansoff Matrices

Definition of Ansoff Matrices: The Ansoff growth matrix assists organizations to map

strategic product market growth.

(http://www.ansoffmatrix.com/)

Ansoff development growth matrix is useful device for identifying growth

opportunities. There are four routs to growth: Market development, new markets, new

products and diversification.

Market penetration

Definition of Market penetration: Market penetration is a strategy for company growth

by increasing sales of current products to current market segments without changing

the product.

28




For example, if there are 300 million people in a country and 65 million of those people

have cell phones then the market penetration of cell phones would be approximately

22%. This would mean in theory there are still 235 million more potential customers for

cell phones, which may be a good sign of growth for cell phone makers. In general, the

older the offering or industry, the greater the market penetration.

( Kotler, Armstrong, Wong, Saunders 2008:146p)

Product development

Definition of Product development: Product development is strategy for company

growth by offering modified new products to current market segments.


In this growth strategy involves, where business aims to introduce new products in

current market. This strategy may require the development of new competencies and

requires the business develop modified products, which can appeal to existing markets.

Market development

Definition of Market development: Market development is strategy for company growth

by identifying and developing new market segments for current company product.


This strategy tries to target non-buying customers in currently targeted segments. In

other word market development means that the company selling the present products or

service in new markets. This means that the managers of a company takes action like

targeting promotion, opening sales office and creating alliance to opetionalize a market

development. There are many ways of doing this strategy, this include:

• New geographical markets

• New product dimensions or packaging

• New distribution channels

• Different pricing policies

Diversification

Definition of Diversification: Diversification is a strategy for company growth through

starting up or acquiring businesses outside the company’s current products and

markets.


In this strategy the company introduce new products in the new markets. Example

29



Mitsubishi is well known for the cars, but they have developed the plan to

manufacturing TV sets. This means that Mitsubishi is entering with new product in the

new market. This is an inherently more risk strategy, because business is moving into

the new waters (Market) in which the company has little or nor previous experience at

all.

Table 1.2

Appendix 2

Organisational Structure

Definition of organisational structure: The framework, typically hierarchical, within

which an organisation arranges its lines of authority and communication, and

allocation rights and duties. Organisational structure determines the manner and

extent to which roles, power, and responsibilities are delegated, controlled and

coordinated, and how information flows between levels of management

(http://www.businessdictionary.com )

This means that that organisation structure depend entirely on organisation’s objectives

and the strategy chosen to achieve them. There are two different type of organisational

structure in terms of span of control and division of labour: Flat and Tall.

Flat

Definition of flat structure: A denormalized file structure where each line in the file

30

http://www.businessdictionary.com/

http://www.google.ie/imgres?imgurl=http://tutor2u.net/business/images/Ansoff%20Matrix%20w500.gif&imgrefurl=http://tutor2u.net/business/strategy/ansoff_matrix.htm&h=375&w=500&sz=12&tbnid=LP7_pk0PnCoDfM:&tbnh=100&tbnw=133&prev=/search%3Fq%3Dansoff%2Bmatrix%26tbm%3Disch%26tbo%3Du&zoom=1&q=ansoff+matrix&docid=_kjr66fgVqPl4M&hl=en&sa=X&ei=4rHwTs6zGMiohAeamunGAQ&sqi=2&ved=0CCcQ9QEwAA&dur=7594

http://www.businessdictionary.com/



represents a row of data.

( http://www.nppesdata.com )

Flat organisation structure will have relatively few layers of management. This means

that the chain of command from the top (CEO) to the bottom (employees) is short and

the spam of control is wide. Because of the small number of management layer, flat

organisation is small companies.

( Linehan M 2007:69p)

Table 2.1

Table 2.1.1

Advantages Disadvantages

• Better team spirit

• Less bureaucracy and easier

decision making

• Greater communication between

management and workers

• May limit the growth of the

organisation

• Structure limited to small

organisations such as partnership,

cooperatives and some private

limited companies

(Linehan M 2007:69p)

Tall

Definition of tall structure: Organisations with narrow spans of control with many

managerial levels called tall structure.


Tall structured organisation has many levels of management and supervisors. There is

long chain of command running from the tops (CAO) to the bottom (Employees)Table 2.2

31

http://www.nppesdata.com/

http://www.nppesdata.com/



Table 2.2.1


• There is clear management

structure

• Clear progression and promotion

ladder

• There is narrow span of control i.e.

The manager has a small number

of employees under his control

• Decision making is slowing down

as approval may be needed by each

of the layers of authority

• Communication has to take

through many layers of

management


There are 6 types of organisational structures.

• Simple

• Functional

• Geographical

32



• Divisional

• Strategic

• Matrix

Simple

Simple organisation structure is characterized by low degree of differentiation of



Formalization will also be low, and work will often be structured through direct control

and supervision. The simple structure is referred to as flat structure. The simple

organisational structure is widely practiced in small companies or organisations, in

which the coordination of work can be very effectively structured around a narrow setof activities and decision makers, who are able to coordinate activities quickly and

effectively. Simple organisation structure is nor relevant when the business or

organisation grows in size, and when surrounding environment of the company grows

in complexity.

(Linehan M 2007:71)

Table 2.3

Table 2.3.1

Advantage Disadvantage

• Control of all business operation

• Frequent communication

• Lack of specialization and hence,

complex tasks deterrent

33



• No coordination problems

• Rapid decision making

(http://www.slideshare.net ) by Rotator Platform Software Consulting c.a accounting

manager on August 2009

Bureaucratic

“The fully developed bureaucratic mechanism compares with other organizations

exactly as does the machine compare with the non-mechanical modes of production.

Precision, speed, unambiguity, … strict subordination, reduction of friction and of

material and personal costs- these are raised to the optimum point in the strictly

bureaucratic administration. Bureaucratic structures have a certain degree of

standardization. They are better suited for more complex or larger scale organizations,

usually adopting a tall structure. The tension between bureaucratic structures and non-

bureaucratic is echoed in Burns and Stalker's distinction between mechanistic and

organic structures.

The Weberian characteristics of bureaucracy are:

• Clear defined roles and responsibilities

• A hierarchical structure

• Respect for merit.

Table 2.4

In other word bureaucratic structure maintain strict hierarchies when it comes to people

management. And it also helps when the organisation is growing in complex and also

34

http://www.slideshare.net/




large, bureaucratic structures are required for management. This structure is suitable for

tall organisations.

(Linehan M 2007:71)

Functional

In a functional structure, teams are created based on the common function in bottom up

manner. The result is a set of functional units such engineering, marketing etc., that are

controlled and coordinated from the top-level management. Functional structure is the

most common type of structural design and has evolved from the concept of high

specialization, high control framework of manufacturing organisations tuned toward

high efficiency. Functional management is more technical orientated and less product

or business orientated while they are skilled in taking decisions in their functional areas,

they are weak in the areas of product business plans, market study and product release

management. If the organisation does have multiple product lines, then functional

hierarchy at lowest level does get divided along product lines, therefore creating deeper

hierarchies.

(Linehan M 2007:71)

Table 2.5

Table 2.5.1


• Efficiency through specialization

• Retains centralized control of

strategic decisions

• Promotes narrow specialization

and potential functional rivalry or

conflict

• Difficulty in functional

35



• Differentiates and delegates day to

day operating decisions

coordination and inter functional

decision making

(http://www.slideshare.net )

Divisional

In a divisional structure, the teams are organised in set of divisions, where each division

corresponds to the end product or service provided by organisation. Each division has

its own set of functional units like research, manufacturing, marketing etc. and is

completely self-contained. Divisional structure is less hierarchical than functional; it is

formed by decomposing the functional structure along the product lines. Divisional

management is more skilled along product business and lesser in core technical

competencies than functional structure management.

Table 2.6

Table 2.6.1


• CEO focus on strategic orientation

• Performance accountability

• Divisions unique environment

hence unique strategic orientation

• Divisions Manager’s line of

Authority

• Policy inconsistencies between

divisions( Linehan M 2007:72)

36





Strategic

Strategic business is understood as business unit within the overall corporate identity

which distinguishable from other business because it serves a defined external market

where management can conduct strategic planning in relation to product and markets.

When the company or organisation becomes large, they are best thought of as being

composed of number of businesses. These organisation entities are large enough to

exercise control over most strategic factors affecting their performance. Multidivisional

structure consisting of three levels, the top level being the corporate headquarters. The

SBU groups, and final level division grouped by relatedness. Divisions within groups

are related, but groups are largely unrelated to each other. Each SBU is profit centre

controlled by firms’ corporate office.

Table 2.7

Table 2.7.1


• Channels accountability to distinct

business units

• Coordination between divisions

with similar strategic concerns and

• Degree of autonomy for each SBU

• Dysfunctional competition for

corporate resources may increase

37



products/market environments

( Linehan M 2007:72)

Matrix

Matrix structure is organisational design that the team of employees by both function

and product. The organisational structure is very flat, and the structure of the matrix is

differentiated into whatever functions are needed to accomplish certain goals. The

employee at the functional department is reporting to the functional heads, but do not

working under their supervision. The employees are supervised and controlled by the

membership of the certain project. This is the way in matrix structure the employees has

two superiors who will jointly ensure the progress of the project. When the project is

accomplished the team of the project is dissolved, and workers from different functional

areas may get reassigned to other projects and tasks

Table 2.8


• Creativity and multiple sources of

diversity

• Efficient use of functional

managers

• Middle management exposure to

strategic issues

• Dual accountability can create

confusion and contradictory prices

• Necessities tremendous horizontal

and vertical coordination

(http://www.slideshare.net)

38



Appendix 3

Managing at different level of the organisation

In the organisations there are three levels of management, represented by top managers(CEO), middle managers and first line managers.

Top Managers

This is small group of executives who are controlling the whole organisation or the

company. In this group includes president, vice-president and also chief executive

officer. The group of executives creates the organisation’s goals, overall strategy and

also operating policies

(Linehan M 2007:3)

Middle Managers

The middle mangers are responsible for applying the policies and also the plans

developed by the group of executives and monitoring and coordinating the activities of

lower level managers. Examples of middle managers are: Human resource manager,

finance manager.

(Linehan M 2007:3)

First line managers

The first line managers of operational managers are responsible for monitoring and

coordinate the activities of operating employees. Operational manager most of the time

spends supervising the work of subordinates.

( Linehan M 2007:3)

Appendix 4Strategic Approaches

As the literature formulate there are three level of strategies:

• Corporate

• Business

• Functional

Corporate level strategy

Corporate strategy may be viewed as grand plan for an organisation which describes the

39



general action to be taken to achieve long-term objectives. The grand strategy

represents the company’s overall direction. According to the literature there are three

grand strategy options:

•

Retrenchment strategy: The company applying retrenchment strategy is seekingto reduce the size of organisation in terms of employees, production or assets.

This could the result of decline in demand for an organisation product, the

introduction of new technology or from increased competitors. In other words

the company cutting back on the range of the products or markets. This means

that the company’s management recognise that the organisation is performing

badly. In retrenchment the company usually selling off parts of business or

liquidation of an entire organisation.

• Stability strategy: The company tries to remain the same size or to grow in a

very slow controlled way. This strategy may be applied after a period of rapid

growth in order to take stock and ensure that the expansion is viable. This

means that the company is seeking to continue with the same products and

markets. This means that the management recognises that its organisation is

performing well and opts for low risk and little change in stable environment.

• Growth strategy: The organisation developing its market position, through

increased investment, new product development, and diversification in to new

markets. This means that organisation is seeking to add new products in the new

market. This means that that the management of the company or business

desired its organisation to perform much better, preferring high risk and change.

In Growth strategy there are three different acquiring:

1. Mergers- Two or more firms combine usually because of

complementing strength

2. Acquisition- One firm purchasing part or all firm. There are five

different type of acquisition, and these are:

I. Horizontal Integration. This means that the firm buys other

firm in the same line of business, and their aims is to

increase the market share

II. Horizontal Related acquisition. This means the firm biys

another firm outside present scope of operation, but related.

III. Horizontal unrelated acquisition. This means that firm

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acquire other firm in unrelated industry. Example of this is

that Supervalue purchase petrol service station

IV. Vertical related acquisition. This means that firm is acquire

other firm with complementary competencies in the vertical

value system

V. Vertical unrelated acquisition. This means that the firm

acquire other firm in unrelated industry.

3. Strategic Alliance- Corporation between two or more firms in a

selected venture. There five forms of strategic alliance, and these

are:

I. Joint venture. This is new jointly owed organisation, and

when the partners remain independent.

II. Consortia. This is when two or more organisation on a

particular venture

III. Networks. Informal collaboration on mutual advantage and

trust.

IV. Opportunistic. Informal market relationship focused on

particular venture.

V. Intermediate. Subcontracting or in other words employ

business or person outside the company to do the work as

part of larger project.

( Jain C S 2000:24-39)

Business level strategy

According to the “Miles and Snow (1976)” Business level strategy can be identify as

one of the four categories:

• Defender strategy- this means that the company has limited product line and its

management focus is on improving the efficiency of existing operations. The

company with this strategy tries to protect the current market share, maintaining

stable growth and serving current customers.

• Prospector strategy- this means that the company is focuses on new product

development, innovation and market opportunities and typically has number of

product lines. The company with strategy is continuing to expand into new

markets and also be high-risk taker.

41



• Analyser strategy- this means that the company is commonly working in two

distinguished markets. One of the markets is stable and one is variable (thus

creating new market opportunities). The company implementing this strategy is

focuses on the efficiency in the stable market and also innovation in the variablemarket.

• Reactor strategy- this means that the company has no clear strategy and also

reacts in changes in the environment very slowly.

( Jain C S 2000:24-39)

Functional level strategy

Functional level strategy is concerned with the on-going functional operations of an

organisation. Functions represented in an organisation depend on the type of business,

its size and its structure, but may include: marketing, sales, research and development,

finance and human resources. The question at this level of strategy is “How do we

support the business level competitive strategy?” All these functions need to follow the

strategic plans of an organisation and must be integrated to ensure the overall success of

an organisation.

( Jain C S 2000:24-39)

Restructuring

There are eight restructuring activities:

• Downsizing- Wholesale reduction of employees. The outcomes in the short term

are to reduce labour costs. Outcome in the long term is to loss of human capital

and lower performance.

• Down scoping- Selectively divesting or closing non core businesses. Reducing

scope of operations. Outcome in the short term is reducing the debt costs and

emphasis on strategic control. Outcomes in the long term are higher

performance.

• Leveraged buyout- a party buys a firm’s entire assets in order to take the firm

private. Outcomes in the short term are emphasis on strategic controls and high

debt costs. Outcome in the long term are higher performance and higher risk.

• Networking- it refers to the process of breaking companies into smaller

independent business units for significant improvement in productivity and

flexibility. The phenomenon is predominant in South Korea, where big

companies like Samsung, Hyundai and Daewoo are breaking themselves up into

42



smaller units. These firms convert their managers into entrepreneurs.

• Virtual Corporation- It is a company that has taken steps to turn itself inside out.

Rather than having managers and staff sitting inside in their offices moving

papers from in basket to out basket, a virtual corporation kicks the employees

outside, sending them to work in customer's offices and plants, determining

what the customer needs and wants, then reshaping the corporate products and

services to the customer's exact needs. This is a futuristic concept wherein

companies will be edgeless, adaptable and perpetually changing. The

centrepiece of the business revolution is a new kind of product called a Virtual

Product Some of the these products already exist, camcorders create instant

movies, personal computers and laser printers have made instant desktop

publishing a reality. And for all these we can obtain cash instantly at ATMs.

• Verticalization- it refers to regrouping of management functions for particular

functions for a particular product range to achieve higher accountability and

transparency. Siemens in 1990 moved from a "function-oriented" structure to a

vertical "entrepreneur-oriented" structure embracing size business and three

support divisions.

• Delayering- Flat organization: In the post world war period the demand for

goods was ever increasing. Main objective of the corporations was production

and capacity build up to meet the demand. The classical, pyramidal structure

was well suited to this high growth environment. This structure was scalable

and the corporations could immediately translate their growth plans into action

by adding workers at the bottom layer and filling in the management layers. But

the price paid in the whole process was much higher. The overall process

became complicated; number of middle managers and functional managers

grew making the coordination of various functions complex. Senior/top

management was alienated from the front-line people as well as the end users of

the product or service. Decision-making became slower. Hence, a need is felt to

attack the unproductive, bulky and sluggish network of white-collar staff. A

powerful strategy would be to remove the layers of senior and middle

management i.e. making the organization structure flat.

• Business Process Reengineering- The Business Process Reengineering method

(BPR) is defined by Hammer and Champy as 'the fundamental reconsideration

and radical redesign of organizational processes, in order to achieve drastic

43



improvement of current performance in cost, service and speed'. Value creation

for the customer is the leading factor for BPR and information technology often

plays an important enabling role. Business process reengineering is also known

as BPR, Business Process Redesign, Business Transformation, or Business

Process Change Management.

( Jain C S 2000:24-39)

Michael Porters generic strategies

Cost leadership

This strategy involves the organisation aiming to be the lowest cost producer within

their industry. The organisation aims to drive cost down through all the elements of the

production of the product from sourcing, to labour costs. The cost leader usually aims at

a broad market; so sufficient sales can cover costs. Low cost producers include Easyjet

airline, Ryan air, Asda and Walmart. Some organisation may aim to drive costs down

but will not pass on these cost savings to their customers aiming for increased profits

clearly because their brand can command a premium rate.

Differentiation

To be different, is what organisations strive for. Having a competitive advantage, which

allows the company and its products ranges to stand out, is crucial for their success.With a differentiation strategy the organisation aims to focus its effort on particular

segments and charge for the added differentiated value. If we look at Brompton folding

cycles their compact design differentiates them from other folding bike companies.

New concepts which allow for differentiation can be patented, however patents have a

certain life span and organisation always face the danger that their idea that gives the

competitive advantage will be copied in one form or another.

Niche strategies

Here the organisation focuses its effort on one particular segment and becomes well

known for providing products/services within the segment. They form a competitive

advantage for this niche market and either succeeds by being a low cost producer or

differentiator within that particular segment. Examples include Roll Royce and Bentley.

With both of these strategies the organisation can also focus by offering particular

segments a differentiated product/service or a low cost product/service. The key is that

the product or service is focused on a particular segment

Middle of the road

44



The danger some organisation face is that they try to do all three and become what is

known as stuck in the middle. The have no clear business strategy, be all to all

consumers, which adds to their running costs causing a fall in sales and market share.

‘Stuck in the middle’ companies are usually subject to a takeover or merger.

( Jain C S 2000:24-39)

Appendix 5

Organisation culture

Definition of organizational culture:

A pattern of shared basic assumptions that the group learned as it solved its problems

of external adaptation and internal integration, that has worked well enough to be

considered valid and, therefore, to be taught to new members as the correct way to

perceive, think, and feel in relation to those problems.

(Schein 1992:12)

There are numbers of visible sign of strong culture and they are divided as follows:

• Routine

Ways members behave toward one another and towards outsiders “the way we doing

things around here. May provide distinctive competence or typical ability. May provide

a taken for grantedness about things are done (this is difficult to change)

(Jason Martin 2006:1)

• Rituals

An event through which organization emphasizes what is important. Example of this is

the company provides an open days or graduation. This can be formal training and

recruitment or informal such as drinks in the pub or gossip in the canteen


• Stories

The stories that have been told by members of organization to each other and to

outsiders (new recruits). Flag important events, personalities. Indicate the essence of the

organization’s past and types of behavior that are acceptable


• Symbols

There are the symbols that the new recruits have to be aware such titles, logos, cars,

45



uniform, language, and office layouts, how people address each other. Symbols of

hierarchy indicate possible barrier levels when implementing strategic change.


•

Power structureMost powerful groups within an organization are likely to be closely attached to the

taken for granted assumption and beliefs.


• Control system

Performance measurement and reward, this means that there is supervisor who checks

the performance. Indicate what is important to the organization (organizational focus).


According to the literature there are four types of culture in organization relating to the

characteristics of organization:

• Control (hierarchy)- Hierarchical organization share similarities with

stereotypical large, bureaucratic corporation. As in the value matrix, they are

defined by stability and control as well as internal focus and integration. They

value standardization, control, and a well-defined structure for authority and

decision-making. Effective leaders in hierarchical cultures are those that can

organize coordinate, and monitor people and process. In other word hierarchical

culture is very formalized structured place to work. Procedures govern what

people do.

• Complete (market)- The complete or market culture organizations are similar to

the control cultures in that they value stability and control. The organizations

with the complete culture are focusing on the external orientation and they value

differentiation over integration. Complete culture organizations are focusing on

relationship more specifically, transactions with suppliers, customers,

contractors, unions, legislators. In other words Market culture organization

whose major concern is with getting the job done. People are competitive and

goal orientated.

• Collaborate (Clan)- A very friendly place to work where people share a lot of

themselves. It is like and extended family.

• Create (Adhocracy)- dynamic entrepreneurial, and creative place to work.

46



People stick their necks out and take risks.


Power Culture

A power culture emanates from centralized power in a charismatic leader. This leader

acts decisively and unilaterally, but always with the best intentions for the organization

in mind. Power cultures are demanding of the people within the organization. Late

nights and weekends in the office often are the norm. Generally motivation is not a

problem since expectations are clear and loyalty is recognized and rewarded. In a

dysfunctional stage power cultures can produce inefficient organizations where

everyone waits for approval before moving forward on an idea. This is seen in

organizations that have become too large for one person to maintain all the control and

authority. Employees may also spend too much time playing political games and trying

to curry favour with the boss instead of actually working. Members of this type of

culture often become burned out, and disloyal employees face a hostile and oppressive

environment.


Role Culture

A role culture is a highly structured environment where clear objectives, goals, and

procedures exist. An employee is judged almost solely on how well they meet these

objectives and goals. In a functional stage role cultures operate highly efficiently and

include built-in checks and balances of power. This culture rewards dependability and

consistency and, due to its well-articulated procedures, produces little stress. However,

taken to extremes role cultures can create an organization of automatons that simply

follow the rules and have very little concern for that which is not in their prescribed

area. This mentality creates an environment where cooperation and collaboration are

non-existent and a person’s talent may go unused. Change comes very slow in role

cultures and those within the culture, especially a dysfunctional one, may become afraid

to take risks.


Achievement Culture

An achievement culture is one where people work hard to achieve goals and better the

47



group as a whole. This culture generally consists of highly motivated people who need

little to no supervision. Rules and procedures are limited as they may interfere with the

accomplishment of work. When a rule gets in the way of achieving a goal the rule is

simply ignored. The best tools and methods for producing results are utilized, and when

one goal is met, everyone quickly moves on to another. Because of this environment

and mind-set, achievement cultures tend to be highly adaptive. Unfortunately members

of an achievement cultures tend to burn out on their work. It may be difficult to

establish control if the need arises as the culture cultivates individuals. Members may

also become highly competitive with each other and the mind-set of “whatever it takes”

can lead to dishonest and illegal behaviour.


Support Culture

A support culture acts like a tiny community where people support and trust each other.

Members of this culture will cooperate, make sure everyone is together on an idea, and

do all that they can to resolve conflict. Support cultures consist of good communication

and excellent service both internal and external. This culture creates a nurturing

environment where members like to spend time together and sometimes personal and

professional lives can become blurred. When a support culture becomes dysfunctional

the needs of the individuals are placed over the needs of the organization. Due to a

commitment to consensus decisions come slowly. Support cultures tend to not be very

task oriented. And too much time spent together fosters personal differences that often

hinder work and ruin the excellent service that is a hallmark of support cultures.

( Jason Martin 2006:6)

Appendix 6

Leadership style

There are many leadership styles in the organisation, but the most common leadership

types are:

Autocratic

Autocratic leadership is characterized by individual who controls over all decision and

little input from group members. The autocratic leader is commonly making all the

decisions on their own ideas and judgments and rarely accepts any advice from the

48



employees or outsiders. This means that the autocratic leader has an absolute control

over a group of employees. The autocratic leader is dictates all the work methods and

process. There is no trust to the group members with decision or important tasks.

( Linehan 2007:54-56)

Democratic

Democratic leadership is characterized by the individual who allows the members of

the group take a more participative role in the decision making process. 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 very good adapted in the

dynamic and rapidly changing environment where little can be taken as a constant. In

these fast growing organisations, every small detail even little opinion for improvement

can be taken in to consideration. This helps to keep the group from falling out of date.

Democratic leadership style encourages the members of the group to share their ideas

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

Democratic leader has to have skills to communicate the decision has been made to the

group of people.

( Linehan 2007:56-58)

Bureaucratic

Bureaucratic leadership is when the managers managing the whole organisation

according to the rules and policies. This type of leader is making sure that the

employees also strictly follow the rules and procedures. Promotion takes place on the

basis of employees’ ability to adhere to organisational rules. This type of leadership is

suitable when there is need of safe work conditions and quality is required.

( Linehan 2007:58-59)

Laissez faire

Laissez faire leadership is known as delegate leadership style in which leaders are

hands-off and let the group members to make the decisions themselves. The leader

gives a little instructions and complete freedom to the followers to came and make the

decision. The leader gives all the tools and also the resources needed to the followers.

Leader is expecting the followers to solve the problems on their own.

( Linehan 2007:59-61)

49



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