MODULE-7

INSTITUTIONALIZING THE STRATEGY.

INTRODUCTION

STRUCTURE,LEADERSHIP,CULTURE.

STRUCTURAL CONSIDERATION AND

ORGANISATIONAL LEADERSHIP.

There are three elements of institutionalizing the strategy

Structure: The focus will be on organizational structure, the formal reporting and responsibilities within a company

Leadership: The focus will shift to the leadership of top management in the accomplishment of strategic management.

Culture: It will focus on organizational culture

Structural consideration

There are five basic types currently used in business firm.

1. Simple

2. Functional

3. Divisional

4. Strategic business unit

5. Matrix

Simple and functional organizational structure model

A. Simple structure B. functional structureOwner manager

Employees

Chief executive officer

Production Marketing Engineering

Staff functionsFinance/Accounting

personnel

Advantages and disadvantages of simple organization structure

Facilitates control of all the business activities. Rapid decision making and ability to change with

market signals. Simple and informal motivation/reward/control

system

Disadvantages

Very demanding on the owner-manager. Increasingly inadequate as volume expands. Does not facilitate development of future

managers. Tends to focus owner-manager on day to day

matters and not on future strategy.

Advavatages and disadvantages of functional

structure Efficiency through specialization. Improved development of functional expertise. Differentiates and delegates day to day operating

decisions. Retains centralized control of strategic decisions.

Disadvantages

Promotes narrow specialization and potential functional rivalry or conflict.

Difficulty in functional coordination and interfunctional decision making.

Staff-line conflict. Limits internal development of general managers.

Divisional organizational structure model

Chief executive officer

Vice presidentAdministrative service

Vice president Operating support

General managerDivision A

General managerDivision B

A General managerDivision C

MarketingMarketing

Production/ operation Production/ operation Production/ operation

personnel

Accounting/control

Division planning

personnelAccounting/control

Division planning

personnelAccounting/control

Division planning

Marketing

Advantages and disadvantages of divisional organizational structure

Coordination and rapid response. Strategy development and implementation . Frees chief executive officer for broader strategic

decision making. Sharply focuses accountability for performance. Retains functional specialization within each

division. Good training ground for strategic managers.

Disadvantages

Problem with the extent of authority given to division managers.

Potential for policy inconsistencies between divisions.

Problem of arriving at a method to distribute corporate overhead costs that is acceptable to different division managers with profit responsibility.

Strategic business unit organizational structure model

Chief executive officer

Group vice presidentSBU1

Group vice presidentSBU2

Group vice presidentSBU3

Vice presidentAdministrative service

Vice president Operating support

Divisions Divisions Divisions

A B CD E F G H I

Advantages and disadvantages of strategic

business unit Improves coordination between divisions . Facilitates the distinct and in-depth business

planning . Channels accountability to distinct business units.

Disadvantages

Places another layer of management between the divisions and the corporate management.

The role of the group vice president can be difficult to define.

Difficulty in defining the degree of autonomy for the group vice presidents and division managers.

Matrix organizational structure modelChief executive officer

vice presidentEngineering

vice presidentProduction

vice presidentPurchasing

vice presidentAdministration

Project manager A

Project manager B

Project manager C

Engineering staff

Engineering staff

Engineering staff

Productionstaff

Productionstaff

Productionstaff

PurchasingAgent

PurchasingAgent

PurchasingAgent

Administrationcoordinator

Administrationcoordinator

Administrationcoordinator

Matrix organizational structureAdvantages and disadvantages

Accommodates a wide variety of project oriented business activity.

Good training ground for strategic managers. Maximizes efficient use of functional managers. Fosters creativity and multiple sources diversity. Broader middle management exposure to strategic

issue for the business.

Disadvantages

Dual accountability can create confusion and contradictory policies.

Necessitates tremendous horizontal and vertical coordination.

Organizational leadership

It is essential element in effective strategy implementation. and two leadership issues are of fundamental importance here:

1. The role of the chief executives officer. And

2. The assignment of key managers.

Selective blend

Current executives via

Promotion and transfer

Where skills match new

roles; otherwise, seek

Skills and experience via outsiders

Turnover

Outsiders should be a

High priority to provide

New skills, and motivation

Stability

Current executives

and internal promotions

Should be a major

emphasis in order to

reward, retain, and

Develop managerial talent.

Reorientation

Outsiders are important

To replace weaknesses

And “communication

Seriousness" current

executives should be a

Priority where possible

Via promotion,transfer,or

role clarification.

Changes required toImplement new strategy

Many

Few

Assessment of past organizationalperformance

Effective Ineffective

Four managerial assignment situations