13. Enabling Success and Strategic Change Flashcards
Why does senior management need to review the organisational structure?
What does the formal organisational structure reveal?
Senior management needs to give careful consideration to the organisation’s structure and internal relationships, if the selected strategy is to be implemented successfully.
The formal organisational structure reveals
- Who is responsible for what? Lines of Responsibility
- Which team members are in communication? lines of communication
- The upper levels of the structure reveal the skills, experience, values and, by extension, the role of knowledge and skills used to manage the business. (Quality of leadership)
What are the influences on the organisation’s structure?
Size and Growth
As the company grows the company structures must change in order to support growth.
changes required:-
- More specialisation
- More decentralization
- More levels of authority
- More bureaucracy
What influences management when creating or changing the business structure
Internally
- To resolve past issues of performance
- Strategic objectives are the co-ordination of staff key to gain competitive advantage
- Future strategy, The future plans, does the structure need to be developed now?
- Ownership and management changes, they may have more influence when joining the company, more entrepreneurial or innovative.
- Nature of the environment, ORG is operating now and would like to be in the future
- Diversity, and cultural changes needs of multinational likely to be different from a sme
- Changes in Size, a rapidly growing company can not keep simple structures
- People, in the org and their skills
External Influences
- technological developments and increased knowledge of personnel in the job market
- economic opportunities or threats posed from new markets
- cultural or social demographic or legal changes
- environmental and ecological changes
- Prevailing ideological differences in the management, less hierarchy needed for knowledge companies. Eg. Japanese companies place more value on planning and hierarchy, tradition, then those in the global market may be more intuitive decentralised.
Key factor:-
Size and Growth
As the company grows the company structures must change in order to support growth.
- More specialisation
- More decentralization
- More levels of authority
- More bureaucracy
What types of structures are there?
What are the benefits and disadvantages of them?
Name 2 types of Internal “control” relationships? and What are their benefits?
Concerning the responsibility and authority for decision making.
- The degree of Centralisation
- The way the Centre (Chief-Board) relates to the SBU.
Centralisation: Means a greater degree of central control.
Decentralisation: Means a greater degree of delegated authority to regions or sub-units.
Advantages of Centralisation
- Greater Control by the Senior Management
- Standardisation of processes
- Overall corporate view of decision making
- Balance of power can be maintained between divisions
- Experience of senior management can be more influential
- Lower Overheads
- Strong Leadership, especially in times of crisis
Advantages of Decentralisation
- The workload is delegated, so senior management can focus on the overall strategy.
- Job satisfaction for subordinate management
- improved local Knowledge from local management
- Flexibility and speed to respond to changing conditions
- Training and experience for subordinate for future leadership
- Established appropriate controls for SBUs, may improve control.
Name 3 types of strategic management styles for divisionalised conglomerates?
There are three generally accepted possible roles for the centre (chief corporate managers considered for:-
- Responsibility for setting overall strategy and resource management.
- Controlling divisional performance.
- The level of services that should be provided by the central office?
3 Styles:-
- Strategic planning style – Centre works with divisional management to develop the long-term strategy and objectives (Financial and non-financial) for the division, unified with the overall corporate strategy.
- Strategic Control style – Lower degree of planning influence and check divisional management plans for acceptability.
- Financial Control Style – Strict financial target placed on division management; most operational plans are left for the divisional managers.
What is collaborative working and how has it affected traditional approaches to business?
Traditionally businesses would have been more adversarial, e.g. seeking the cheapest supplier or charging the highest amount.
While this is still a characteristic, businesses are taking a modern approach with a bigger focus on co-operation rather than rivalry. These are known as: -
Boundary-less organisations: Are those which have structured their operations to allow for collaboration with external parties.
Building relationships with suppliers, competitors and customers should increase the organisations’ flexibility to respond to change.
What are the likely benefits and disadvantages of a boundaryless organisation?
- *The key advantages:**
- Increased flexibility and ability to cope with change.
- Removes geographical barriers to productivity.
- Collaboration can bring specialisation and comparative and absolute advantages.
- More efficient communication between functions.
- *The key problems are:**
- The organisation is only as strong as the weakest collaborator.
- Employee management and goal congruence can become more complex and difficult.
- Some boundary-spanning activities are still required (e.g. marketing).
Briefly describe 4 types of Boundary-less organisations?
HOLLOW structure the majority of the company’s non-core processes are outsourced to specialists, leaving management free to concentrate on its value-adding activities.
MODULAR structure involves outsourcing certain production processes to specialist outsourcers. The core company will then assemble the outsourced components in-house to produce a final product.
e.g. Airplane manufactures may outsource the engine and build the frame themselves.
NETWORK structure is groups of organisations or individuals who co-operate to deliver services to customers. e.g Building Project manager hiring different types of trade skills specialist (plumbers and electricians) to build. Very fluid-structure best used for innovating response to changing environments.
VIRTUAL structure- A virtual organisation appears as a single entity from outside to its customers but is in fact a network of different organisational nodes. e.g Amazon and various delivery partners
What are the types of Organisational Partnering?
- Internal Partnering
- External Partnering -(Franchising, joint ventures)
- Outsourcing
- Off-shoring
- Shared Services
- Global Business Service
Briefly explain Internal Partnering?
Concerned with increasing the levels of co-operation and collaboration between the various functions and departments that exist internally.
To be successful managers need to better understand, how the activities of their respective departments interact with and impact upon other parts of the organisation. This requires breaking down the barriers that exist between them.
Internal partnering often requires cultural change as people need to be encouraged to work more collaboratively. To achieve this Orgs should set departmental and interdepartmental performance targets.
Briefly explain External Partnering/Franchising?
Franchising arrangements place legal obligations on both the franchiser and franchisee.
Franchisers will develop performance measures and reporting systems to ensure that the franchisee complies with the terms of the franchise agreement. Arrangements are collaborative by nature; franchisers are required to provide support to franchisees via staff training or group-wide marketing plans.
Briefly explain Outsourcing? and the Pros and Cons?
Outsourcing: Involves an organisation contracting out certain internal business functions to a third party. Which are non-critical to the business.
For outsourcing to be successful, careful consideration needs to be given when selecting partners, trust is an important element of the partnership. It common practice for service level agreements to be used, to address quality provided and the roles of each party, to support the trust between the parties.
Advantages
- Removes uncertainty about cost, it may also result in achieving economies of scale.
- Outsource arrangements can be established for long periods, encouraging future planning.
- Specialist outsourcers possess greater skills and
- Knowledge, which can be shared amongst different clients
- It offers flexibility (contract permitting). Resources may be able to be scaled to demand.
Disadvantages and implications
- Sharing of High-Risk information with third parties could be risky, in commercial and legal terms.
- locked into an unsatisfactory contract.
- Using outsourcers does not encourage the awareness of potential costs or benefits of conducting the process internally.
- Bringing the function back in house may not easy or even possible.
Briefly explain Shared Servicing? and the Pros and Cons?
Shared servicing: Is an alternative to outsourcing, where shared service centres (SSC) consolidate the transaction-processing activities of many operations within an organisation.
Advantages
- Reduced headcount, due to economies of scale
- Reduced premises and overhead costs
- Improvement in quality, from the knowledge shared between staff in a department
- Allows for standard approaches to be adopted across the organisation, in terms of management, reporting and procedures
Disadvantages
- Servicing department is removed from the local level of decision making.
- Weakened relationships between the departments
- Loss of business-specific knowledge. e.g. offsite finance team member would not have the same level of knowledge of an SBUs needs than one that is on-site.
Briefly explain global business service?
A global business service:
- Effectively brings together shared service and outsourcing arrangements together to form an integrated, collaborative framework
- This helps to coordinate and support the global operations of the organisation in areas including finance, HR, IT and procurement.
How to achieve empowerment?
Empowering workers requires the organisation to approach to H.R management which views employees as being an important strategic asset, a source of competitive advantage.
The role of the manager becomes one of supporting staff to find solutions to better meet the objectives, as opposed to simply ensuring compliance with organisational rules.
The change in structure and culture because of empowerment is illustrated in the following diagram.
What type of activities helps with talent management?
What are the 4 types of change mentioned by Balogun and Hope Hailey?
The scope of change is its extent: the measure of scope is whether or not the methods and assumptions of the existing paradigm must be replaced. The paradigm represents the common, basic assumptions and beliefs held by those within the organisation.
- Realignment of the paradigm where processes are adapted to meet with strategic change.
- Transformation there needs to be an underlying shift in the way we work as an organisation.
The nature of change may be,
- Incremental (gradual) and built on existing methods and approaches,
- Big bang’ approach if a rapid response is required, as in times of crisis.
- Adaptation is the most common type of change. It does not require the development of a new paradigm and proceeds step by step. The majority of change falls into this category.
- Reconstruction can also be undertaken within an existing paradigm but requires rapid and extensive action. It is a common response to a long-term decline in performance. An example would be cost cutting in response to falling profits.
- Evolution is an incremental process that leads to a new paradigm. It may arise from careful analysis and planning or may be the result of learning processes. Its transformational nature may not be obvious while it is taking place.
- Revolution is rapid and wide-ranging response to extreme pressures for change. A long period of strategic drift may lead to a crisis that can only be dealt with in this way. Revolution will be very obvious and is likely to affect most aspects of both what the organisation does and how it does them
