Chapter 10: Building an Organization Capable of Good Strategy Execution

Question 1

What does good strategy execution require?

Answer 1

A team effort.

Question 2

What is the main reason for strategies failing?

Answer 2

Poor execution. Strategy execution is a critical managerial endeavor.

Question 3

What are the 3 most important types of organization-building actions?

Answer 3

1. Staffing the organization
2. Acquiring, developing, and strengthening resources + capabilities
3. Structuring the organization and work effort

Question 4

What does structuring the organization and work effort involve?

Answer 4

• Instituting organizational arrangements that facilitate good strategy execution
• Establishing lines of authority
• Deciding how much decision-making authority to delegate

Question 5

What should be the overriding aim in building a management team?

Answer 5

Assembling a critical mass of talented managers who can function as agents of change and spearhead excellent strategy execution.

Question 6

How do firms develop dynamic capabilities?

Answer 6

By making capability-building activities a routine part of their strategy execution endeavours.

Question 7

What are the 3 most common approaches to capability building?

Answer 7

1. Developing and strengthening capabilities internally
2. Acquiring capabilities through mergers and acquisitions
3. Developing new capabilities via collaborative partnerships

Question 8

What are capabilities the product of?

Answer 8

Bundles of skills and know-how that are integrated into organizational routines and deployed within activity systems.

Question 9

What is the first step of building a capability?

Answer 9

Develop the ability to do something, however imperfectly or inefficiently.

Question 10

What does an ability evolve into once personnel learn how to perform it consistently?

Answer 10

A tried-and-true competence.

Question 11

What is required to turn an ability into a competence?

Answer 11

Continual investment of resources and systematic efforts to improve processes and solve problems creatively as they arise.

Question 12

Which two forms do managerial actions to develop competitive capabilities generally take?

Answer 12

• Strengthening the company’s base of skills, knowledge, and experience
• Coordinating and integrating the efforts of the various work groups and departments

Question 13

When are capabilities-motivated acquisitions essential? (2)

Answer 13

1. The company des not have the ability to create the needed capability internally and
2. industry conditions, technology, or competitors move at a rapid pace

Question 14

What are the 3 basic ways to pursue collaborative partnership to access capabilities?

Answer 14

1. Outsource the required function
2. Collaborate with a firm in a joint venture, strategic alliance, etc.
3. Engage in a collaborative partnership to learn how the partner does things and acquire its capabilities

Question 15

A firm’s organizational structure should be matched to what to support good strategy execution?

Answer 15

To the particular requirements of implementing the firm’s strategy.

Question 16

How can outsourcing contribute to better strategy execution?

Answer 16

Allows a company to concentrate its full energies on performing value chain activities that are at the core of its strategy, where it can create unique value.

Question 17

What does a firm’s organizational structure comprise?

Answer 17

The formal and informal arrangement of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered.

Question 18

What does a simple structure consist of?

Answer 18

A central executive who handles all major decisions and oversees all operations with the help of a small staff.

Question 19

What is a functional structure?

Answer 19

One that is organized along functional lines, where a function represents a major component of the firm’s value chain, such as R&D, engineering and design, manufacturing, sales and marketing, logistics, and customer service. Each functional unit is supervised by functional line managers who report to the CEO.

Question 20

What is the primary advantage of functional structures over simple structures?

Answer 20

Greater task specialization, which promotes learning, enables the realization of scale economies, and offers productivity advantages not otherwise available.

Question 21

What are the 4 basic types of organizational structures?

Answer 21

1. Simple
2. Functional
3. Multidivisional
4. Matrix

Question 22

What do functional structures generally evolve into as firms continue to grow?

Answer 22

Multidivisional structures.

Question 23

What is a multidivisional structure?

Answer 23

Decentralized structure consisting of a set of operating divisions organized along business, product, customer group, or geographic lines and a central headquarters to allocate resources and monitor activities.

Question 24

What are other names for multidivisional structures?

Answer 24

Divisional structures or M-forms

Question 25

What is a matrix structure?

Answer 25

This is a combination structure that overlays one type onto another, with multiple reporting relationships. Used to foster cross-unit collaboration.

Question 26

What are other terms for matrix structures (2)?

Answer 26

Composite structures or combination structures.

Question 27

How do matrix structures lower costs?

Answer 27

By enabling the realization of economies of scope as they facilitate the sharing of key resources.

Question 28

How does the modern matrix structure look?

Answer 28

A single primary reporting relationship that can be overlaid with a temporary secondary reporting relationship as the need arises.

Question 29

Which types of management generally employ matrix structures?

Answer 29

Project-based, process-based, team-based management. Often used in businesses involving projects of limited duration.

Question 30

What are the 2 extremes to authority delegation?

Answer 30

1. Centralize decision making at the top
2. Decentralize decision making by giving managers and employees considerable decision-making latitude in the areas of their responsibility.

Question 31

What is a network structure?

Answer 31

Arrangement linking a number of independent organizations involved in some common undertaking, with one firm typically taking on a more central role.