Session 18 Flashcards
What is differentiation in terms of organizing?
Creating multiple work units for particular tasks using different skills, tools and methods.
- Likely high in complex and dynamic environment
What is integration in an organization
The degree to which differentiated units share resources and capabilities, coordinate and are unified under a corporate parent
What is organizational structure?
- Reporting relationships, procedures, controls, authority, decision making
- The work to be done and how to do it given the firm’s strategies
What is the relationship between strategy and structure?
- reciprocal relationship
- Structure flows from selection of strategy
- once structure is in place, it can influence current strategy
- effect of strategy on structure > effect structure on strategy
What should be thought about when selecting a structure that aligns with strategy?
- Stability needed to use current competitive advantages
- Flexibility needed to develop future advantages
What is relationship between organizational growth and strategy?
organizational growth allows the firm to change its strategy to become even more successful
Existing structure could lack the sophistication to support this strategy, therefore new organizational structure is neededW
What are the three basic structure types?
- Simple Structure
- functional Structure
- Multidivisional Structure (M-form)
Across time, firms move from simplest to multidivisional
No structure is inherently better, must choose the structure that best matches strategy
What is the simple structure?
- Owner/manage make all major decisions and monitor activities
- staff serve as extension of the manager’s authority
- Matched with focus strategy and business-level strategies. (single product lign in single geographic market)
- Growth creates complexity and managerial and structural challenges
What is the functional structure?
- CEO
- Line managers in dominant organizational areas (production, marketing, engineering, accounting, etc)
- Benefits: Economies of scale and scope, maintained performance standards, specialized training, clear decision making and communication
Who should use a functional structure?
- Support use of business level strategies and some corporate level strategies (single or dominant business with low levels of diversification)
What are the disadvantages of functional strucutre?
- hard to integrate
- lack of common vision
What is multidivisional structure?
- Strategic control: Operation divisions function and seperate businesses or profit centers
- top corporate officers delegates responsibilities to division managers
Who should have a multidivisional structure?
Highly diversified firms
What are the benefits and disadvantages of a multidivisional structure?
Benefits:
1. corporate officers can more accurately monitor performance of each business (simplifies control)
2. Facilities comparisons between divisions (improves resource allocation
3. Makes managers in poorly performing divisions find ways to improve performance
Disadvantages:
1. Difficult to coordinate
2. Replication of resources
3. pressure to generalize, not specialize
What is strategic leadership?
Ability to anticipate, envision, maintain flexibility and empower others to create strategic change when necessary
Multifunctional in nature:
- managing through others
- managing entire organization
- coping with rapid and intense changes associated with global economy
What is strategic change?
Change resulting from selecting and implementing a firm’s strategies
What makes an effective strategic leader?
- Influence behaviors, throughts and feelings of those who the work with by example, word and ability to envision the future
- Create and support the context or environment through which stakeholders can perform most efficiently
- Implement strategies to make above-average returns
What is the most critical skill of a strategic leader?
Attracting and managing human capital. Especially now where the intellectual capital that the firm possesses affects the strategic leader’s success.
Who does strategic leadership rest with?
CEO
What is a top management team?
Individuals responsible for making the firm use the strategic management process, especially to select and implement strategies.W
who is part of the top management team?
Officers and BoD
Why should a firm have a top management team instead of just a CEO
most problems require a team of executives rather than a single individual
they help CEO avoid overconfidence and make better decisions
What is a heterogeneous top management team?
- Team with different types of expertise and knowledge
- different background, experience, education
Why is having a heterogeneous top management team advantageous?
- Decisions by heterogeneous top management team tend to have a positive relationship with innovation and strategic change
- Different perspectives creates higher quality decisions and firm performance
- Makes other team members think more creatively
- Firms who could benefit from making strategic changes are more likely to make changes if they have a heterogeneous top management team
What could be a disadvantage of a top management team?
- If the team cannot manage itself effectively, it can stop effective decision-making processes
- large and more heterogenous management teams make it more difficult to implement strategies
What is the role of a top-level manager?
- Make decisions regarding strategies and implement them
- Use their own discretion
What are the three factors affecting managerial discretion?
- External environment (industry, growth rates, number of competitors, legal constraints, differentiation amongst products)
- characteristics of the organization (size, age, culture, resources, interactions among employees)
- Characteristics of the manager (tolerance for ambiguity, commitment to firm and strategy, interpersonal skills, self confidence)
What are the primary factiosn which determine the amount of discretion a manager has?
- External environemtn sources
- Organizaitonal characteristics
- Managerial characteristics
