CHAPTER:5

STRATEGY IMPLEMENTATION AND EVALUATION

QUESTION 1.
WHAT ARE THE REASONS OF CHANGING THE CORPORATE STRUCTURE WHILE CHANGES IN
CORPORATE STRATEGY?

ANSWER.
THERE ARE TWO MAIN REASON FOR DOING SO:-

1. Structure largely dictates how operational objectives and policies will be established to
achieve the strategic objectives The structural format for developing objectives and policies
can significantly impact all other strategy-implementation activities.
2. structure dictates how resources will be allocated to achieve strategic objectives. If an
organization’s structure is based on customer groups, then resources will be allocated
in that manner. Similarly, if an organization’s structure is set up along functional
business lines, then resources are allocated by functional areas.

QUESTION 2.
WHAT ARE SYMTOMS OF INEFFECTIVE ORGANISATIONAL STRUCTURE?

ANSWER.
Symptoms of an ineffective organizational structure include too many levels of
management, too many meetings attended by too many people, too much attention being
directed toward solving interdepartmental conflicts, too large a span of control, and too
many unachieved objectives. Changes in organisational structure can facilitate strategy-
implementation efforts, but changes in structure should not be expected to make a bad
strategy good, to make bad managers good, or to make bad products sell.
QUESTION 3.
WHAT ARE THE DIFFERENT TYPE OF STRATEGY?

ANSWER.

1. SIMPLE STRUCTURE
2. FUNCTIONAL STRUCTURE
3. DIVISIONAL STRUCTURE
4. MULTI DIVISIONAL STRUCTURE
5. STRATEGIC BUSINESS UNIT STRUCTURE
6. MATRIX STRUCTURE
7. NETWORK STRUCTURE
8. HOUR GLASS STRUCTURE

1 SIMPLE STRUCTURE
 Simple organizational structure is most appropriate for companies that follow a single-
business strategy and offer a line of products in a single geographic market.
 The simple structure also is appropriate for companies implementing focused cost
leadership or focused differentiation strategies.
 A simple structure is an organizational form in which the owner-manager makes all
major decisions directly and monitors all activities, while the company’s staff merely serves
as an executor.

characterise the simple structure.

 In the simple structure, communication is frequent and direct, and new products tend to
be introduced to the market quickly, which can result in a competitive advantage
 A simple organizational structure may result in competitive advantages for some small
companies relative to their larger counterparts. These potential competitive advantages
include a broad-based openness to innovation, greater structural flexibility, and an
ability to respond more rapidly to environmental changes.
 2 FUNCTIONAL STRUCTURE
 A functional structure groups tasks and activities by business function, such as
production/operations, marketing, finance/accounting, research and development, and
management information systems.
 Besides being simple and inexpensive, a functional structure also promotes
specialization of labour, encourages efficiency, minimizes the need for an elaborate control
system, and allows rapid decision making.
 The functional structure consists of a chief executive officer or a managing director and
supported by corporate staff with functional line managers in dominant functions such
as production, financial accounting, marketing, R&D, engineering, and human resources.
 The functional structure enabling or facilitating communication and coordination

QUESTION.
What are the Problems associated with Functional Structure?

ANSWER.
Following are the problems associated with functional structure:-

 Differences in functional specialization and orientation may impede communications

and coordination. Thus, the chief executive officer must integrate functional decision-
making and coordinate actions of the overall business across functions.
 Functional specialists often may develop a myopic (or narrow) perspective, losing
sight of the company’s strategic vision and mission. When this happens, this problem can
be overcome by implementing the multidivisional structure.
 DIVISIONAL STRUCTURE
Divisional structure is that organizational structure which is based on extensive delegation of
authority and built on division basis. The divisional structure can be organized in one of the
four ways: by geographic area, by product or service, by customer, or by process. With a
divisional structure, functional activities are performed both centrally and in each division
separately.

Advantages of Divisional Structure are following:-

 Accountability is clear: Divisional managers can be held responsible for sales and profit
levels. Because a divisional structure is based on extensive delegation of authority,
managers and employees can easily see the results of their good or bad performances and
thus their morale is high.
 Other advantages: It creates career development opportunities for managers, allows
local control of local situations, leads to a competitive climate within an organization, and
allows new businesses and products to be added easily

Disadvantages of Divisional Structure are following:-

 Higher cost: Owing to following reasons: (i). requires qualified functional specialist
at different divisions and needed centrally (at headquarters); (ii). It requires an
elaborate, headquarters –driven control system.
 Conflicts between divisional managers: Certain regions, products, or customers may
sometimes receive special treatment, and it may be difficult to maintain consistent,
company-wide practices.

POINTERS:-

 A divisional structure by geographic area is appropriate for organizations whose strategies

are formulated to fit the particular needs and characteristics of customers in different
geographic areas.
 The divisional structure by product (or services) is most effective for implementing strategies
when specific products or services need special emphasis. Also, this type of structure is
widely used when an organization offers only a few products or services.
 A divisional structure by process is similar to a functional structure, because activities
are organized according to the way work is actually performed. However, a key difference
between these two designs is that functional departments are not accountable for profits
or revenues, whereas divisional process departments are evaluated on these criteria.
 MULTI DIVISIONAL STUCTURE
Multidivisional (M-form) structure is composed of operating divisions where each division
represents a separate business to which the top corporate officer delegates responsibility for
day-to-day operations and business unit strategy to division managers. By such delegation,
the corporate office is responsible for formulating and implementing overall corporate
strategy and manages divisions through strategic and financial controls.

Multidivisional structure calls for:

 Creating separate divisions, each representing a distinct business
 Each division would house its functional hierarchy;
 Division managers would be given responsibility for managing day-to-day operations;
 A small corporate office that would determine the long-term strategic direction of the
firm and exercise overall financial control over the semi- autonomous divisions.

BENEFITS OF MULTIDIVISIONAL STRUCTURE

This would enable the firm to more accurately monitor the performance of individual
businesses, simplifying control problems, facilitate comparisons between divisions, improving
the allocation of resources and stimulate managers of poorly performing divisions to seek ways
to improve performance.

Hourglass structure
QUESTION.
What is an Hourglass Structure? How can this structure benefit an organisation?

ANSWER.
In the recent years information technology and communications have significantly
altered the functioning of organizations. The role played by middle management is
diminishing as the tasks performed by them are increasingly being replaced by the
technological tools. Hourglass organization structure consists of three layers in an organisation
structure with constricted middle layer. The structure has a short and narrow middle
management level.

Information technology links the top and bottom levels in the organization taking away many
tasks that are performed by the middle level managers. A shrunken middle layer coordinates
diverse lower level activities.
Hourglass structure has obvious benefit of reduced costs. It also helps in enhancing
responsiveness by simplifying decision making. Decision making authority is shifted close
to the source of information so that it is faster. However, with the reduced size of
middle management, the promotion Opportunities for the lower levels diminish significantly.

Strategic business unit

QUESTION.
What is an Strategic Business Unit? How can this structure benefit an organisation?

ANSWER.
A strategic business unit (SBU) is any part of a business organization which is treated separately
for strategic management purposes. The concept of SBU is helpful in creating an SBU
organizational structure. It is discrete element of the business serving product markets with
readily identifiable competitors and for which strategic planning can be concluded. It is created
by adding another level of management in a divisional structure after the divisions have
been grouped under a divisional top management authority based on the common strategic
interests.

Advantages of SBU are:

a. Establishing coordination between divisions having common strategic interests.

b. Facilitates strategic management and control on large and diverse organizations.
c. Fixes accountabilities at the level of distinct business units.
d. Allows strategic planning to be done at the most relevant level within the total enterprise.
e. Makes the task of strategic review by top executives more objective and more effective.
f. Helps allocate corporate resources to areas with greatest growth opportunities.
 MATRIX STRUCTURE
The matrix structure, in contrast, may be very appropriate when organizations conclude that neither
functional nor divisional forms, even when combined with horizontal linking mechanisms like
strategic business units, are right for the implementation of their strategies. In matrix structure
functional and product forms are combined simultaneously at the same level of the organization

A matrix structure is the most complex of all designs because it depends upon both vertical and
horizontal flows of authority and communication (hence the term matrix)

Despite its complexity, the matrix structure is widely used in many industries, including
construction, healthcare, research and defence. Some advantages of a matrix structure are that
project objectives are clear, there are many channels of communication workers can see the visible
results of their work, and shutting down a project is accomplished relatively easily.

QUESTION.
What are the conditions to be exist to have a matrix sturucture?

ANSWER.
The matrix structure is often found in an organization or within an SBU when the following three
conditions exists:

1. Ideas need to be cross-fertilised across projects or products,

2. Resources are scarce and
3. Abilities to process information and to make decisions need to be improved.

QUESTION.
What are the three distinct phases for matrix development by davis and Lawrence?

ANSWER.
For development of matrix structure Davis and Lawrence, have proposed three distinct phases:

1. Cross-functional task forces: Temporary cross-functional task forces are initially used when a
new product line is being introduced. A project manager is in charge as the key horizontal link.
2. Product/brand management: If the cross-functional task forces become more permanent, the
project manager becomes a product or brand manager and a second phase begins. In this
arrangement, function is still the primary organizational structure, but product or brand managers
act as the integrators of semi permanent products or brands.
3. Mature matrix: The third and final phase of matrix development involves a true dual-authority
structure. Both the functional and product structures are permanent. All employees are connected
to both a vertical functional superior and a horizontal product manager. Functional and product
managers have equal authority and must work well together to resolve disagreements over
resources and priorities. However, the matrix structure is not very popular because of
difficulties in implementation and trouble in managing.
 Network Structure
 A radical organizational design, the network structure is an example of what could be termed a
“non -structure” by its virtual elimination of in-house business functions. Many activities are
outsourced. A corporation organized in this manner is often called a virtual organization because it
is composed of a series of project
 groups or collaborations linked by constantly changing non-hierarchical, cobweb- like networks. The
network structure becomes most useful when the environment of a firm is unstable and is expected
to remain so. Under such conditions.
 Companies like Airtel use the network structure in their operations function by subcontracting
manufacturing to other companies in low-cost.
 The network organization structure provides an organization with increased flexibility and
adaptability to cope with rapid technological change and shifting patterns of international trade
and competition.

Organisation culture

 Corporate culture refers to a company’s values, beliefs, business principles traditions, ways of
operating, and internal work environment.

Every organisation has a unique organizational culture. It has its own philosophy and principles, its
own history, values, and rituals, its own ways of approaching problems and making decisions, its
own work climate. It has its own embedded patterns of how to do things. Its own ingrained beliefs
and thought patterns, and practices that define its corporate culture.

Question
Where Does Corporate Culture Come From?

ANSWER.
A company’s culture is manifested in the values and business principles that management
preaches and practices, in its ethical standards and official policies, in its stakeholder relationships
(especially its dealings with employees, unions, stockholders, vendors, and the communities in
which it operates), in the traditions the organization maintains, in its supervisory practices, in
employees’ attitudes and behaviour, in the legends people repeat about happenings in the organization

Frequently, a significant part of a company’s culture emerges from the stories that get told over and
over again to illustrate to newcomers the importance of certain values and beliefs and ways of
operating.