STRATEGIC IMPLEMENTATION

To successfully implement the strategies of the organization, its structure must support its unique system while
the entire machinery of the company must be aligned to the direction where it wants to go. The functional
strategies of the company should be complementary to the much desired goals, hence there must be a fit
between and among organizational elements, including its departments and small business units.

Part 1: ORGANIZATIONAL STRUCTURE

Organizational structure refers to the system or mode by which a group of individuals is able to achieve its
desired goals. It is also referred to the formalized patterns of interactions that link a firm’s tasks, technologies,
and people.

TYPES OF ORGANIZATIONAL STRUCTURES

Simple Structure: It is an organizational form where the owner-manager makes most of the decisions
and controls activities, and the staff serves as an extension of the top executive.

Functional Structure: it is an organizational form in which the major functions of the firm such as
production, marketing, R & D, and accounting are grouped internally. Particularly, human resources are
brought together in units, teams, or projects so that job specialization can be optimized while special
skills can be best managed.

Territorial Structure: It is an organizational form used when an organization is serving customers who
are spread over a wide or growing geographical area.

Product Structure: It is an organizational structure where sub-businesses are assigned to product

managers, each of them is given key operating and staff functions. As long as the product, markets and
customers are diverse and mutually exclusive, there is no limit to the number of product management
systems used.

Market-Centered Structure: Companies can structure their business to fit their markets. A market-
centered structure describes the wide range of structural forms that center on a group of customer
needs rather than a region, product line, or functions.

SBU Structure: An organizational form in which products, projects or product-market divisions are
grouped into homogenous units to achieve some synergies. This is used when the divisions are large
enough to work independently yet interdependently with each other.

Divisional Structure: An organizational form that is organized around products, projects or markets.
Each of the division, in turn, includes its own functional specialists who are typically organized into
divisions.

Holding Company Structure: Also referred to as a “conglomerate”. It is a variation of the divisional

structure but one in which the divisions have a high degree of autonomy both from other divisions and
from corporate headquarters.

Matrix Structure: It is a combination of the functional and divisional structure. It is an organizational

structure in which there are multiple lines of authority and some individuals report to at least two
managers.

Choice of an Organizational Structure: Some of the factors which may influence the firm’s decision to adopt
the type of organizational structure appropriate to its needs include:
 Size of the Firm
 The Products
 The Market
 Competition
 Philosophy of Management
INTERNATIONAL OPERATIONS: IMPLICATIONS FOR ORGANIZATIONAL STRUCTURE

Today’s managers must maintain an international outlook on their firm’s business and competitive strategies.
In the global marketplace, managers must ensure consistency between their strategies (at the business,
corporate, and international levels) and the structure of their organization. As firms expand into foreign
markets, they generally follow pattern of change in structure that parallel the changes in their strategies. Three
major contingencies that influence the chosen structure are:
1. the type of strategy that is driving a firm’s foreign operations,
2. product diversity, and
3. the extent to which a firm is dependent on foreign sales

As international operations become an important part of a firm’s overall operations, mangers must make
changes that are consistent with their firm’s structure. The primary types of structures used to manage a firm’s
international operations are:

International Division Structure: An organizational form in which international operations are in a

separate, autonomous division. Most domestic operations are kept in other parts of the organization.
Local managers are provided with a high level of autonomy to manage their operations within the
constraints and demands of their geographic market.

Geographical-area Division Structure: A type of divisional design in which operations in geographic

regions are grouped internally.

Worldwide Matrix Structure: A type of matrix structure that has one line of authority for geographic
area divisions and another line of authority for worldwide product divisions.

Worldwide Functional Structure: A functional structure which all departments have worldwide
responsibilities.

Worldwide Product Division Structure: A product division structure in which all divisions have
worldwide responsibilities.

Global Start-up: A business organization that, from inception, seeks to derive significant advantage
from the use of resources and the sale of outputs in multiple countries.

Boundaryless Organizational Designs: Organizations in which the boundaries, including vertical, horizontal,
external, and geographic boundaries are permeable. There at least three types of boundaryless designs:

 Barrier-free Organization. An organizational design in which firms bridge real differences in culture,
functions, and goals to find common ground that facilitates information sharing and other forms of
cooperative behaviour.

 Modular Organization. An organization in which non-vital functions are outsourced, using the
knowledge and expertise of outside suppliers while retaining strategic control.

 Virtual Organizations. A continually evolving network of independent companies – suppliers,

customers, even competitors- that are linked together to share skills, costs, and access to one
another’s markets.

Horizontal Organizational Structure: Organizational forms that group similar or related business units under
common management control and facilitate sharing resources and infrastructures to exploit synergies among
operating units and help create a sense of common purpose.

CREATING AMBIDEXTROUS ORGANIZATIONAL DESIGNS

Ambidextrous organizational designs enable firms to explore new opportunities and effectively integrate
existing operations. Ambidextrous organizational design attempts to simultaneously pursue modest,
incremental innovations as well as more dramatic, breakthrough innovations. The concept of “ambidexterity”
incorporates two challenges faced by managers today.
  Adaptability. The managers’ exploration of new opportunities and adjustment to volatile markets in
order to avoid complacency.
 Alignment. The managers’ clear sense of how value is being created in the short term and how
activities are integrated and properly coordinated.

Part 2: STRATEGIC LEADERSHIP

Leadership. It is the process of transforming organizations for what they are to what the leader would have
them become. This definition implies a lot:
 dissatisfaction with the status quo;
 a vision of what should be; and
 a process for bringing about change

LEADERSHIP: THREE INDEPENDENT ACTIVITIES

1. Setting a Direction. A strategic leadership activity of strategy analysis and strategy formulation.
2. Designing the Organization. A strategic leadership activity of building structures, teams, systems, and
organizational processes that facilitate the implementation of the leader’s vision and strategies.
3. Nurturing a Culture Committed to Excellence and Ethical Behaviour. A leadership activity that
involves creating and fostering an organizational culture focused on the core competencies of the
organization and high ethical standards.

GETTING THINGS DONE: OVERCOMING BARRIERS AND USING POWER

Barriers to Change. These are characteristics of individuals in organizations that prevent a leader from
transforming an organization.

 Vested interest in the status quo. A barrier to change that stems from people’s risk aversion. People
tend to be risk-averse and resistant to change.
 Systemic barriers. The barriers to change that stem from an organizational design that impedes the
proper flow and evaluation of information.
 Behavioral barriers. These are barriers to change associated with the tendency of managers to look at
issues from a biased or limited perspective based on their prior education and experience.
 Political barriers. These are barriers to change related to conflicts arising from power relationships.
 Personal time constraints. A barrier to change that arises from people’s not having a sufficient time
for strategic thinking and reflection.

Using Power Effectively

Power. A leader’s ability to get things done in a way he or she wants them to be done. A leader’s power may
be classified into two major sources:

 Organizational bases of power. Refers to the power that is based on a formal management position.
These may include legitimate, reward, coercive and information power.
 Personal bases of power. Refers to the leader’s personality characteristics and behaviour that are the
bases of the leader’s power. This includes the referent power (a subordinates identification with the
leader, i.e. personal attributes of a leader-charisma for example that makes the subordinate respect
and follow the leader) and expert power (the leader’s knowledge and expertise).

Emotional Intelligence: A Key Leadership Trait

There has been a vast amount of literature on the successful traits of a leader. These traits include integrity,
maturity, energy, judgement, motivation, intelligence, expertise, and so on. For simplicity, these traits may be
grouped into broad sets of capabilities:

1. Purely technical skills (like accounting, human resource management, marketing or operations
research)
2. Cognitive abilities (like analytical reasoning, critical thinking and quantitative analysis)
3. Emotional intelligence (like self-management and managing relationships)
Emotional Intelligence (EI). This is an individual’s capacity for recognizing his or her own emotions and those
of others including the five components of self-awareness, self-regulation, motivation, empathy, and social
skills.

1. Self Awareness. The ability to know your own emotions, drives, values and goals as well as
recognize their impact to others.
2. Self-regulation. The ability to control or redirect disruptive emotions and impulses and adapt to
changing circumstances.
3. Motivation. Being driven to achieve for the sake of achievement, not simply for money or status.
4. Empathy. The ability to see and consider other people’s feelings, especially when making
decisions.
5. Social Skills. The ability to build and manage relationships to move people in the desired direction.

Creating Learning Organizations

To enhance the long term viability of an organization, leaders also need to build a learning organization. Such
an organization is capable of adapting to change, fostering creativity, and succeeding in highly competitive
markets.

Learning Organizations. These are organizations that create a proactive, creative approach to the unknown;
characterized by:
1. inspiring and motivating people with a a mission and purpose;
2. developing leaders;
3. empowering employees at all levels;
4. accumulating and sharing internal knowledge;
5. gathering and integrating external information; and
6. challenging the status quo and enabling creativity.

Part 3: MANAGING INNOVATION and FOSTERING CORPORATE ENTREPRENEURSHIP

MANAGING INNOVATION

Innovation. It is the use of new knowledge to transform organizational processes or create commercially
viable products and services.

Types of Innovation

 Product innovation. It is the effort to create product designs and applications of technology to develop
new products for end users.
 Process innovation. These are efforts to improve the efficiency of organizational processes, especially
manufacturing systems and operations.
 Radical innovation. It is an innovation that fundamentally changes existing practices. These may
usually occur because of technological changes. Examples of these innovations include electricity,
telephones, the transistor, desktop computers, fibre optics, artificial intelligence, genetically engineered
drugs, etc.
 Incremental innovation. It is a form of innovation that enhances existing practices or makes small
improvement in products and processes. They may represent evolutionary applications within existing
concepts of earlier, more radical innovations. Examples include improvements o existing cellular
phones, improvement on sports drinks, electronic bookkeeping, revitalized or improved versions of
coffee drinks, shampoos, or soaps, etc.

DEFINING the SCOPE of INNOVATION

Strategic Envelope. This is a firm specific view of innovation that defines how a firm can create new
knowledge and learn from an innovation initiative even if the project fails. It also gives direction to a firm’s
innovation efforts, which helps “separate seeds from weeds” and builds internal capabilities.
CORPORATE ENTREPRENEURSHIP

Corporate Entrepreneurship (CE) is the creation of new value for a corporation through investments that
create either new sources of competitive advantage ore renewal of the value propositions.

Approaches to Corporate Entrepreneurship

1. Focused Approaches to Corporate Entrepreneurship. Firms using a focused approach typically

separate the corporate venturing activity from the other ongoing operations of the firm. Two most common
forms are:
 New Venture Groups. Corporations often form new venture groups (NVGs) whose goal is to identify,
evaluate, and cultivate venture opportunities. These groups typically function as semi-autonomous units
with little formal structure. The NVG may simply be a committee that reports to the president on
potential new ventures.
 Business Incubators. The term incubator was originally used to describe a device which eggs are
hatched. Business incubators are designed to “hatch” new business. A business incubator is a
corporate new venture group that supports and nurtures fledging entrepreneurial ventures until they can
thrive on their own as stand-alone businesses.

2. Dispersed Approaches to Corporate Entrepreneurship. For some companies, a dedication to the

principles and practices of entrepreneurship is spread throughout the organization. An advantage of the
this dispersed approach is that organizational members don’t have to be reminded to think
entrepreneurially or be willing to change.
 Entrepreneurial Culture. In some large corporations, the corporate culture embodies the spirit of
entrepreneurship, Entrepreneurial culture is a corporate culture in which change and renewal are a
constant focus of attention.
 Product Champions. It is an individual working within a corporation who brings entrepreneurial ideas
forward, identifies what kind of market exists for the product or service, finds resources to support the
venture, and promotes the venture concept to upper management.

Measuring the Success of Corporate Entrepreneurship Activities

 Exit Champion. An individual working within a corporation who is willing to question the validity of a
venture project by demanding hard evidence of venture success and challenging the belief system that
carries a venture forward.

Entrepreneurial Orientation
 These are the practices that businesses use in identifying and launching corporate ventures.
 There are five dimensions of Entrepreneurial Orientation, these are:
o Autonomy. The independent action by an individual or a team aimed at bringing forth a
business concept or vision and carrying it through to completion.
o Innovativeness. A willingness to introduce novelty through experimentation and creative
processes aimed at developing new products and services as well as new processes.
o Proactiveness. A forward-looking perspective characteristic of a marketplace leader that has
the foresight to seize opportunities in anticipation of future demand.
o Competitive Aggressiveness. It is an intense effort to outperform industry rivals; characterized
by a combative posture or an aggressive response aimed at improving position or overpowering
a threat in a competitive market.
o Risk Taking. It is making decisions and taking action without certain knowledge of probable
outcomes. Some undertakings may also involve making substantial resource commitments in
the process of venturing forward.

Part 4: STRATEGIC CONTROL and CORPORATE GOVERNANCE

The two central aspects of strategic control are 1) informational control, which is the ability to respond
effectively to environmental change; and 2) behavioral control, which is the appropriate balance and alignment
among a firm’s culture, rewards, and boundaries. Here, we direct our attention to the need for a firm’s
shareholders (owners) and their elected representatives (board of directors) to ensure that the firm’s
executives (the management team) strive to fulfil their fiduciary duties of maximizing long-term shareholder
value.
ENSURING INFORMATIONAL CONTROL: Responding Effectively to Environmental Change

There are two broad types of control, that is, “traditional” and “contemporary”.

A Traditional Approach to Strategic Control. A sequential method of organizational control in which

 strategies are formulated and top management sets goals;
 strategies are implemented; and
 performance is measured against the predetermined goals.

A Contemporary Approach to Strategic Control. It is an organizational control that looks into the
relationship between strategy formulation, implementation, and control as highly interactive. It involves two
types of strategic control:
 Informational Control. It is method of organizational control in which a firm gathers and analyzes
information from the internal and external environment in order to obtain the best fit between the
organization’ goals and strategies and the strategic environment.
 Behavioural Control. It is a method of organizational control in which a firm influences the actions of
employees through culture, rewards and boundaries.

ATTAINING BEHAVIORAL CONTROL: BALANCING CULTURE, REWARDS and BOUNDARIES

Building a Strong Effective Culture

 Organizational Culture. This is a system of shared values and beliefs that shape a company’s people,
organizational structures, and control systems to produce behavioural norms.
 The Role of Culture. Culture sets implicit boundaries-unwritten standards of acceptable behaviour – in
dress, ethical matters, and the way an organization conducts its business.
 Sustaining an Effective Culture. A viable and productive organizational culture can be strengthened
and sustained. However, it cannot be “built” or “assembled”, instead it must be “cultivated”,
encouraged, and “fertilized”.
 Motivating with Rewards and Incentives. Reward and incentive systems represent a powerful means
of influencing an organization’s culture, focusing efforts on high-priority tasks, and motivating individual
and collective task performance.
o Rewards System. Policies that determine and specify who gets rewarded and why.

Setting Boundaries and Constraints

 Boundaries and constraints are rules that specify behaviours that are acceptable and unacceptable.

THE ROLE of CORPORATE GOVERNANCE

Corporate Governance. It is the relationship among various participants in determining the direction and
performance of corporations. The primary participants in a corporate governance are:
1. the shareholders;
2. the management (led by the CEO); and
3. the board of directors

Corporation. A mechanism created to allow different parties to contribute capital, expertise, and labor for the
maximum benefit of each party.

Agency Theory. A theory of the relationship between principles and their agents, with emphasis on two
problems:
1. the conflicting goals of principals and agents, along with the difficulty of principals to monitor the
agents;
2. the different attitudes and preferences toward risk of principals and agents.

Board of Directors. A group that has a fiduciary duty to ensure that company is run consistently with the long-
term interests of the owners, or shareholders, of a corporation and that acts as an intermediary between the
shareholders and management.
A Committed and Involved BOD
 A firm needs to cultivate engaged and committed boards. The following are several actions that can
have a positive influence on board dynamics as the board works to both oversee and advise
management.
1. Build in the right expertise on the board.
2. Keep your board size manageable.
3. Choose directors who can participate fully.
4. Balance the need to focus on the past, the present, and the future.
5. Consider management talent development.
6. Get a board view.
7. Maintain norms of transparency and trust.