STRATEGIC MANAGEMENT

LECTURE 5
 organizational design:
- strat implementation encompasses company organizational design
- OD: is about selecting syst, structure, management styles that can best
implement strat

 emergence modern corpo

ex: valeo
 hierarchy as control: Weber’s principles of Bureaucracy:
- rational legal authority
- specialisation of labour
- hierarchical structure
- coordination and control through rules and standard operating procedure
- standardization of employment practices
- separation of position and people

 the contingency theory: the org depends on the strat being pursued

 structural forms:
- functional organization: benefits because single business, scale of eco,
Klization of know how, capability building
But problem of coordination and cooperation btw functions

- multidivisional: product based structure, with high potential for decentralized

decision making “take the decision in the field”.
Key: be able to apply common set of corporate tools

- matrix: for companies willing to coordinate countries, products, functions

But: cost complexity, heavy headquarters, slow decision process, conflict
organization
Ex: royal dutch, Shell group

- T shaped
 based on business unit

orga design:
- defining orga units
 units may be defined on the basis of taks products, geographical proximity, or
process
 criteria: eco of scale, learning, capitalization of know how…
- choosing the right structure: basic feature of organizations is hierarchy

 Trends

1980: trend is to:

- simplify structure
- focus on the main dimension
- accept informal coordination for the other dimensions

 hierarchy remains the basic structural form

- evolution of fctional, divisional, matrix org: delayering ( reduce nb of hierarchy
level, more flexible, less cost + adhocracy, MINTZBERG: team based, shared
values + Project based orga)
- permeable organizational boundaries: narrowing the scope, focusing on core
competencies, outsourcing non core act, concept od “extended company” (? )

Trends in orga design:

- focus on coordination: financial incentives, culture and social controls
replacing hierarchy control
- informal coordination through bilateral and multilateral adjustments, network
structure
- individual employees occupy multiple roles
 -

 organization adaption and change:

 the sources of inertia

 limited search
- preference of exploitation over exploration
- limited pool of competences ( ex: Kodak)
- satisfying behaviour limit firms to incremental change and limited perf
 complementarities btw strat, structure and systems
- firms create unique configurations of orga: localized changes tend to be
dysfunctional  change needs to be systematic
- neW CEO

 organization adaptation

- orga ecology based in orga inertia: changes in the indus occur through the
change in the population of firms with new entrants (rather than by adaptation
of firms themselves)
- other fail: evolutionary eco, successful routines are retained and replicated
within the orga (costly and slow) + different stages of the life cycle require diff
skills and capabilites

 technological change

- techno change can enhance (incremental; ipad) or destroy competences

(disruptive; smartphone, digital world)
- architectural innovation tend to destroy compet ( LCC,la poste), whereas
component innovation don’t

 managing strat change: dual strat and orga ambidexterity : M. Tushman and
Charles O’REILLY’s
Ambidextrous organization firms need to:
- exploit existing resources and capabilities and market positions
- explore news opportunities for the future
Structural Ambi (exploration and explotation allocated to different orga units)/
Contextual Ambi (same orga units and people perfo both explor and exploit)

 tools of strat change management:

- creating perception of crisis
- establishing stretch targets
- creating individual initiatives
- reorganization and new blood
- dynamic capabilities
- multiple scenario anaysis
 compet advantage: accrue to companies that initiate change and create future
 strat as a systematic and concerted approach to redefining both the company and
its industry
radical change: lethal business