Gloryson Chalil
Organizational Design and Development
Chapter 8:
Organizational Strategy
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Organizational Design and Strategy
Relationship between strategy and structure
Structuralist strategies (operating environment is given) Reconstructionist strategies (seek to shape the environment)
Need to consider environmental attractiveness, the
capabilities and resources, and strategic mind-set
Alignment of three strategic orientations: value, profit and people
Strategy is: Specific pattern of decisions and actions To utilize core competency In order to achieve competitive advantage
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Organizational Design and Strategy
Value Creation Cycle
Value creation cycle for Infosys
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Organizational Design and Strategy
Global Expansion and Core Competences
Example: Tata Corus deal, Pepsi in India, IT firms going abroad
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Organizational Design and Strategy
Functional Level Strategy
Responsibility of functional managers
Train the subordinates Scan and manage the functional environment
Deal with a plan of action to strengthen all sources of core competence. Why does it deal with organizational and coordination sources? Two ways of achieving competitive advantage
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Organizational Structure,Design and Change-
Organizational Design and Strategy
Functional Level Strategy
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Organizational Structure,Design and Change-
Organizational Design and Strategy
Functional Level Strategy and Structure
Discussion: What about Finance and HR
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Organizational Design and Strategy
Functional Level Strategy and Culture
Less imitable than organizational structure
Why?
Difference between American and Japanese way of manufacturing
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Organizational Design and Strategy
Business level strategy
Who is responsible? What it covers? Combination of cost leadership and differentiation Indian examples Structural choices from strategy perspective:
Wider range of products (R&D, Mktg. and Mfg) New customer groups (Geographic, Market) New product development
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Organizational Design and Strategy
Business level strategy
Business level strategy and culture Air Deccan example
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Organizational Design and Strategy
Corporate-level strategy
Beyond protecting and enlarging existing domain
Utilize the existing core competency Organizations without corporate level managers? Vertical integration
Responsibility of corporate-level managers
Types:
Examples: Reliance Related and Unrelated, examples:
Diversification
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Organizational Design and Strategy
Corporate-level strategy
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Organizational Design and Strategy
Corporate-level strategy
Corporate-level strategy and Structure Multidivisional and Conglomerate Conglomerate structure:
Usually among unrelated diversification Limited integrating role & lateral communication High involvement during restructuring phase After restructuring role is limited to monitoring Size of corporate staff is proportionately low Investment companies with a controlling stake are typical example Organization culture in Conglomerates Vs Multidivisional structure
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Organizational Design and Strategy
Global Expansion Strategy
Choice on the basis of
Extent of decentralization Use of resources to serve local customers Type of integration and control mechanisms
Four principal strategies
Multidomestic strategy: International strategy: Global strategy: Transnational strategy:
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Organizational Design and Strategy
Multidomestic Strategy
Type of structure? Decentralization?, Local responsiveness? & Extent of integration? Same product across regions Philips
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Organizational Design and Strategy
International Strategy
Different products/ business across regions Global Product Group Decentralization?, Local responsiveness? & Extent of integration?
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Pharmaceutical
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Organizational Design and Strategy
Global Strategy
Value chain activities at a location ensuring efficiency and quality Global Product Group Decentralization?, Local responsiveness? & Extent of integration?
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Matsushita
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Organizational Design and Strategy
Transnational Strategy
Trying to achieve local response, efficiency and quality & responsiveness Global Matrix Structure Decentralization?, Local responsiveness? & Extent of integration?
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Organizational Design and Strategy
Global Expansion Strategy
IT Firms?
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Organizational Design and Strategy
Restructuring for Global Success
Why existing structures are deficient Emergence of India and China as leading markets China and India becoming sources of talent
Possibility for segmentation of R&D work
Existing intellectual leadership assumptions T Shaped structure Horizontal stroke representing linkages across countries Vertical stroke need for depth within each country Difference from Transnational structure It distributes parts of functionsnot entire functions geographically, which requires unprecedented integration across countries
Global R&D centers of Intel, GE and Microsoft in India
Norms and culture becoming greatest integrator
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