Strategy Formulation

Strategy Formulation includes planning and decision-making involved in developing organizations strategic goals and plans. In short, Strategy Formulation is placing the Forces before the action. Strategy Formulation is an Entrepreneurial Activitybased on strategic decision-making.

Strategy Implementation
Strategy Implementation involves all those means related to executing the strategic plans.

In short, Strategy Implementation is managing forces during the action. Strategic Implementation is mainly an Administrative Task based on strategic and operational decisions. Strategy Implementation emphasizes on efficiency. Strategy Implementation is basically an operational process. Strategy Implementation requires co-ordination among many individuals. Strategy Implementation requires specific motivational and leadership traits. STrategy Implementation follows Strategy Formulation.

Strategy Formulation emphasizes on effectiveness. Strategy Formulation is a rational process.

Strategy Formulation requires co-ordination among few individuals. Strategy Formulation requires a great deal of initiative and logical skills. Strategic Formulation precedes Strategy Implementation.

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McKinsey 7S Concept

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Managing Organizational Structure and Culture

Organizational Structure
Organizational Architecture
The organizational structure, control systems, culture, and human resource management systems that together determine how efficiently and effectively organizational resources are used.

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Designing Organizational Structure

Organizing
The process by which managers establish working relationships among employees to achieve goals.

Organizational Structure
Formal system of task and reporting relationships showing how workers use resources.

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Designing Organizational Structure

Organizational design
The process by which managers create a specific type of organizational structure and culture so that a company can operate in the most efficient and effective way

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Factors Affecting Organizational Structure

Figure 10.1

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Grouping Jobs into Functions

Functional Structure
An organizational structure composed of all the departments that an organization requires to produce its goods or services.

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Functional Structure
Advantages
Encourages learning from others doing similar jobs. Easy for managers to monitor and evaluate workers. Allows managers to create the set of functions they need in order to scan and monitor the competitive environment

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Functional Structure
Disadvantages
Difficult for departments to communicate with others. Preoccupation with own department and losing sight of organizational goals.

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The Functional Structure of Pier 1 Imports

Figure10.3

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Divisional Structures
Divisional Structure
Managers create a series of business units to produce a specific kind of product for a specific kind of customer

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Product, Market, and Geographic Structures

Figure 10.4

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Matrix Design Structure

Matrix Structure
An organizational structure that simultaneously groups people and resources by function and product.
Results in a complex network of superiorsubordinate reporting relationships. The structure is very flexible and can respond rapidly to the need for change. Each employee has two bosses (functional manager and product manager) and possibly cannot satisfy both.
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Matrix Structure

Figure 10.6

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Tall and Flat Organizations

Tall structures have many levels of authority and narrow spans of control.
As hierarchy levels increase, communication gets difficult creating delays in the time being taken to implement decisions. Communications can also become distorted as it is repeated through the firm. Can become expensive
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Tall Organizations

Figure 10.9
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Tall and Flat Organizations

Flat structures have fewer levels and wide spans of control.
Structure results in quick communications but can lead to overworked managers.

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Flat Organizations

Figure 10.9
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Network Structure

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Organizational Culture
Organizational culture
shared set of beliefs, expectations, values, and norms that influence how members of an organization relate to one another and cooperate to achieve organizational goals

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Sources of an Organizations Culture

Figure 10.11
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Characteristics of Organizational Members

Ultimate source of organizational culture is the people that make up the organization Members become similar over time which may hinder their ability to adapt and respond to changes in the environment

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Organizational Ethics
Organizational Ethics
moral values, beliefs, and rules that establish the appropriate way for an organization and its members to deal with each other and people outside the organization

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Employment Relationship
Human resource policies:
Can influence how hard employees will work to achieve the organizations goals, How attached they will be to it Whether or not they will buy into its values and norms

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Organizational Structure
In a centralized organization:
people have little autonomy norms that focus on being cautious, obeying authority, and respecting traditions emerge predictability and stability are desired goals

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Organizational Structure
In a flat, decentralized structure:
people have more freedom to choose and control their own activities norms that focus on being creative and courageous and taking risks appear gives rise to a culture in which innovation and flexibility are desired goals.

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Strong, Adaptive Cultures Versus Weak, Inert Cultures

Adaptive cultures
values and norms help an organization to build momentum and to grow and change as needed to achieve its goals and be effective

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Strong, Adaptive Cultures Versus Weak, Inert Cultures

Inert cultures
Those that lead to values and norms that fail to motivate or inspire employees Lead to stagnation and often failure over time

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