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    Differentiated Strategies & Service Organizations

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    This document discusses strategies for differentiated organizations and service organizations. It covers corporate strategy which determines the mix of businesses, and business strategy which is how a business competes in its market. Organizational structure ranges from functional to divisions to holding companies. Increased diversification reduces management knowledge and leads to more vertical planning, budgetary control, less subjective incentives, and less goal congruence. Business units have strategies of build, hold, harvest, or divest and compete through low cost or differentiation. Management control systems must account for management style which can be personal or impersonal with tight or loose controls. Service organizations are characterized by quality control, labor intensity, and often multi-unit structures such as professional services, financial services, health

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    Differentiated Strategies & Service Organizations

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    Valentino
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    This document discusses strategies for differentiated organizations and service organizations. It covers corporate strategy which determines the mix of businesses, and business strategy which is how a business competes in its market. Organizational structure ranges from functional to divisions to holding companies. Increased diversification reduces management knowledge and leads to more vertical planning, budgetary control, less subjective incentives, and less goal congruence. Business units have strategies of build, hold, harvest, or divest and compete through low cost or differentiation. Management control systems must account for management style which can be personal or impersonal with tight or loose controls. Service organizations are characterized by quality control, labor intensity, and often multi-unit structures such as professional services, financial services, health

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    This document discusses strategies for differentiated organizations and service organizations. It covers corporate strategy which determines the mix of businesses, and business strategy which is how a business competes in its market. Organizational structure ranges from functional to divisions to holding companies. Increased diversification reduces management knowledge and leads to more vertical planning, budgetary control, less subjective incentives, and less goal congruence. Business units have strategies of build, hold, harvest, or divest and compete through low cost or differentiation. Management control systems must account for management style which can be personal or impersonal with tight or loose controls. Service organizations are characterized by quality control, labor intensity, and often multi-unit structures such as professional services, financial services, health

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Download as pdf or txt
    10 views12 pages

    Differentiated Strategies & Service Organizations

    Uploaded by

    Valentino
    This document discusses strategies for differentiated organizations and service organizations. It covers corporate strategy which determines the mix of businesses, and business strategy which is how a business competes in its market. Organizational structure ranges from functional to divisions to holding companies. Increased diversification reduces management knowledge and leads to more vertical planning, budgetary control, less subjective incentives, and less goal congruence. Business units have strategies of build, hold, harvest, or divest and compete through low cost or differentiation. Management control systems must account for management style which can be personal or impersonal with tight or loose controls. Service organizations are characterized by quality control, labor intensity, and often multi-unit structures such as professional services, financial services, health

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    of 12

    Differentiated Strategies &

    Service Organizations
    Chapters 13 & 14
    Management Control Systems, 11th Ed.,
    Anthony and Govindarajan
    Differentiated Strategies
    Corporate Strategy
    The right mix of businesses
    Single industry
    Related diversified industries
    Unrelated diversified industries
    Allocation of resources to support the mix
    Business Strategy
    How to compete in a particular market
    Based on the resources allocated by the corporate
    strategy
    Organizational Structure
    Continuum
    From single industry (Functional)
    Through related diversified (Business units)
    To unrelated diversified (Holding company)
    Must be considered in developing a
    management control system
    Control Considerations
    Increased diversification reduces knowledge
    levels of management
    Results in increased vertical planning systems
    Results in greater budgetary control at lower
    levels
    Results in less subjectivity for incentive plans
    Results in less goal congruence at the highest
    corporate level
    Business Unit Strategy
    Basis how to compete in a given market
    Usually have one of four missions
    Build
    Hold
    Harvest
    Divest
    Two ways to compete
    Low cost
    Differentiation
    Implications
    Build
    Less certainty, greater subjectivity
    Use of interactive control systems
    Hold
    Greater certainty, balance of subjectivity and
    objectivity
    Heavier use of diagnostic control systems
    Harvest
    Almost absolute certainty, greater objectivity
    Use of diagnostic control systems
    Divest
    Top Management Style
    Managers are different
    Management control systems must take that
    into consideration
    Personal versus impersonal controls
    Tight versus loose controls
    Want some examples?
    All taken from Fortune, November 18, 2002
    John Patterson
    National Cash Register Company
    1884-1921
    Three-step approach to employee
    development
    Break a mans self-esteem
    Rebuild it from scratch
    Then fire him
    John F. Welch
    General Electric
    1981-2001
    Redefined the CEOs central purpose in
    life:
    Increase the stock price, pure and simple
    Albert J. Dunlap
    Scott Paper / Sunbeam Corporation
    Mid 1990s
    Scott Paper
    Boosted stock price by 225%
    Cut 11,000 employees, R&D, plant
    improvements, and almost everything within
    reach
    Im a superstar in my field, much like Michael
    Jordan in basketball
    Sunbeam Corporation
    Bankrupt
    Service Organizations
    General Characteristics
    Quality Control
    Labor Intensive
    Often Multi-Unit
    Organization Types
    Professional Services
    Financial Services
    Health Care Organizations
    Nonprofit

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