Professional Documents
Culture Documents
Readings Strategic Management
Readings Strategic Management
Readings Strategic Management
B. Organizational structure
1. M-Form (multi divisional)
a. a corporation has operating divisions that are responsible for profits and
at the corporate level, there are organization units or departments that
provide centralized organizational functions such as HRD, Finance, Legal
and Accounting.
Example : URC
2. Holding Companies
a. own shares in subsidiary corporations and control is done through the
board members and appointed corporate officers and subsidiaries such
as president and treasurer.
Example : JG Summit
C. Organizational Change and Renewal
a. Reengineering is the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in critical
contemporary measures of performance such as cost, quality, service
and speed.
Example : FORD – invoiceless processing. Mazda only has five people processing
the accounts payable.
b. Managing Incrementalism – executives in large companies utilize
incremental processes as they manage complex strategy shifts.
Strategic change processes are fragmented, evolutionary and intuitive.
They are unstructured and have no rigid timetable, thus dynamic.
Example : Starbucks
D. Organizational Culture
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1. Organizational culture represents basic assumptions that are shared by a group
and that have been found to be valid in the past so they can be taught to
newcomers in the organization:
a. Key Functions of Culture
- provides solutions to problems of external adaptation or
external survival of the firm.
- manages internal integration problems
- provides a sense identity for the firm
People and organization leaders create and change culture. Leaders particularly
visionary and articulate leaders define and institutionalize the organization’s
culture.
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has been built up between people.
External
a. Suppliers, customers, government
3. Regulatory Issues
Conclusion
The internal and external environment must be dealt with by the CEO in order to have an
effective strategy implementation. Issues are never ending. CEO has to be alert for any
changes. CEO must build a management team to help him anticipate, plan and deal with the
challenges.
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B. Advantages and Disadvantages
Advantages
1. Improves effectiveness of the Division managers are given more authority
company Can respond to operational problems immediately
Corporate executives have more time to plan
2. Provides higher level of The division managers will have to deliver because the
control to divisional managers corporate managers decide budget allocations and
giving them more incentives approve projects for expansion
to be more efficient and The division managers performance is determinant of
cooperative with other their future in terms of promotions and rewards
product divisions
3. Allows corporate managers to If both the corporate managers and division managers
identify which divisions were to perform their tasks, the M form structure
generate the highest rate of should result in synergy
return on invested capital
Disdvantages
1. Problems on balancing If no proper control, the division managers can abuse
between centralization and their authority and make decisions that are not
decentralization consistent with the goals of the company
2. Too much competition can be If too much competition, the managers may be
counter productive uncooperative or will not want to share to other
divisions
3. Raises problems in setting Divisions are profit center and may be charging high
transfer prices transfer prices to other divisions
4. May increase operating costs May require another management level that can result
to increase in costs and slow decision making process
5. Difficulty in monitoring More room to conceal the operating performance as
division manager’s divisions are headed by different managers.
performance
C. Levels of Diversification
a. Low levels of diversification
i. Single business
ii. Dominant business
D. Types of M Form
1. Cooperative
a. Horizontal integration is used to enhance cooperation among divisions
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b. May need to share one or more corporate strengths; production, marketing
distribution channels, r and d. This can result in economies of scale
c. Applicable to related-constrained diversification strategies, products or target
markets
d. Integrating mechanisms; centralization of some org functions, constant
communication among division managers, sharing of competencies and
resources.
e. Success factors include effective communication, performance review of
managers should be based not only on division manager’s performance but also
his contribution to interdivisional cooperation
Example : P and G
3. Competitive Type
a. Creates value through an efficient allocation of capital by restructuring,
acquiring and disposing of businesses.
b. Divisions are completely different from each other
c. Competes for resources
d. Advantages :
i. Creates flexibility
ii. Challenges status quo
iii. Motivates effort
e. HQ must come up with performance appraisal measures that are financial in
nature.
f. DM has more autonomy
g. No need for integrating mechanism
Example : Textron, Inc
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E. Importance of M Form
1. Flow of information
2. Degree of authority delegated to other managers
3. Speed of management decisions
4.