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    Mcs Ch12d13

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    DrBabita Singla
    This document discusses differentiated corporate strategies, organizational structures, and control considerations for organizations. It addresses the relationship between corporate and business strategy, and how organizational structure should be considered when developing a management control system. As diversification increases, management knowledge decreases, requiring more vertical planning, budgetary control, less subjective incentive plans, and less goal congruence at the corporate level. The implications for "build", "hold", "harvest", and "divest" business unit strategies are outlined. Top management style must also be considered in management control systems.

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    Mcs Ch12d13

    Uploaded by

    DrBabita Singla
    9 views12 pages
    This document discusses differentiated corporate strategies, organizational structures, and control considerations for organizations. It addresses the relationship between corporate and business strategy, and how organizational structure should be considered when developing a management control system. As diversification increases, management knowledge decreases, requiring more vertical planning, budgetary control, less subjective incentive plans, and less goal congruence at the corporate level. The implications for "build", "hold", "harvest", and "divest" business unit strategies are outlined. Top management style must also be considered in management control systems.

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    This document discusses differentiated corporate strategies, organizational structures, and control considerations for organizations. It addresses the relationship between corporate and business strategy, and how organizational structure should be considered when developing a management control system. As diversification increases, management knowledge decreases, requiring more vertical planning, budgetary control, less subjective incentive plans, and less goal congruence at the corporate level. The implications for "build", "hold", "harvest", and "divest" business unit strategies are outlined. Top management style must also be considered in management control systems.

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    9 views12 pages

    Mcs Ch12d13

    Uploaded by

    DrBabita Singla
    This document discusses differentiated corporate strategies, organizational structures, and control considerations for organizations. It addresses the relationship between corporate and business strategy, and how organizational structure should be considered when developing a management control system. As diversification increases, management knowledge decreases, requiring more vertical planning, budgetary control, less subjective incentive plans, and less goal congruence at the corporate level. The implications for "build", "hold", "harvest", and "divest" business unit strategies are outlined. Top management style must also be considered in management control systems.

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    of 12

    Differentiated Strategies &

    Service Organizations

    Chapters 12 & 13,


    Management Control Systems, 12th 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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