13 Implementing Strategy in Companies That Compete Across Industries and Countries
Managing Corporate Strategy Through the Multidivisional Structure <ul><li>Functional or product structures are not suffici...
Multidivisional Structure
Advantages of a Multidivisional Structure <ul><li>Enhanced corporate financial control </li></ul><ul><li>Enhanced strategi...
Problems in Implementing a Multidivisional Structure <ul><li>Establishing the divisional-corporate authority relationship ...
Structure, Control, Culture, and Corporate-Level Strategy <ul><li>Unrelated diversification </li></ul><ul><ul><li>Easiest ...
Structure, Control, Culture, and Corporate-Level Strategy (cont’d) <ul><li>Vertical integration </li></ul><ul><ul><li>More...
Structure, Control, Culture, and Corporate-Level Strategy (cont’d) <ul><li>Related diversification </li></ul><ul><ul><li>M...
Corporate Strategy and Structure and Control
The Role of Information Technology <ul><li>IT provides a common software platform that can make it less problematic for di...
Implementing Strategy Across Countries <ul><li>Multidomestic strategy </li></ul><ul><ul><li>Local responsiveness; decentra...
Global Strategy/Structure Relationships
Implementing a Multidomestic Strategy <ul><li>Global-area structure </li></ul><ul><ul><li>All value creation activities du...
Global-Area Structure
Implementing International Strategy <ul><li>International division structure </li></ul><ul><ul><li>Used when a company sel...
International Division Structure
Implementing Global Strategy <ul><li>Global product-division structure </li></ul><ul><ul><li>All value chain activities lo...
Global Product-Division Structure
Implementing Transnational Strategy <ul><li>Global Matrix Structure </li></ul><ul><ul><li>Lower cost structures  and  diff...
Global Matrix Structure
Entry Mode and Implementation <ul><li>Internal new venturing </li></ul><ul><ul><li>Structure, control, and culture must en...
Entry Mode and Implementation (cont’d) <ul><li>Joint venturing </li></ul><ul><ul><li>Managing culture differences </li></u...
IT, the Internet, and Outsourcing <ul><li>IT and strategy implementation </li></ul><ul><ul><li>Knowledge leveraging throug...
IT, the Internet, and Outsourcing <ul><li>Strategic outsourcing and network structure </li></ul><ul><ul><li>IT increases t...
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Ppt13

  1. 1. 13 Implementing Strategy in Companies That Compete Across Industries and Countries
  2. 2. Managing Corporate Strategy Through the Multidivisional Structure <ul><li>Functional or product structures are not sufficient when a company enters new industries </li></ul><ul><li>Multidivisional structure innovations </li></ul><ul><ul><li>Divisions (operating responsibility) </li></ul></ul><ul><ul><li>Corporate headquarters staff to monitor divisions (strategic responsibility) </li></ul></ul><ul><ul><li>Each division may be organized differently </li></ul></ul>
  3. 3. Multidivisional Structure
  4. 4. Advantages of a Multidivisional Structure <ul><li>Enhanced corporate financial control </li></ul><ul><li>Enhanced strategic control </li></ul><ul><li>Growth </li></ul><ul><li>Stronger pursuit of internal efficiency </li></ul>
  5. 5. Problems in Implementing a Multidivisional Structure <ul><li>Establishing the divisional-corporate authority relationship </li></ul><ul><li>Distortion of information </li></ul><ul><li>Competition for resources </li></ul><ul><li>Transfer pricing </li></ul><ul><li>Short-term R&D focus </li></ul><ul><li>Duplication of functional resources </li></ul>
  6. 6. Structure, Control, Culture, and Corporate-Level Strategy <ul><li>Unrelated diversification </li></ul><ul><ul><li>Easiest and cheapest strategy to manage </li></ul></ul><ul><ul><li>Allows corporate managers to evaluate divisional performance easily and accurately </li></ul></ul><ul><ul><li>Divisions have considerable autonomy </li></ul></ul><ul><ul><li>No integration among divisions is necessary </li></ul></ul>
  7. 7. Structure, Control, Culture, and Corporate-Level Strategy (cont’d) <ul><li>Vertical integration </li></ul><ul><ul><li>More expensive than unrelated diversification </li></ul></ul><ul><ul><li>Multidivisional structure provides necessary controls to achieve benefits from the control of resource transfers </li></ul></ul><ul><ul><li>Must strike balance between centralized and decentralized control </li></ul></ul><ul><ul><li>Divisions must have input regarding resource transfer </li></ul></ul><ul><ul><li>Managed through a combination of corporate and divisional controls </li></ul></ul>
  8. 8. Structure, Control, Culture, and Corporate-Level Strategy (cont’d) <ul><li>Related diversification </li></ul><ul><ul><li>Multidivisional structure allows gains from the transfer, sharing, or leveraging of R&D knowledge, industry information, and customer bases across divisions </li></ul></ul><ul><ul><li>Difficult to measure performance of individual divisions </li></ul></ul><ul><ul><li>High bureaucratic costs </li></ul></ul><ul><ul><li>Integration and control at divisional level is required </li></ul></ul><ul><ul><li>Incentives and rewards for cooperation are necessary </li></ul></ul>
  9. 9. Corporate Strategy and Structure and Control
  10. 10. The Role of Information Technology <ul><li>IT provides a common software platform that can make it less problematic for divisions to share information </li></ul><ul><li>IT facilitates output and financial control </li></ul><ul><li>IT helps corporate managers react more quickly because of higher-quality, more timely information </li></ul><ul><li>IT makes it easier to decentralize control to divisional managers, but react quickly if necessary </li></ul><ul><li>IT makes it difficult to distort information because of standardized information </li></ul><ul><li>IT eases the transfer pricing problem </li></ul>
  11. 11. Implementing Strategy Across Countries <ul><li>Multidomestic strategy </li></ul><ul><ul><li>Local responsiveness; decentralized control </li></ul></ul><ul><li>International strategy </li></ul><ul><ul><li>Centralized R&D and marketing; other functions are decentralized </li></ul></ul><ul><li>Global strategy </li></ul><ul><ul><li>Cost reductions; centralized functions </li></ul></ul><ul><li>Transnational strategy </li></ul><ul><ul><li>Local responsiveness and cost reduction </li></ul></ul>
  12. 12. Global Strategy/Structure Relationships
  13. 13. Implementing a Multidomestic Strategy <ul><li>Global-area structure </li></ul><ul><ul><li>All value creation activities duplicated and overseas division established in every country of operation </li></ul></ul><ul><ul><li>Decentralized authority </li></ul></ul><ul><ul><li>Managers at global headquarters evaluate performance of overseas divisions </li></ul></ul><ul><ul><li>No integrating mechanisms needed </li></ul></ul><ul><ul><li>No global organizational culture </li></ul></ul><ul><ul><li>Duplication of specialist activities raises costs </li></ul></ul>
  14. 14. Global-Area Structure
  15. 15. Implementing International Strategy <ul><li>International division structure </li></ul><ul><ul><li>Used when a company sells domestically made products in markets abroad </li></ul></ul><ul><ul><li>Foreign sales organization added to existing structure; same control system </li></ul></ul><ul><ul><li>Customization is minimal </li></ul></ul><ul><ul><li>Subsidiary handles local sales and distribution </li></ul></ul><ul><ul><li>Behavior controls keep the home office informed </li></ul></ul><ul><ul><li>International division coordinates flow of different products across different countries </li></ul></ul><ul><ul><li>Domestic and overseas managers may compete for control of strategy making </li></ul></ul>
  16. 16. International Division Structure
  17. 17. Implementing Global Strategy <ul><li>Global product-division structure </li></ul><ul><ul><li>All value chain activities located to allow efficiency, quality, and innovation </li></ul></ul><ul><ul><li>Problems of coordinating and integrating global activities </li></ul></ul><ul><ul><li>Structure must lower bureaucratic costs and provide central control </li></ul></ul><ul><ul><li>Product division headquarters coordinates activities </li></ul></ul>
  18. 18. Global Product-Division Structure
  19. 19. Implementing Transnational Strategy <ul><li>Global Matrix Structure </li></ul><ul><ul><li>Lower cost structures and differentiate activities </li></ul></ul><ul><ul><li>Decentralized control provides flexibility for local issues, but product and corporate managers at headquarters have centralized control to coordinate company activities on global level </li></ul></ul><ul><ul><li>Knowledge and experience can be transferred </li></ul></ul><ul><ul><li>Global corporate culture </li></ul></ul><ul><ul><li>IT integration mechanisms provide coordination </li></ul></ul><ul><ul><li>Bureaucratic costs are high </li></ul></ul>
  20. 20. Global Matrix Structure
  21. 21. Entry Mode and Implementation <ul><li>Internal new venturing </li></ul><ul><ul><li>Structure, control, and culture must encourage creativity and give intrapreneurs autonomy and freedom to develop and champion new products and allow corporate managers to monitor profitability and fit </li></ul></ul><ul><ul><li>Organization-wide new venturing vs. separate new-venture division </li></ul></ul>
  22. 22. Entry Mode and Implementation (cont’d) <ul><li>Joint venturing </li></ul><ul><ul><li>Managing culture differences </li></ul></ul><ul><ul><li>Allocating authority and responsibility </li></ul></ul><ul><li>Mergers and acquisitions </li></ul><ul><ul><li>Must establish new lines of authority </li></ul></ul><ul><ul><li>Must streamline operations </li></ul></ul><ul><ul><li>In unrelated acquisitions, managers must understand the new industry </li></ul></ul><ul><ul><li>Must standardize control systems </li></ul></ul><ul><ul><li>Must recognize culture differences </li></ul></ul>
  23. 23. IT, the Internet, and Outsourcing <ul><li>IT and strategy implementation </li></ul><ul><ul><li>Knowledge leveraging through IT to achieve low costs and differentiation </li></ul></ul><ul><ul><li>Flattening the organization, moving toward decentralization and increased integration through IT </li></ul></ul><ul><ul><li>Virtual organization </li></ul></ul><ul><ul><li>Knowledge management system </li></ul></ul>
  24. 24. IT, the Internet, and Outsourcing <ul><li>Strategic outsourcing and network structure </li></ul><ul><ul><li>IT increases the efficiency of inter-organizational relationships </li></ul></ul><ul><ul><li>Business-to-business (B2B) networks </li></ul></ul><ul><ul><li>Network structure </li></ul></ul>

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