Please summarize the following and explain what you’ve learned:
Implementation levers include organizational structure, systems and processes, and people and rewards. Strategic leaders use these levers to implement strategies. The success with which diversified firms are managed in accord with key organizational features has a significant effect on the level of value that can be created through their portfolios. Implementation levers that are critical for corporate strategy vary from firm to firm, but some of the more important levers to achieve successful diversification include knowledge -transfer mechanisms, coordination mechanisms, rewards, and corporate oversight.
Organizational structure exists to perform two essential functions within the organization such as ensuring control and coordinating the efforts of managers and employees. As it gets difficult to control and coordinate, organization generally modify their structures to improve it. There are different forms of organizational structure which are functional, divisional, matrix, network, and partnerships and franchises. It should be chosen consistent with firms’ strategy.
Functional structure organizes its activities according to the specific functions that a company performs such as form of organization revolving around specific value chain functions. This usually fits the small or firms with few products. “For example, managers of different functional areas all report up to one director or vice president who has responsibility for all of the operational areas. The advantage of this type of structure is that functions are separated by expertise but the challenges comes in when different functional areas turn into silos that focus only on their area of responsibility and don’t support the function of other departments,” (Lotich, 2013).
Multi divisional structure organizes its activities according to product, geographic markets, or groups of related businesses. For example, each product group falls within the reporting structure of an executive and that person oversees everything related to that particular product line. Such as an executive over Kraft products would be responsible for every product under that label – dressings, meats, sauces, etc. In the case of geographic form is used when companies go beyond a city or state limit and may have customers all across the country or in multiple states (Lotich, 2013).
A matrix structure provides for reporting levels both horizontally as well as vertically. Employees may be part of a functional group but may serve on a team that supports new product development. This kind of structure may have members of different groups working together to develop a new product line.
“For example, a recording engineer who works for a music publisher, may have engineers who report to him but may also use his expertise and work with teams to develop new music albums,” (Lotich, 2013).
Advantage of this structure is that person is responsible for organizational and departmental projects. Disadvantage is that when two different directions are given from two different managers which can put employee in position where they don’t know how to prioritize work. This has happened to me and the way I handled is by meeting with both managers and laying down my work priorities so that they both understand what should come first based on importance.
Partnerships and franchise are both legal form of organization. In partnerships, the company is organized as a group of partners who own shares or units in the company. There are certain active partners who are involved in day to day operations where as some are sleeping partners who invest in the company but don’t get involved in day to day operations. But they do get share of the profit based on the agreement. This form is found in accounting firms, retail businesses etc. This is very common form of business (Carpenters & Sanders, p.247, 2008).
Franchise structure is used when firm wants to transfer ownership but retains control on business model and brand name. In turn, franchisee pays royalty and other fees to the franchisor. This is used by McDonald restaurants where they give management responsibility to franchisee by making sure that their brand name and model is used (Carpenters & Sanders, p.247, 2008).
“Deliberate time and thought should go into the design of an organization’s structure. This is important so employees have a visual of how the organization functions and understands the chain-of-command. Operating within a defined structure, with good communication processes and work-flows, help to ensure efficient management of resources – people, time and money”, (Lotich, 2013).
“The balanced scorecard as a management system designed for organizations to manage their strategy. Specifically, the scorecard was a way to (1) clarify and translate vision and strategy; (2) communicate and link strategic objectives and measures; (3) plan, set targets, and align strategic initiatives; and (4) enhance strategic feedback and learning. The scorecard was primarily intended for a “closed system” – a strategic business unit responsible for an entire value chain in producing and distributing products for defined customers,” (Caudle, 2008).
I learned from the previous class about Balanced Scorecard approach, the term was coined by Robert S. Kaplan (a Harvard Business School accounting professor) and David P. Norton (a consultant) in an article that appeared in the Harvard Business Review, “The Balanced Scorecard – Measures that Drive Performance”, in January-February of 1992 (retrieved from http://www.bptrends.com). Traditional measures report on how the performance was last period but don’t give any measures to improve performance in the future whereas the information from the four perspectives in Balanced Scorecard such as financial, internal business measures, Innovation & learning measures, and Customer measures provides balance between external measures like operating income and internal measures like new product development. This balanced set of measures both reveals the trade-offs that managers have already made among performance measures and encourages them to achieve their goals in the future without making trade-offs among key success factors. The balanced score card can serve as main focal point for organization’s efforts communicating priorities to managers, employees, investors and even customers.
There are thousands of companies using Balanced Scorecard approach to understand and achieve organizational objectives. For example, Apple Computer developed a balanced scorecard to focus senior management on a strategy that would expand discussions beyond gross margin, return on equity, and market share. A small steering committee, intimately familiar with the deliberations and strategic thinking of Apple’s Executive Management Team, chose to concentrate on measurement categories within each of the four perspectives and to select multiple measurements within each category. For the financial perspective, Apple emphasized shareholder value; for the customer perspective, market share and customer satisfaction; for the internal process perspective, core competencies; and, finally, for the innovation and improvement perspective, employee attitudes (retrieved from https://hbr.org/).
1)Harmon, P. (2009, June 23). Balanced Scorecard. Retrieved July 24, 2015, from http://ww.w.bptrends.com/publicationfiles/spotligh…
2)Lotich, P. (2013). Types of Business Organizational Structures | Pingboard. Retrieved November 13, 2016, fromhttps://pingboard.com/blog/types-business-organizational-structures/
3)M. Carpenter & Wm. Sanders (2008). Strategic Management. A Dynamic Perspective. Upper Saddle River, N.J: Prentice Hall
4) P. Norton, D., & S. Kaplan, R. (1993, October 1). Putting the Balanced Scorecard to Work – HBR. Retrieved July 24, 2015, from https://hbr.org/1993/09/putting-the-balanced-score…