MGMT20001 Study Guide - Final Guide: Cost Leadership, Division Of Labour, Throat Culture
17 May 2018
School
Department
Course
Professor
Strategy and Structure
Strategy
● Determination of basic long-term goals and objectives of an enterprise
● Adoption of courses of action and allocation of resources necessary for carrying out
these goals
1. Planned Approach
a. Porter’s five forces
Choose either:
● Cost leadership
● Cost focus
● Differentiation
b. Miles and Snow
● Defender: produce limited set of products directed at a narrow segment of
the total potential market
● Prospector: find and exploit new product and market opportunities
● Analyser: move into new products or markets only after their viability has
been proven
● Reactor: follow inconsistent and unstable patterns
2. Emergent Approach
● Strategic Change evolves in practice, adaptive, unanticipated action
Structure
● Structure is the division and coordination of labour within an organisation
○ Division: vertically (flat vs tall) or horizontally (degree of centralisation)
○ Coordination: ensures that a divided workforce achieves organisational goals
1. Simple Structure
2. Functional Structure
3. Multidivisional Structure
a. Customer divisions
b. Product divisions
c. Geographical divisions
4. Matrix Structure
5. Hybrid Structure
Enron
Structure - functional
Division of labour
● Vertical division - apportioning authority for planning and decision-making
○ Relatively flat structure, with energy traders all possessing the same level of
authority
○ “Cellular division” where entrepreneurial new business, which challenged
established business models became a new division
● Horizontal division
○ Labour specialisation: Energy traders assigned to certain territories or specialities
but their real assignment was to simply make money at all costs
○ Span of control: Employees high skilled and quite autonomous, little control
○ Degree of centralisation: decision-making very decentralised, a large scope is
given for own innovation e.g. new entrepreneurs given “phantom equity” which
was then exchanged for real Enron shares if they made profit
Coordination of Labour
● Unified company goals of being the best in the business
● Cut throat culture and everyone thriving for success together due to the threat of losing
their job
Strategy
● Evolutionary/Emergent approach
○ Strategy evolves in practice (e.g. deregulation of markets prompted venture)
○ Formulation and implementation are entwined
○ Decisions are a result of intuition, opportunism, reflection
○ Strategic decisions taken all over organisation (e.g. Enron Online)
● Differentiation competitive strategy approach as Enron were an energy trader, rather
than an energy producer like many companies in the industry
○ “Transforming energy into financial instruments that could be traded like stocks
and bonds”
● Miles and Snow strategy: Prospector
○ Enron are innovative in their industry “invented radical new business concepts”
○ “Being a laboratory for innovation”
○ Flexible and constantly adapting to the business environment
■ Embraced deregulation and free markets
■ Adopted new technology quickly
■ Transforming the business model several times
○ Employees given scope and freedom in their methods to generate income for the
business
○ Expanding the business to non-energy markets such as telecommunications and
water
Document Summary
Determination of basic long-term goals and objectives of an enterprise. Adoption of courses of action and allocation of resources necessary for carrying out these goals: planned approach, porter"s five forces. Defender: produce limited set of products directed at a narrow segment of the total potential market. Prospector: find and exploit new product and market opportunities. Analyser: move into new products or markets only after their viability has been proven. Reactor: follow inconsistent and unstable patterns: emergent approach. Strategic change evolves in practice, adaptive, unanticipated action. Structure is the division and coordination of labour within an organisation. Division: vertically (flat vs tall) or horizontally (degree of centralisation) Coordination: ensures that a divided workforce achieves organisational goals: simple structure, functional structure, multidivisional structure, customer divisions, product divisions, geographical divisions, matrix structure, hybrid structure. Relatively flat structure, with energy traders all possessing the same level of authority. Cellular division where entrepreneurial new business, which challenged established business models became a new division.
