Chapter 11 Notes

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Management (MGS)
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Professor Constantinou

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Chapter 11 Organizational Structure Systems and Processes NotesInterdependence of Strategy Formulation and Implementation The KnowingDoing Gap y knowingdoing gapfirms tend to be better at generating new knowledge than at creating new products based on that knowledge y one explanation of the knowingdoing gap is the fact that the strategy formulation process itself isnt shared with those stakeholders including lowerlevel managers who will be integral in rolling out the strategy y another argument is that even if all the right stakeholders are included in the strategy formulation process management often fails either to determine whether the proper implementation levers are in place or to take appropriate strategic leadership actions Implementation Levers y implementation leversmechanisms used by strategic leaders to help execute a firms strategy y the major levers are structure systems and processes and people and rewards Forms of Organizational Structure y functional structureform of organization revolving around specific valuechain functions y multidivisional structureform of organization in which divisions are organized around product or geographic markets and are often selfsufficient in terms of functional expertise y matrix structurespecialists from functional departments are assigned to work for one or more product or geographic units y network structuresmall semiautonomous and potentially temporary groups are brought together for specific purposes Systems and Processes y systems and processes make it possible to manage budgeting quality control planning distribution and resource allocation in complex contemporary organizations y balanced scorecardsupport system for measuring vision and strategy against business and operatingunitlevel performance y they serve to 1 translate the strategy into operational terms 2 align the organization with the strategy 3 make strategy everyones job 4 make strategy a continual process and 5 mobilize change through executive leadership y the balanced scorecard approach teaches three fundamental lessons 1 translate strategy into tangible and intangible performance metrics 2 use a strategy map to align metrics with strategy 3 make strategy a continuous and dynamic process y there are 4 perspectives on performance financial external relations internal business process and learning and growth 1 financial perspective involves strategy for growth profitability and risk when viewed from shareholdersowners perspective 2 external relations perspective pertains to strategy for creating value and differentiating from the perspective of the customer 3 internal business process perspective reflects strategic priorities among processes according to their contributions to customer and shareholder satisfa
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