5.Organizational Structure, Systems, and Implementation ( critical Thinking )

 Capability Development and Organizational Structure (105 points):This week, our focus is on capability development and organizational structure as they apply to strategy implementation. For this critical thinking assignment, read Chapter 6, “Organizational Structure and Management Systems: The Fundamentals of Strategy Implementation” and evaluate a KSA company and their processes of strategy execution.

1. How does the strategy developed in the strategic planning processes translate into action for this company? Consider the role of capital expenditure budgets, operating plans, and performance management systems.  
2. What role do resources, processes, motivation, play in strategy execution in this company and what stands in the way?
3. How does this company’s structure and management system promote the effective implementation of the company’s strategy?
4. What specific organizational capability should the company develop to support implementation?

Your well-written paper should meet the following requirements:

• Be 4 to 5 pages in length, which does not include the required title and reference pages, which are never a part of the content minimum requirements.
• Use  APA style guidelines.
• Support your submission with course material concepts, principles, and theories from the textbook and at least two scholarly, peer-reviewed journal articles unless the assignment calls for more.
• It is strongly encouraged that you submit all assignments into the Turnitin Originality Check before submitting it to your instructor for grading. If you are unsure how to submit an assignment into the Originality Check tool, review the Turnitin Originality Check—Student Guide for step-by-step instructions.

 Required:

• Chapter 6 in Contemporary Strategy Analysis
• Chapter 6 PowerPoint slides Chapter 6 PowerPoint slides – Alternative Formats in Contemporary Strategy Analysis
• Radomska, J., & Kozyra, C. (2020). Awareness of strategy execution barriers in decision-making process: moderated mediation analysis. Decision (0304-0941), 47(1), 61–78. https://doi.org/10.1007/s40622-020-00234-w
• Bhimavarapu, S. R., Kim, S.-Y., & Xiong, J. (2020). Strategy execution in public sectors: empirical evidence from Belgium. Journal of Business Strategy, 41(6), 39–47. https://doi.org/10.1108/JBS-01-2019-0025
• Di Muro, P., Lecoeuvre, L., & Turner, R. (2021). Ambidextrous strategy and execution in entrepreneurial project-oriented organizations: The case of Pagani supercars. International Journal of Project Management, 39(1), 45. https://doi.org/10.1016/j.ijproman.2020.09.006

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CONTEMPORARY STRATEGY ANALYSIS
tenth edition
Robert M. Grant
John Wiley & Sons Ltd., 2019

Chapter 6
Organizational Structure and Management Systems:
The Fundamentals of Strategy Implementation

Strategy Formulation and Strategy Implementation
The Fundamentals of Organizing
Developing Organizational Capability
Organizational Design
Organization Structure and Management Systems: The Fundamentals of Strategy Implementation
2
Copyright © 2019 John Wiley & Sons, Inc.
OUTLINE

Corporate
Guidelines
Draft
Business
Plans
Discussions
with
Corporate
Revised
Business
Plans
Corporate
Plan
Forecasts/
Scenarios/
Planning
Assumptions
Approval
by
Board
Performance
Targets
Performance
Review
Capex
Budget

Operating Plan/
Operating Budget

The Strategic Planning Cycle
STRATEGY FORMULATION AND STRATEGY IMPLEMENTATION
Copyright © 2019 John Wiley & Sons, Inc.

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Organizational solutions:
Control through hierarchical supervision
Performance incentives to align individual and firm goals
Shared values to create common purpose
Persuasion
High productivity requires specialization
The need for coordination
–Managing interdependency

The efforts of specialized individuals need to be integrated.
This creates two problems:

Basic Tasks of Organizing: Cooperation and Coordination
5
© 2016 Robert M. Grant, www.contemporarystrategyanalysis.com
The need for cooperation
–The Agency Problem:
Employees’ goals ≠ Owners’ goals
Organizational solutions:
Rules and directives
Organizational routines
Mutual adjustment
THE FUNDAMENTALS OF ORGANIZING

Emergence of the Modern Corporation
Copyright © 2019 John Wiley & Sons, Inc.
ORGANIZATIONAL DESIGN: THE FUNDAMENTALS OF ORGANIZING
Key drivers:
Technological and economic developments
Developments in transportation (e.g. railroads) enabled firms to serve wider markets
Developments in communication (e.g. telegraph, telephone) allowed firms to organize across a wider geographical area.
Legal developments
The corporation as a legal entity
Limited liability.
Organizational innovations
Line and staff structure—the creation of corporate headquarters that administered multiple operating units
The holding company—financial group of companies linked by parent-subsidiary relationships
The multidivisional structure—integrated companies with corporate headquarters responsible for financial and strategic control and divisions operating the individual businesses.

ORGANIZATIONAL
CAPABILITIES
RESOURCES
TANGIBLE INTANGIBLE HUMAN
Financial
Physical

Technology
Reputation
Culture
Skills/know-how
Capacity for communication & collaboration
Motivation

Integrating Resources to Create Organizational Capability
Processes
Motivation
Organizational
Structure
DEVELOPING ORGANIZATIONAL CAPABILITY
© 2019 Robert M. Grant,
www.contemporarystrategyanalysis.com

ORGANIZATIONAL CAPABILITIES
Footballing capability
On-field capabilities: Attack, Defence, Set-piece,
Off-field capabilities, Scouting, Player appraisal, Team selection,
Commercial capability
Financial mgt., Sponsor relations, Negotiation, Marketing & distribution
RESOURCES
Players, Coaches, Scouts, Medical personnel (doctors, physios), Nutritionists, Psychologists, Executives, Fans
Finance, Training facilities, Stadium
Brand, Relationships
Culture
Motivation
Structure
Processes
Resources & capabilities in
professional soccer
DEVELOPING ORGANIZATIONAL CAPABILITY

7

FUNCTIONAL PRACTICES
I P
N R
D A
U C
S T
T I
R C
Y E
S

[B] 1998: Organizing for Capability

Reorganizing to Accommodate Capability Development:
Booz Allen Hamilton (Worldwide Commercial Business), 1992-1998
NY
Tokyo
London

NY
Tokyo
London
[A] 1992: “A colony of artists”

P r o j e c t T e a m s

Project Teams
Project Teams
Strategy Operations IT
Financial
services
Energy
Telecom
Consumer
Engineering
Chemicals
/Pharma

Project Teams
DEVELOPING ORGANIZATIONAL CAPABILITY
Copyright © 2019 John Wiley & Sons, Inc.

8

Rational-legal authority
Specialization of labor
Hierarchical structure
Coordination and control through rules and standard operating procedures
Standardization of employment practices
Separation of positions and people: authority assigned to a position, not a person
Formalization of administrative acts, decisions, and rules
Hierarchy as Control:
Weber’s Principles of Bureaucracy
Copyright © 2019 John Wiley & Sons, Inc.
ORGANIZATIONAL DESIGN

(a) Self Organizing Team:
10 interactions
(b) Hierarchy:
4 interactions

But what about effectiveness of coordination?
–Depends upon the organization’s task
6
Hierarchy as Coordination:
[1] Hierarchy Economizes on Coordination Costs
Copyright © 2019 John Wiley & Sons, Inc.

ORGANIZATIONAL DESIGN

Tightly-coupled, integrated system: Change in any part of the system requires system-wide adaptation
Loose-coupled, modular hierarchy: partially-autonomous modules linked by standardized interfaces permits decentralized adaptation and innovation

Hierarchy as Coordination: [2] Loosely-Coupled Modular Systems Allow Decentralized Adaptation
Copyright © 2019 John Wiley & Sons, Inc.

THE FUNDAMENTALS OF ORGANIZING

The Hierarchical Structure of Organizational Capabilities: Oil and Gas Exploration
ORGANIZATIONAL DESIGN
Copyright © 2019 John Wiley & Sons, Inc.

Board of Directors
CEO
(Michael O’Leary)
Finance
Legal & Regulatory

Ryanair Holdings plc:
Organizational structure
Technology
Human Resources
Marketing

Operations
Copyright © 2019 John Wiley & Sons, Inc.
ORGANIZATIONAL DESIGN

Corporate Executive Office
Chairman & CEO
Corporate Staff
-Business Development -Legal
-Commercial & Public Relations -Global Research
-Human Resources -Finance

GE Power
GE Digital
GE Health care
GE Capital
GE Renewable Energy

GE Aviation
GE Trans-portation
General Electric: Organizational Structure, January 2018
Current powered by GE
Baker Hughes

Copyright © 2019 John Wiley & Sons, Inc.
ORGANIZATIONAL DESIGN

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Royal Dutch/Shell Group, 1994: A Matrix Structure
© 2016 Robert M. Grant, www.contemporarystrategyanalysis.com
ORGANIZATIONAL DESIGN

Mechanistic versus organic organizational forms
Copyright © 2019 John Wiley & Sons, Inc.
Feature Mechanistic forms Organic forms
Task definition Rigid and highly specialized Flexible and broadly defined
Coordination and control Rules and directives vertically imposed Mutual adjustment, common culture
Communication Vertical Vertical and horizontal
Knowledge Centralized Dispersed
Commitment and loyalty To immediate superior To the organization and its goals
Environmental context Stable with low technological  uncertainty Dynamic with significant technological uncertainty and ambiguity

ORGANIZATIONAL DESIGN

Major trends of past two decades:
Delayering—organizational hierarchies becoming flatter
Adhocracy and team-based organization—emphasis shared values, high participation, flexible roles and communication, lack of authority
Project-based organizations—dynamic structures with time-limited project teams
Network structures—organizations and groups of organizations where coordination based upon informal social linkages
Recent Trends in Organizational Design
Copyright © 2019 John Wiley & Sons, Inc.
Limited evidence of a “revolution in organizational design”—basic features of organizations (e.g. hierarchy, financial control mechanisms, strategic planning) are still present
ORGANIZATIONAL DESIGN