What is the relationship between strategy and organizational structure?

  

Post-response Guidelines: (Respond to the following.)

Explain why firms experience evolutionary cycles in which there is a fight between strategy and structure, punctuated with periods in which strategy and structure are reshaped. Provide examples of global firms that have experienced this pattern.
Choose a CEO of a prominent firm that you believe exemplifies the positive aspects of strategic leadership.

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What actions has this CEO taken that demonstrate effective strategic leadership?
What are the effects of those actions on the firm’s performance?

*250 words
BUS 499, Week 9, Part 1: Organizational Structure and Controls

Slide #

Topic

Narration

1

Introduction

Welcome to Senior Seminar in Business Administration.

In this lesson we will discuss Organizational Structure and Controls.

Please go to the next slide.

2

Objectives

Upon completion of this lesson, you will be able to:

Describe the relationship between strategy and organizational structure.

Please go to the next slide.

3

Supporting Topics

In order to achieve these objectives, the following supporting topics will be covered:

Organizational structure and controls;
Relationships between strategy and structure;
Evolutionary patterns of strategy and organizational structure;
Implementing business-level cooperative strategies;
Implementing corporate-level cooperative strategies; and Implementing international cooperative strategies.

Please go to the next slide.

4

Organizational Structure and Controls

Organizational structure specifies the firms formal reporting relationships, procedures, controls, and authority and decision-making processes. Developing an organizational structure that effectively supports the firms strategy is difficult, especially because of the uncertainty about cause-effect relationships in the global economys rapidly changing and dynamic competitive environments. When a structures elements are properly aligned with one another, the structure is a critical component of effective strategy implementation processes.

A firms structure specifies the work to be done and how to do it, given the firms strategy or strategies. Thus, organizational structure influences how managers work and the decisions resulting from that work. Supporting the implementation of strategies, structure is concerned with processes used to complete organizational tasks.

Please go to the next slide.

5

Organizational Structure and Controls, continued

Organizational controls are an important aspect of structure. Organizational controls guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable. When fewer differences separate actual from expected outcomes, the organizations controls are more effective.

It is difficult for the company to successfully exploit its competitive advantages without effective organizational controls. Properly designed organizational controls provide clear insights regarding behaviors that enhance firm performance. Firms use both strategic controls and financial controls to support using their strategies.

Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the companys competitive advantages.

Financial controls are largely objective criteria used to measure the firms performance against previously established quantitative standards.

Please go to the next slide.

6

Relationships Between Strategy and Structure

Strategy and structure have a
reciprocal relationship. This relationship highlights the
interconnectedness between
strategy formulation and
strategy implementation. Once in place though,
structure can influence
current strategic actions and future strategies. Research that
strategy has a much more important influence on structure than the reverse. Regardless of the strength of the reciprocal relationships between
strategy and
structure, those choosing the firms strategy and structure should be committed to matching each strategy with a structure that provides the
stability needed to use current
competitive advantages. We also want to make sure that there is flexibility to develop
future advantages. As a result of this a firm should simultaneously
consider the structure that will be needed to support use of the new strategy. By properly matching strategy and structure can create a competitive advantage.

7

Evolutionary Patterns of Strategy and Organizational Structure

Firms choose from among three major types of organizational structures:

Simple;
Functional; and
Multidivisional.

Across time, successful firms move from the simple to the functional to the multidivisional structure to support changes in their growth strategies.

The
simple structure is a structure in which the owner-manager makes all major decisions and monitors all activities while the staff serves as an extension of the managers supervisory authority.

The
functional structure consists of a chief executive officer and a limited corporate staff with functional line managers in dominant organizational areas such as production, accounting, marketing, resource and development, engineering, and human resources. This structure allows for functional specialization, thereby facilitating active sharing of knowledge within each functional area.

The
multidivisional structure consists of operating divisions, each representing a separate business or profit center in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers.

Please go to the next slide.

8

Evolutionary Patterns of Strategy and Organizational Structure, continued

Firms use
different forms of the functional organizational structure to support implementing the cost leadership, differentiation, and integrated cost leadership/ differentiation strategies. The differences in these forms are accounted for primarily by different uses of three important structural characteristics which include:

Specialization;
Centralization; and
Formalization.

Firms using the
cost leadership strategy sell large quantities of standardized products to an industrys typical customer. Firms using this strategy need a
structure and
capabilities that allow them to achieve
efficiencies and produce their goods at
costs lower than those of competitors. In terms of
centralization, decision- making authority is centralized in a
staff function to maintain a
cost- reducing emphasis within each organizational function. While encouraging continuous cost reductions, the centralized staff also verifies that
further cuts in costs in one function wont adversely affect the productivity levels in other functions.
Jobs are highly specialized in the cost leadership functional structure; work is divided into homogeneous subgroups.
Organizational functions are the most common subgroup, although work is sometimes batched on the
basis of products produced or clients served. Specializing in their work allows employees to
increase their efficiency, resulting in
reduced costs. Guiding individuals work in this structure are
highly formalized rules and procedures, which often emanate from the centralized staff.

Firms using the
differentiation strategy produce products that customers hopefully perceive as being
different in ways that create value for them. With this strategy, the firm wants to sell
nonstandardized products to customers with
unique needs. From this structure emerges a
development- oriented culture in which employees try to find ways to further differentiate current products and to develop new, highly differentiated products.
Continuous product innovation demands that people throughout the firm
interpret and take
action based on information that is often
incomplete or
uncertain. Following a strong focus on the external environment to identify new opportunities, employees often gather this information from people outside the firm. Commonly,
rapid responses to the possibilities indicated by the collected information are necessary, suggesting the need for
decentralized decision-making responsibility and authority. It also requires building a
strong technological capability and
strategic flexibility, which allow the organization to take advantage of opportunities created by changes in the market. To support the creativity needed and the continuous pursuit of new sources of differentiation and new products, jobs in this structure are
not highly specialized. This lack of specialization means that workers have a relatively
large number of tasks in their job descriptions.
Few formal rules and procedures also characterize this structure.

Please go to the next slide.

9

Evolutionary Patterns of Strategy and Organizational Structure, continued

Firms using the i
ntegrated cost leadership/ differentiation strategy sell products that create value because of their
relatively low cost and
reasonable sources of differentiation. The cost of these products is
low relative to the cost leaders prices while their differentiation is
reasonable when compared with the clearly unique features of the
differentiators products. Although challenging to implement, the integrated cost leadership/ differentiation strategy is used frequently in the
global economy. The challenge of using this strategy is due largely to the fact that different
primary and
support activities are emphasized when using the cost leadership and differentiation strategies. To achieve the cost leadership position,
production and
process engineering need to be emphasized, with
infrequent product changes.

The firms
level of diversification is a function of decisions about the
number and
type of businesses in which it will compete as well as how it will manage the businesses. Using a diversification strategy requires the firm to
change from the functional structure to the multidivisional structure to develop an appropriate strategy/ structure match. Corporate- level strategies have different degrees of
product and
market diversification. The demands created by different levels of diversification hi
ghlight the need for a unique organizational structure to effectively implement each strategy.

Please go to the next slide.

10

Evolutionary Patterns of Strategy and Organizational Structure, continued

The
cooperative form is an M- form structure in which horizontal integration is used to bring about interdivisional cooperation. Divisions in a firm using the related constrained diversification strategy commonly are formed around
products, markets, or both. Research suggests
that informal ties may be even more important than
formal coordination devices in achieving cooperation.
Sharing divisional competencies facilitates the corporations efforts to develop
economies of scope. Economies of scope are linked with successful use of the
related constrained strategy.
Interdivisional sharing of competencies depends on
cooperation, suggesting the use of the cooperative form of the multidivisional structure.

Sometimes,
liaison roles are established in each division to reduce the time division managers spend integrating and coordinating their units work with the work occurring in other divisions.
Temporary teams or task forces may be formed around projects whose success depends on sharing competencies that are embedded within several divisions. Ultimately, a
matrix organization may evolve in firms implementing the related con-strained strategy. A
matrix organization is an organizational structure in which there is a dual structure combining both functional specialization and business product or project specialization. Although complicated, an effective matrix structure can lead to
improved coordination among a firms divisions. The
success of the cooperative multidivisional structure is significantly affected by how well divisions
process information. However, because cooperation among divisions implies a loss of
managerial autonomy, division managers may not readily commit themselves to the type of integrative information- processing activities that this structure demands.

Strategic controls are important because divisional managers performance can be evaluated at least partly on the basis of how well they have
facilitated interdivisional cooperative efforts. In addition, using reward systems that emphasize overall company performance helps overcome problems associated with the
cooperative form. Still, the costs of
coordination and
inertia in organizations limit the amount of related diversification attempted.

Please go to the next slide.

11

Evolutionary Patterns of Strategy and Organizational Structure, continued

Firms with
fewer links or
less constrained links among their divisions use the
related linked diversification strategy. The strategic business unit form of the multidivisional structure supports implementation of this strategy. The
strategic business unit or
SBU form is an M- form structure consisting of three levels which include:

Corporate headquarters;
Strategic business units; and
SBU divisions.

The SBU structure is used by
large firms and can be
complex, given associated organization size and product and market diversity. The divisions within each SBU are related in terms of
shared products or markets or both, but the divisions of one SBU have little in common with the divisions of the other SBUs. Divisions within each SBU sh
are product or market competencies to develop
economies of scope and possibly
economies of scale. In this structure, each SBU is a
profit center that is controlled and evaluated by the headquarters office. Although both financial and strategic controls are important,
financial controls are vital to headquarters evaluation of each SBU. Strategic controls on the other hand are critical when the heads of SBUs evaluate their divisions performances. Strategic controls are also critical to the headquarters efforts to determine whether the company has formed an effective.

The SBU structure is
difficult to implement.
Sharing competencies among units within an SBU is an important characteristic of the SBU form of the multidivisional structure. A drawback to the SBU structure is that multifaceted businesses often have difficulties in
communicating this complex business model to stockholders. Furthermore, if
coordination between SBUs is needed, problems can arise because the SBU structure does not readily foster cooperation across SBUs.

Please go to the next slide.

12

Evolutionary Patterns of Strategy and Organizational Structure, continued

Firms using the
unrelated diversification strategy want to create value through efficient internal capital allocations or by restructuring, buying, and selling businesses.
The competitive form of the multidivisional structure supports implementation of this strategy. The competitive form is an M- form structure characterized by complete independence among the firms divisions which compete for corporate resources. Unlike the divisions included in the cooperative structure, divisions that are part of the competitive structure
do not share common corporate strengths. Because strengths are not shared, integrating devices are not developed for use by the divisions included in the competitive structure.
The efficient internal capital market that is the foundation for using the unrelated diversification strategy requires organizational arrangements
emphasizing divisional competition rather than cooperation. Three benefits are expected from the internal competition and they include:

Internal competition
creates flexibility;

Internal competition
challenges the status quo and inertia; and

Internal competition
motivates effort in that the challenge of competing against internal peers.

Please go to the next slide.

13

Evolutionary Patterns of Strategy and Organizational Structure, continued

As explained previously, international strategies are becoming increasingly important for long- term competitive success in what continues to become an increasingly
border-less global economy. Among other benefits, international strategies allow the firm to search for new markets, resources, core competencies, and technologies as part of its efforts to outperform competitors. As with business- level and corporate- level strategies,
unique organizational structures are necessary to successfully implement the different international strategies.
Forming proper matches between international strategies and organizational structures facilitates the firms efforts to effectively
coordinate and
control its global operations.

The multidomestic strategy decentralizes the firms strategic and operating decisions to business units in each country so that product characteristics can be tailored to
local preferences. Firms using this strategy try to
isolate themselves from global competitive forces by establishing
protected market positions or by competing in industry segments that are most affected by
differences among local countries. The
worldwide geographic area structure is used to implement this strategy. The worldwide geographic area structure emphasizes
national interests and
facilitates the firms efforts to satisfy local differences.

Using the multidomestic strategy requires
little coordination between different country markets, meaning that
integrating mechanisms among divisions around the world are not needed. Coordination among units in a firms worldwide geographic area structure is often
informal. A key disadvantage of the multidomestic strategy/ worldwide geographic area structure match is
the inability to create strong global efficiency.

With the corporations home office
dictating competitive strategy, the global strategy is one through which the firm
offers standardized products across country markets. The firms success depends on its ability to
develop economies of scope and
economies of scale on a global level.
The worldwide product divisional structure supports use of the global strategy. In the worldwide product divisional structure,
decision- making authority is centralized in the worldwide division headquarters to coordinate and integrate decisions and actions among divisional business units. This structure is often used in
rapidly growing firms seeking to manage their diversified product lines effectively.

Please go to the next slide.

14

Evolutionary Patterns of Strategy and Organizational Structure, continued

The transnational strategy calls for the firm to combine the
multidomestic strategys local responsiveness with the
global strategys efficiency. Firms using this strategy are trying to gain the
advantages of both local responsiveness and global efficiency.
The combination structure is used to implement the transnational strategy. The combination structure is a structure drawing characteristics and mechanisms from both the
world-wide geographic area structure and the
worldwide product divisional structure. The transnational strategy is often implemented through two possible combination structures which include a
global matrix structure and a
hybrid global design.

The global matrix design brings together both
local market and
product expertise into teams that develop and respond to the global marketplace. The global matrix design also promotes flexibility in designing products and responding to customer needs. However, it has severe limitations in that it places employees in a position of
being accountable to more than one manager. At any given time, an employee may be a member of several functional or product group teams. Relationships that evolve from multiple memberships can make it difficult for employees to be
simultaneously loyal to all of them. Although the matrix places authority in the hands of
managers who are most able to use it, it creates problems in regard to
corporate reporting relationships.

The fit between the
multidomestic strategy,
worldwide geographic area structure,
global strategy, and the
worldwide product divisional structure is apparent. However, when a firm wants to implement the
multidomestic and
global strategies simultaneously through a combination structure, the appropriate integrating mechanisms are less obvious. The structure used to implement the transnational strategy must do the following:

S
imultaneously be centralized and
decentralized;

Integrated and nonintegrated; and

Formalized and nonformalized.

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15

Evolutionary Patterns of Strategy and Organizational Structure, continued

A
network strategy exists when partners form several alliances in order to improve the performance of the alliance network itself through
cooperative endeavors. The greater levels of environmental complexity and uncertainty facing companies in todays competitive environment are causing more firms to use cooperative strategies such as
strategic alliances and
joint ventures. The
breadth and
scope of firms operations in the global economy create many opportunities for firms to cooperate. A firm can develop cooperative relation-ships with many of its stakeholders, including customers, suppliers, and competitors. When a firm becomes involved with combinations of cooperative relationships, it is part of a
strategic network, or an
alliance constellation or portfolio.

A
strategic network is a group of firms that has been formed to create value by participating in multiple cooperative arrangements. An effective strategic network facilitates
discovering opportunities beyond those identified by individual network participants. A strategic network can be a
source of competitive advantage for its members when its operations
create value that is difficult for competitors to duplicate. Strategic networks are used to
implement business- level, corporate- level, and international cooperative strategies.

At the core or center of the strategic network, the strategic center firm is the one around which the networks cooperative relationships
revolve. Due to its central position, the strategic center firm is the
foundation for the strategic networks structure. Concerned with various aspects of organizational structure, the strategic center firm manages what are often
complex,
cooperative interactions among network partners.

The strategic center firm is engaged in four primary tasks as it manages the strategic network and controls its operations. These tasks include the following:

Strategic outsourcing;
Competencies;
Technology; and
Race to learn.

16

Check Your Understanding

17

Cooperative Strategies

The two types of business-level complementary alliances are vertical and horizontal. Firms with competencies in different stages of the value chain form a vertical alliance to cooperatively integrate their different, but complementary, skills. Firms combining their competencies to create value in the same stage of the value in the same stage of the value chain are using a horizontal alliance. Vertical complementary strategic alliances are formed more frequently than horizontal alliances.

Corporate-level cooperative strategies are used to facilitate product and market diversification. As a cooperative strategy, franchising allows the firms to use its competencies to extend or diversify its product or market reach, but without completing a merger or an acquisition.

Strategic networks formed to implement international cooperative strategies result in firms competing in several countries. Differences among countries regulatory environments increase the challenge of managing international networks and verifying that at a minimum, the networks operations comply with all legal requirements.

Please go to the next slide.

18

Summary

We have reached the end of this lesson. Lets take a look at what we have covered.

First, we went over organizational structure. Organizational structure specifies the firms formal reporting relationships, procedures, controls, and authority and decision-making processes.

We then talked about organizational controls. Organizational controls guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable.

Next, we went over types of structure. Types of structure include simple, functional, and multidivisional. We also went over several different types of strategies and structures.

We concluded the lesson with a discussion on cooperative strategies. These include business-level cooperatives, corporate-level cooperatives, and international cooperatives.

This completes this lesson. BUS 499, Week 9, Part 2: Strategic Leadership

Slide #

Topic

Narration

1

Introduction

Welcome to Senior Seminar in Business Administration.

In this lesson we will discuss Strategic Leadership.

Please go to the next slide.

2

Objectives

Upon completion of this lesson, you will be able to:

Analyze strategic leadership.

Please go to the next slide.

3

Supporting Topics

In order to achieve this objective, the following supporting topics will be covered:

Strategic leadership and style;
The role of top-level managers;
Managerial succession; and
Key strategic leadership actions.

Please go to the next slide.

4

Strategic Leadership

Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary. Multifunctional in nature, strategic leadership involves managing through others, managing an entire enterprise rather than a functional subunit, and coping with change that continues to increase in the global economy.

Because of the global economys complexity, strategic leaders must learn how to effectively influence human behavior, often in uncertain environments. By word or by personal example, and through their ability to envision the future, effective strategic leaders meaningfully influence the behaviors, thoughts, and feelings of those with whom they work.

The ability to attract and then manage human capital may be the most critical of the strategic leaders skills, especially in light of the fact that not being able to fill key positions with talented human capital constrains firm growth.

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5

Leadership Styles

The styles used to provide leadership often affect the productivity of those being led. Transformational leadership is the most effective strategic leadership style. This style entails motivating followers to exceed the expectations other have of them, to continuously enrich their capabilities, and to place the interests of the organization above their own.

Transformational leaders develop and communicate a vision for the organization and formulate a strategy to achieve the vision. They make followers aware of the need to achieve valued organizational outcomes. And they encourage followers to continuously strive for higher levels of achievement. These types of leaders have a high degree of integrity and character.

Please go to the next slide.

6

The Role of Top-level Managers;

Top-level managers are charged to make certain that their firm is able to effectively formulate and implement strategies. Managers use their discretion when making strategic decisions. The primary factors that determine the amount of decision-making discretion held by a managers are:
External environmental sources;
Characteristics of the organization;
Characteristics of the manger;

In addition, top-level managers develop firms organizational structure and reward system. They also have a major effect on a firms culture.

In most firms, the complexity of challenges and the need for substantial amounts of information and knowledge require strategic leadership by a team of executives.

Please go to the next slide.

7

Managerial Succession

Many organizations use leadership screening systems to identify individual with managerial and strategic leadership potential. These individuals are selected from two types of markets: internal and external. An internal managerial labor market consists of a firms opportunity for managerial positions and the qualified employees within the firm. An external managerial labor market is the collection of managerial career opportunity and the qualified people who are external to the organization in which the opportunities exist.

There are several benefits when internal labor market is used. Insiders are familiar with the company and also internal hiring produce lower turnover among existing personnel. In addition, hiring from inside keeps the important knowledge necessary to sustain performance. On the other side, long tenure with a firm may reduce strategic leaders to firm success.

Please go to the next slide.

8

Key Strategic Leadership Actions

Certain actions characterize strategic leadership; the most important ones are shown on the figure on the slide.

Determining the strategic directions involves specifying the image and character the firm seeks to develop over time. The strategic direction is framed within the context of the conditions strategic leaders expect their firm to face in roughly the next three to five years.

Effectively managing the firms portfolio of resources may be the most important strategic leadership task. The firms resources are categorized as financial capital, human capital, social capital, and organizational capital.

Organizational culture is a complex set of ideologies, symbols, and core values that are shared throughout the firm and influence the way business is conducted. Because the organizational culture influences how the firm conducts its business and helps regulate and control employees behavior, it can be a source of competitive advantage and is a critical factor in promoting innovation.

The effectiveness of processes used to implement the firms strategies increases when they are based on ethical practices. Ethical companies encourage and enable people at all organizational levels to act ethically when doing what is necessary to implement strategies.

The challenge strategic leaders face is to verify their firm is emphasizing financial and strategic controls so that firm performance improves. The Balance Scoreboard is a tool that helps strategic leaders assess the effectiveness of the controls. The
balanced scorecard is a framework firms can use to verify that they have established both strategic and financial controls to assess their performance.

Please go to the next slide.

9

Check Your Understanding

10

Summary

We have reached the end of this lesson. Lets take a look at what we have covered.

First, we discussed strategic leadership. Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary. Multifunctional in nature, strategic leadership involves managing through others, managing an entire enterprise rather than a functional subunit, and coping with change that continues to increase in the global economy.

Next, we went over leadership styles. The styles used to provide leadership often affect the productivity of those being led. Transformational leadership is the most effective strategic leadership style.

Finally to conclude the lesson we talked about strategic leadership actions. These include determining strategic direction, establishing balanced organizational controls, managing the firms resource portfolio, sustaining an effective organizational culture, and emphasizing ethical practices.

This completes this lesson.

Introduction:

Organizational structure plays a crucial role in the implementation of a company’s strategy. Developing an appropriate structure that aligns with the strategy can be challenging due to the rapidly evolving and dynamic nature of the global economy. In this Senior Seminar in Business Administration lesson, we will discuss Organizational Structure and Controls and their relationship with a company’s strategy.

Description:

The lesson will cover the following topics to help achieve the objectives:

1. Organizational structure and controls
2. Relationships between strategy and structure
3. Evolutionary patterns of strategy and organizational structure
4. Implementing business-level cooperative strategies
5. Implementing corporate-level cooperative strategies
6. Implementing international cooperative strategies

We will discuss how organizational structure specifies the firm’s formal reporting relationships, procedures, controls, and decision-making processes, affecting how managers work and make decisions. Proper organizational controls guide the use of strategy, indicate how to compare actual and expected outcomes, and suggest corrective actions to take when the differences are unacceptable. We will also look at the reciprocal relationship between strategy and structure, where both influence each other.

Furthermore, we will explore the evolutionary patterns of strategy and organizational structure that lead to a fight between strategy and structure, followed by a period where both are reshaped. We will provide examples of global firms that have experienced such patterns.

Lastly, we will choose a prominent CEO who exemplifies positive strategic leadership and discuss the actions they have taken that demonstrate effective strategic leadership. We will examine the effects of those actions on the firm’s performance.

Objectives:
1. To understand the relationship between strategy and organizational structure.
2. To identify the evolutionary patterns of strategy and organizational structure.
3. To explain the process of implementing business-level, corporate-level, and international cooperative strategies.
4. To recognize the importance of organizational controls in supporting the implementation of strategies.

Learning Outcomes:
1. Students will be able to analyze the relationship between strategy and organizational structure, identifying how they impact one another.
2. Students will be able to identify the evolutionary patterns that firms experience in terms of strategy and organizational structure.
3. Students will be able to explain the process of implementing business-level, corporate-level, and international cooperative strategies, recognizing their differences and similarities.
4. Students will be able to recognize the importance of organizational controls in supporting the implementation of strategies, identifying the different types of controls and how they impact firm performance.

Evolutionary Cycles and Strategic Leadership in Global Firms

Relationship between strategy and structure

The relationship between strategy and organizational structure is crucial in determining a firm’s effectiveness in implementing its strategies. Organizational structure specificity relate to the company’s formal reporting relationships, procedures, controls, and authority and decision-making processes. It can be difficult to develop an organizational structure that effectively supports the firm’s strategy, especially given the uncertainty about cause-effect relationships in the global economy’s rapidly changing and dynamic competitive environments.

Evolutionary cycles in strategy and structure

Firms experience evolutionary cycles in which there is a fight between strategy and structure, punctuated with periods in which strategy and structure are reshaped. Global firms such as Microsoft and General Electric are examples of firms that have experienced this pattern. Microsoft, for instance, has gone through several changes in its organizational structure, such as shifting from a functional structure to a divisional structure, and then to a hybrid structure. All these changes were made to better support the firm’s strategies.

Implementing cooperative strategies

Implementing different types of cooperative strategies (business-level, corporate-level, and international) can significantly impact a firm’s ability to compete in the global market effectively. These strategies require a firm to be able to partner with other entities in a way that mutually benefits all parties involved. Therefore, it is crucial for a firm to have the right organizational structure in place to support the implementation of these strategies.

Organizational controls and their importance

Organizational controls are another important aspect of structure as they guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable. Having properly designed organizational controls provide clear insights regarding behaviors that enhance firm performance. This, in turn, supports the firm’s ability to exploit its competitive advantages effectively.

Positive aspects of strategic leadership

Jeff Bezos, CEO of Amazon, is an example of a CEO that has exemplified positive aspects of strategic leadership. Under his leadership, Amazon has managed to diversify its product offerings, expand globally, and stay ahead of competitors in the e-commerce industry. His strategic decisions and actions have included a heavy focus on innovation, investing heavily in research and development, and putting customers first. All these actions have made Amazon one of the most successful and influential companies globally.

Effects of effective strategic leadership on firm performance

Effective strategic leadership can significantly impact a firm’s performance. Jeff Bezos’ strategic leadership has been credited with much of Amazon’s success. Under his leadership, the firm has enjoyed significant revenue growth and maintained a strong market position. Additionally, his strategic decisions have helped Amazon remain competitive and relevant, even in the face of significant market changes.

Solution 1:

Evolutionary Cycles in Firms

Firms experience evolutionary cycles where there is a fight between strategy and structure, punctuated with periods in which strategy and structure are reshaped. These cycles occur due to multiple reasons, such as internal and external factors, changes in the market, and new technologies. The firm’s structure and strategy should be aligned with each other to achieve the desired results. However, sometimes, the structure becomes outdated, and the strategy fails to adapt to the changing circumstances, leading to a conflict between the two. During these times, the firm’s management needs to reassess and redesign its structure and strategy to maintain its competitive advantage.

For example, in the 1990s, IBM was on the brink of collapse due to its outdated organizational structure and its inability to adapt to new technologies. IBM’s management realized that its structure was hindering its growth and profitability. Therefore, they decided to implement a new structure that was flatter and more flexible to better match IBM’s new business strategy. IBM restructured into small, independent business units that could respond faster to changing market needs. As a result of this structural change, IBM regained its competitive edge and became a dominant player in the technology industry.

Solution 2:

Effective Strategic Leadership

CEO of Alibaba, Jack Ma, exemplifies the positive aspects of strategic leadership. Jack Ma is known for his unique leadership style and innovative approach to management. He is an excellent communicator, and his vision and passion have been instrumental in the success of Alibaba. His actions demonstrate effective strategic leadership in multiple ways.

Firstly, Jack Ma prioritized customer satisfaction and innovation in his business strategy. He valued customer feedback and used it to redesign Alibaba’s website, which made online transactions easier and more secure. This action helped Alibaba become the world’s largest e-commerce platform.

Secondly, Jack Ma’s leadership instilled a culture of innovation within Alibaba. He encouraged his employees to think creatively and take risks, which resulted in numerous successful products and services such as Alipay, Tmall, and Taobao.

Lastly, Jack Ma recognized the importance of corporate responsibility and sustainability. He launched the Alibaba charity foundation, which has supported numerous social initiatives in China and worldwide.

Overall, Jack Ma’s effective strategic leadership has led to Alibaba’s tremendous growth and success. His vision and approach to management have enabled Alibaba to become one of the world’s most valuable companies.

Suggested Resources/Books:
1. “Organizational Structure: Influencing Factors and Impact on a Firm” by Dorathy Gass
2. “Corporate Strategy and Organizational Structure: A Study of L&T” by Abhishek Kumar
3. “Evolutionary Dynamics of Organizations” by Joel A. C. Baum
4. “Managing Organizational Structure and Culture” by Kanak Pandey
5. “Strategy and Structure: Chapters in the History of the American Industrial Enterprise” by Alfred D. Chandler Jr.

Similar Asked Questions:
1. How does organizational structure impact strategy implementation?
2. What are the factors that influence the choice of organizational structure in a firm?
3. How do firms balance their strategy and structure to meet changing environmental conditions?
4. What are the different types of organizational controls used by firms?
5. How do firms implement cooperative strategies through their organizational structure?

Explanation of Evolutionary Cycles in Firms:
Firms experience evolutionary cycles in which there is a fight between strategy and structure, punctuated with periods in which strategy and structure are reshaped due to the rapidly changing and dynamic competitive environment. In a firm, the organizational structure specifies the formal reporting relationships, procedures, controls, authority, and decision-making processes. Developing an effective organizational structure that supports the firm’s strategy is difficult due to the uncertainty about cause-effect relationships in the global economy. The structure plays a critical role in effective strategy implementation if its elements are properly aligned. A firm’s strategy influences the firm’s structure, but the structure also influences how managers work and the decisions resulting from that work. An appropriate organizational control guide is necessary to compare actual results with expected results and provide corrective measures.
Evolutionary patterns of strategies and organizational structure are heuristics in which the firm progresses from capitalizing on its existing competitive advantages to developing new ones. At each stage, the firm’s structure and strategy align to provide a competitive advantage. An example of a global firm that has experienced this pattern is Apple Inc., which has evolved over the years from being a personal computer manufacturer to a leading player in mobile devices, with a broad range of products and services.

CEO with Effective Strategic Leadership:
One CEO that exemplifies the positive aspects of strategic leadership is Satya Nadella, the CEO of Microsoft. He took a strategic approach to transform Microsoft from a software company into a cloud-based and technology services organization. One of the significant actions he took demonstrates effective strategic leadership is to shift the company’s focus away from its traditional windows operating system to cloud-based services. Nadella made a massive investment in expanding the company’s cloud infrastructure and developing new cloud-based services, such as Office 365 and the Azure Platform. His actions have resulted in significant growth for the company. For instance, Microsoft’s revenue growth rate increased by 17.5% YoY in 2021, and its stock price has tripled since he became CEO in 2014. Nadella’s leadership has led to the company becoming a leader in the cloud infrastructure and services market, with an estimated market share of 20%, second only to Amazon Web Services.

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