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CHAPTER TEN
STRATEGY IMPLEMENTATION: ORGANIZING AND STRUCTURE
Following the basic management functions of planning, organizing, directing, staffing, and controlling, the text
views strategy formulation as primarily composed of planning activities, strategy implementation as primarily
composed of organizing, directing, and staffing activities, and evaluation and control as primarily composed of
controlling activities. This chapter begins by specifying who implements strategy and what must be done (e.g.,
programs, budgets, and procedures). It proposes a matrix of change to assess the impact new programs will have on
an organization’s current activities. It stresses the importance of finding synergy among organizational activities.
The rest of the chapter emphasizes organizing activities by looking closely at the design of organizations and jobs.
LEARNING OBJECTIVES
1. Describe the major issues that impact successful strategy implementation.
2. Explain how you would develop programs, budgets, and procedures to implement strategic change.
TOPICS OUTLINE COVERED
1. Strategy Implementation
a. Who Implements Strategy?
2. What Must Be Done?
3. How Is Strategy to Be Implemented? Organizing for Action
4. Flexible Types of Organizational Structure
5. Reengineering and Strategy Implementation
a. Six Sigma
10-1. How do timing tactics impact the strategy implementation efforts of a company?
A timing tactic deals with when a company implements a strategy. Some companies are first movers, or pioneers.
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10–2. What issues would you consider to be the most important for a company that is considering the use of
a functional structure?
One of the most important issues when utilizing a functional structure is leadership. The leader of the organization
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
10-3. Why are staffing decisions considered an important component of strategic planning and the
management process? How is the strategy implementation process connected to the decisions resulting
from a staffing strategy?
Staffing decisions are an important component of the strategic formulation and implementation process. They need
to be in line with an organization’s business strategy, and organizational leaders must fully understand the
10-4. Why is it necessary for an organization to align its managers with the corporate strategy to ensure
better organizational performance?
Research suggests that firms that align the profiles of their managers with the requirements of their strategies
perform significantly better than firms where such an alignment is absent. The importance of strategy-manager
10-5. Is downsizing a good strategy for revamping an organization’s competitiveness when it is facing major
competitive threats in the market?
Retrenchment is a corporate-level strategy that tries to reduce the size or diversity of an organization’s operations.
Downsizing the organization’s employment is a possible retrenchment strategy, but it should be the last one. The
10-6. Can organizations be controlled by culture? Explain.
Organizational culture comprises the beliefs, values, and behavioral norms of an organization. It can influence how
employees think and behave. Shared values can align the goals and objectives of managers and employees within
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10-7. How is an international staffing strategy different from a domestic one?
An international strategy needs to determine when, how, and where to send expatriates for overseas operations.
Expatriate employees are frequently assigned key positions. The issues of compensation and other human resource
ADDITIONAL DISCUSSION QUESTIONS FOR INSTRUCTORS
These are not found in the text and may be used by the instructor for classroom discussion or exams.
A10–1. Does structure follow strategy or does strategy follow structure? Why?
Although Chandler and others have made convincing arguments that a change in strategy tends to be followed by a
change in structure, a good argument can be made for strategy following structure as well. To the extent that the
formulators of strategy seriously consider implementation issues in choosing a strategic alternative, they will have to
SUGGESTIONS FOR STRATEGIC PRACTICE EXERCISE
The Synergy Game
Excerpted from Teaching Note by Y. Sarason and Catherine Banbury
A key strategic issue for organizations is whether or not to diversify their business. In order for diversification to
have performance implications, there must be some economies of scale or economies of scope, which has become
known as “synergy.” Economies of scale are relatively easy to identify, as the advantages come from size.
Economies of scope have proven more difficult, as it is harder to decipher if operating in two or more lines of
business will cause an increase in performance. A relatively consistent finding in strategy research has been that
organizations that diversify into related businesses outperform businesses that diversify into unrelated businesses.
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as related. This exercise puts students in the role of managers by having them identify how businesses of
recognizable firms are related.
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Products or Services
Synergy
Company
Family restaurants, airline catering, hotels, retirement
centers
Standardized food service and
hospitality setting
Marriott
Motorcycles, autos, sit-down lawn mowers, generators
Engine technology
Honda*
Athletic footwear, Rockport shoes, Greg Norman clothing,
sportswear
Marketing and distribution for
athletic-conscious products
Reebok*
Televisions, portable telephones, personal device assistants,
pagers, two-way mobile radios
Manufacturer of untethered
communications products
Motorola
Beer, cigarettes, coffee, soft drinks, cheese, chocolates
Distribution and marketing of
consumable products
Philip Morris
Acetaminophen, tranquilizers, anti-inflammatory drugs,
wound care products
Brand name, R&D, of healthcare
products
Johnson and
Johnson
Dinner ware, fiber optics, liquid crystal display, lighting,
specialty glass
R&D of sand-based technology
Corning
Max Factor, Vidal Sassoon, Joy soap, Pepto-Bismol, Vicks
44, Folgers, Pringles, Tampax, Pampers, Cheer, Charmin
R&D, manufacturing and
distribution of consumer products
Procter &
Gamble
Television station, radio station, amusement parks, movie
studio, retail outlets, cable station, distribution network,
cruise lines, animation school
Family entertainment
Walt Disney
Razors, Oral B toothbrushes, Duracell batteries, stationary
products, toiletries, Braun coffee makers
Distribution of consumer goods
Gillette
Pocket television, portable CD player, portable radio
Miniaturization of electronic audio
products
Sony
Digital pianos, amplifiers, electric guitars, receivers,
motorcycles, sound cards, digital and portable keyboards
and synthesizers, snowmobiles
Electronic musical devices (except
for the motorcycles and
snowmobiles)
Yamaha