Page 195 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 10: Strategy Implementation

Structure: “Structure” means the organisational structure of the company. The design of Notes
organisational structure is a critical task of top management. Organisational structure refers to
the relatively more durable organisational arrangements and relationships. It prescribes the
formal relationships among various positions and activities, communication channels, roles to
be performed by various members of an organisation.

Organisational structure performs four major functions:
1. It reduces external uncertainty.
2. It reduces internal uncertainty due to variable, unpredictable and random human behaviour.
3. It provides a wide variety of devices like departmentalization, specialization, division of
labour, delegation of authority etc.
4. It helps in coordinating various activities of the organisation and focus on its objectives.
Organisational structure must be designed in accordance with the needs of the strategy. According
to Chandler, structure must follow strategy. In other words, changes in strategy must be followed
by changes in organisational structure.
According to McKinsey, the relationship between strategy and structure, though important,
rarely provides unique structural solutions. Quite often the main problem in strategy relates to
its execution.
Systems: “Systems” mean the procedures that make the organisation work. They include the
rules, regulations and procedures, both formal and informal, that complement the organisational
structure. Systems include production planning and control systems, cost accounting procedures,
capital budgeting systems, performance evaluation systems etc. Often, changes in strategy require
changes in systems.
Style: “Style” means the way the company conducts its business. Top managers in organisations
can use style to bring about change. Organisations differ from each other in their “styles” of
working. The style of an organisation, according to the McKinsey framework, becomes evident
through the patterns of actions taken by the top management team over a period of time.
Thus, an important part of managing change is establishing and nurturing a good ‘fit’ between
culture and strategy.
Staff: “Staff” refers to the pool of people who need to be developed, challenged and encouraged.
It should be ensured that the staff has the potential to contribute to the achievement of goals.
Three important aspects about staff are:
1. Selecting meritorious people for specific organisational positions.
2. Developing abilities and skills in them, to take up challenging assignments.
3. Motivating them to give their best to achieve strategic goals.
Skills: “Skills” are the most crucial attributes or capabilities of an organisation. Skills in the 7-S
framework can be considered as an equivalent of “distinctive competencies”. For example,
Hindustan Lever is known for its marketing skills, TELCO for its engineering skills, IBM for its
customer service, Du Pont for its research and development skills and Sony for its new product
development skills. Skills are developed over a period of time and are a result of a number of
factors. Hence, to implement a new strategy, it is necessary to build new skills.
Strategy: “Strategy” is the long-term direction and scope of an organisation. It is the route that
the company has chosen to achieve competitive success.

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