Strategy and Structure Cheat Sheet

what business an organi­sation wants to be and how it is going to get there

strategy formul­ation emergent is the process of using available knowledge to document the intended direction of a business

the Learning School

successful businesses pursue strategies that are opport­unistic and adaptive; Mintzberg and Waters suggest 3 approaches to strategy: intended, realis­ed,­eme­rgent; “Strategy comes about as a result of a process of learning” (Henry); strategic drift

internal businesses trade in one or more countries

George Yip’s framework helps a business determine which parts of an industry can be considered global or not, enabling managers to be able to determine a global strategy by reviewing four key global drivers:

market drivers (who are customers, what are implic­ati­ons); cost drivers (economies of scale + economies of scope); government drivers; compet­itive drivers

powerful tool used to analyse the compet­iti­veness of an industry

threat of new entrants

if new entrants move into an industry they will gain market share and rivalry will intensify; the position of existing firms is stronger if there are barriers to entering the market; if barriers to entry are low then the threat of new entrants will be high, and vice versa

bargaining power of customers

powerful customers are able to exert pressure to drive down prices

intensity of rivalry

compet­itive rivalry will be higher in an industry with many current and potential compet­itors

Weber suggested managers structure their organi­sations carefully and show their structure using organi­sat­ional charts. He suggested this in part to reduce nepotism. Weber pursued the internal process management model – bureau­cracy – lots of rules

Henry Fayol’s Scalar Chain within his 14 Principles of Management suggested organi­sations should be struct­ured, and this should be depicted through an organi­sat­ional chart

centra­lised

occurs where senior management make most decisions in the organi­sation

formalised

is in place where organi­sations use written or electronic documents to direct and control employees, rather than a friendly chat

higher the added value, the more compet­itive and profitable the organi­sation becomes

focuses on primary activities

produc­tion; mainte­nance; sales; supporting activi­ties; any area that does not add value needs to be restru­ctured

sole trader

privat­e/p­ublic limited company

franchise

a company whose structure, policies, and capabi­lities have been designed to enable employees to quickly respond to changing enviro­nments

tradit­ional structures are replaced by flatter struct­ures, formal working practices and relati­onships are replaced by new ones with wider reporting lines and new ways of working

flatter structures encourages innovation and engagement

high level of trust placed on employees

features of agile working practices

efficient use of techno­logy; productive working enviro­nment; team working; recogn­ition and use of skills; flexible practices; career develo­pment; enrich­ment; less constr­aints; empowe­rment; more remote working; workers autonomy; talent acquis­ition and retention; job satisf­action; reduced operating costs; motivated staff; lean produc­tion; social intera­ction; career develo­pment; efficient space management

drawbacks of agile organi­sations

change cannot happen overnight; there must be commitment at all levels; culture is long establ­ished and can be a signif­icant barrier; not everyone will buy into the agile concept; benefits may not be clearly measurable and can be very subjec­tive; staff may need to be educated and trained regarding agile processes

how a business intends to achieve a compet­itive advantage in its market

compet­itive advantage is the config­uration of an organi­sations activities which enable it to meet consumer needs better than its rivals (Henry, 2021)

just like the Kolb’s learning loop

volatile markets offer opport­unities and threats, but they are unpred­ictable so planning is difficult

Corpor­ate­-level strategy

Operat­ional strategies

Burns & Stalker (1961)

links to Quinn's Competing Values Framework

Organic

flatter organi­sat­ions; fewer rules; decent­ral­ised; flexible bottom-up; employees involved more in decisi­on-­making process; human relations model

Political

compet­ition policy; industry regula­tion; government spending and tax policies; business policy and incentives

Social

demogr­aphic change; impact of pressure groups; consumer tastes and fashions; changing lifestyles

Legisl­ation

employment law; minimu­m/l­iving wage; health and safety laws; enviro­nmental legisl­ation

must be relevant and personal to the organi­sation

Kay's RAI

distin­ctive capabi­lities; unique to each business; critical for establ­ishing compet­itive advantage

differ­ent­iation

involves a business operating in a amass market but adopting a unique position; usp may mean premium price; easy to copy

limited liability company

a business that is owned by its shareh­olders, run by directors and,most import­antly, where the liability of shareh­olders for the debts of the company is limited; business is a separate entity to the shareh­olders of a business; investors can only lose the money they have invested and no more

gives managers options to achieve growth using one of more of the strategies suggested

market develo­pment

business aims to sell existing products into new markets; businesses retain existing markets whilst moving into new markets by altering products or developing new ones

divers­ifi­cation

business aims to sell new products in new markets; horizontal and vertical integr­ation; very risky

entrep­ren­eurial structures

centra­lised structure revolves around founder of business; founder makes all decisions; employees may not have clearly defined roles and will work long hours; flexib­ility a strength

flat structures

middle layer (middle managers) removed; based around teamwork and collab­ora­tion; open culture; wide spans of control; short chain of command; respond faster to market changes; innova­tive; manager overload; lack of promotion opport­uni­ties; lack of close superv­ision may lead to poor decision making so a drop in produc­tivity

networks

outsourced activities controlled by a central hub, organi­sations that outsource all activities other than central capabi­lities are called hollow organi­sat­ions; core capabi­lities retained centrally; where manufa­cturing is outsou­rced; organi­sations are known as modular organi­sations useful in fast moving indust­ries; flexible; need to agree and understand goals

holacracy

an organi­sation that focuses on autonomy and self-g­ove­rnance; employees are not told how to work but belong to voluntary groups who listen to new ideas or problems and come up with solutions together; decision making by everyone rather than a line manager/HR manager; engagement and motivation increases as employees experience autonomy, mastery and meaning (Daniel Pink); originated from anti-t­ota­lit­arian political writer Arthur Koestler

creation (non-b­ure­auc­ratic)

few staff; few written rules; few formalised processes

mid-life (burea­ucr­atic)

becoming large in market; many rules; many hires; decent­ralised structure

Internal

strengths + weaknesses

strengths of SWOT analysis

logical structure; focuses on strategic issues; encourages analysis of external enviro­nment

strategy is shaped by the mission

a mission statement creates a shared and clear sense of purpose/a broad vision; it powerfully commun­icates intentions which inspires and motivates employees to realise the organi­sat­ion’s visions of the future

valuable capabi­lities

enable a business to exploit an internal opport­unity or neutralise an external threat; in regards to revenues and costs, any positive impact is a valuable capability

imitab­ility

difficult to retain as compet­itors copy

make or buy

anything that is not a core competence may be outsou­rced, which may keep costs down but then it is open to supplier price hikes/­supply issues