MGMT 478 Ch. 7

disadvantages of a functional organizational structure

1. Accountability forced to the top 2. Delegation of authority and responsibility not encouraged 3. Minimizes career development 4. Low employee and manager morale 5. Inadequate planning for products and markets 6. Leads to short-term, narrow thinking 7. Leads to communication problems

linking performance and pay to strategies

• Decisions on salary increases, promotions, merit pay, and bonuses need to support the long-term and annual objectives of the firm • Gain sharing and bonus systems can be used

Resource Allocation

- central management activity that allows for strategy execution - Strategic management enables resources to be allocated according to priorities established by annual objectives

Functional structure

- groups tasks and activities by business function, such as production/operations, marketing, finance/accounting, research and development, and management information systems

Reegineering

- involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed - does not usually affect the organizational structure or chart, nor does it imply job loss or employee layoffs

reengineering

- involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed - does not usually affect the organizational structure or chart, nor does it imply job loss or employee layoffs

restructuring

- involves reducing the size of the firm in terms of number of employees, number of divisions or units, and number of hierarchical levels in the firm's organizational structure - primary benefit sought from restructuring is cost reduction

Marketers use a tool called​ ______ to develop schematic representations that reflect how a​ firm's goods or services compare to​ competitors' in the mind of consumers.

perceptual mapping

When doing the case project, how should students handle the organizational structure topic?

show your firms existing structure and then show your improved/recommended structure

advantages of matrix structure

1. Clear project objectives 2. Employees clearly see results of their work 3. Easy to shut down a project 4. Facilitates uses of special equipment, personnel, and facilities 5. Shared functional resources instead of duplicated resources, as in a divisional structure

Vertical consistency of objectives

Compatibility of objectives from the CEO (corporate level) down to the presidents (divisional level) on down to the managers (functional level).

What is the focus of​ reengineering?

changing the way work is actually carried out

There are several major production/operations issues that are especially important for successful strategy implementation. Of the following, which was the most significant one for Blackbird?

deciding where/how to produce goods

When developing an organizational​ chart, one should avoid having a particular person report to more than one person in the chain of command. The only exception to this is in​ a(n) ______ structure.

matrix

Divisional presidents should report to what top executive?

COO

When a firm changes its​ strategy, ​______.

the organizational structure may become ineffective

The author says even the best strategies are doomed unless what occurs?

the plans are backed by effective management of marketing and financial resources

Which of the following is NOT one of the primary reasons that annual objectives are essential for strategy​ implementation?

they enable effective monitoring of progress toward short-term objectives

Corporate Wellness Program

• The Affordable Care Act increased the maximum incentives and penalties employers may use to encourage employee well-being • Most companies have both - "carrots," such as giving employee discounts on insurance premiums or even extra cash, - "sticks," such as imposing surcharges on premiums for those who do not make progress toward getting healthy

Culture

The set of shared values, beliefs, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm. Strategists should strive to preserve, emphasize, and build on these aspects.

When John Luttwak began thinking about the type of guitar he wanted to produce one that would require a comprehensive redesign, he was at what stage of the strategic-management process?

strategy formulation

Matching Structure With Strategy

-Structure largely dictates how objectives and policies will be established -Structure dictates how resources will be allocated

There are ______ types of decentralized (divisional) structures mentioned in the video.

4

According to the​ text, ______ may be the single greatest threat to successful strategy implementation.

resistance to change - May be the single greatest threat to successful strategy implementation. - Successful strategy implementation hinges on managers' ability to develop an organizational climate conducive to change.

Which of the following is NOT a management​ trade-off decision required in strategy​ implementation?

Finance with Bank A locally or with Bank B locally

divisional structure

Functional activities are performed both centrally and in each separate division Organized by geographic area, product or service, customer, or process

Which of the following relates to strategy implementation but not strategy​ formulation?

People orientation Strategy formulation is process oriented

Policies

The means by which annual objectives will be achieved. Policies include guidelines, rules, and procedures established to support efforts to achieve stated objectives. Policies are guides to decision making and address repetitive or recurring situations.

Conflict

- Disagreement between two or more parties on one or more issues - Establishing annual objectives can lead to conflict because individuals have different expectations and perceptions, schedules create pressure, personalities are incompatible, and misunderstandings occur between line managers and staff managers Not always bad Approaches for managing conflict - Ignoring the problem - Physically separating the conflicting individuals - Holding meetings to seek compromise

Strategic Business Unit (SBU) Structure

- groups similar divisions into strategic business units and delegates authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer - can facilitate strategy implementation by improving coordination between similar divisions and channeling accountability to distinct business units

Disadvantages of a divisional organizational structure

1. Can be costly 2. Duplication of functional activities 3. Requires a skilled management force 4. Requires an elaborate control system 5. Competition among divisions can become so intense as to be dysfunctional 6. Can lead to limited sharing of ideas and resources 7. Some regions, products, or customers may receive special treatment

Guidelines for developing an organizational chart

1. Instead of chairman of the board, make it chairperson of the board. 2. Make sure the board of directors reveals diversity in race, ethnicity, gender, and age. 3. Make sure the chair of the board is not also the CEO or president of the company. 4. Make sure the CEO of the firm does not also carry the title president. 5. Reserve the title president for the division heads of the firm. 6. Include a COO if divisions are large or geographically dispersed. 7. Make sure only presidents of divisions report to the COO. 8. Make sure functional executives such as CFO, CIO, CMO, CSO, R&D, CLO, CTO, and HRM report to the CEO, not the COO. 9. Make sure every executive has one boss, so lines in the chart should be drawn accordingly, assuring unity of command. 10. Make sure span of control is reasonable, probably no more than 10 persons reporting to any other person. 11. Make sure diversity in race, ethnicity, gender, and age is well represented among corporate executives. 12. Avoid a functional type structure for all but the smallest firms. 13. Decentralize, using some form of divisional structure, whenever possible. 14. Use a SBU type structure for large firms with more than 10 divisions. 15. Make sure executive titles match product names as best possible in division-byproduct and SBU-designated firms.

Seven human resource issues:

1. Linking performance and pay to strategy 2. Balancing work life with home life 3. Developing a diverse work force 4. Using caution in hiring a rival's employees 5. Creating a strategy-supportive culture 6. Using caution in monitoring employees' social media 7. Developing a corporate wellness program

Altering an organizations culture

1. Recruitment 2. Training 3. Transfer 4. Promotion 5. Restructuring 6. Reengineering 7. Role modeling 8. Positive reinforcement 9. Mentoring 10. Revising vision or mission 11. Redesigning physical spaces or facades 12. Altering reward system 13. Altering organizational policies, procedures, and practices

Annual Objectives

1. Represent the basis for allocating resources 2. Are a primary mechanism for evaluating managers 3. Are the major instrument for monitoring progress toward achieving long-term objectives 4. Establish organizational, divisional, and departmental priorities 5. Are essential for keeping a strategic plan on track

Disadvantages of a matrix structure

1. Requires excellent vertical and horizontal flows of communication 2. Costly because creates more manager positions 3. Violates unity of command principle 4. Creates dual lines of budget authority 5. Creates dual sources of reward and punishment 6. Creates shared authority and reporting 7. Requires mutual trust and understanding

advantages of a functional organizational structure

1. Simple and inexpensive 2. Capitalizes on specialization of business activities such as marketing and finance 3. Minimizes need for elaborate control system 4. Allows for rapid decision making

Management trade off decisions

1. To offer extensive or limited management development workshops and seminars 2. To recruit through employment agencies, college campuses, or newspapers 3. To promote from within or to hire from the outside 4. To promote on the basis of merit or on the basis of seniority 5. To tie executive compensation to long-term or annual objectives 6. To allow heavy, light, or no overtime work 7. To establish a high- or low-safety stock of inventory

Symptoms of an Ineffective Organizational Structure

1. Too many levels of management 2. Too many meetings attended by too many people 3. Too much attention being directed toward solving interdepartmental conflicts 4. Too large a span of control 5. Too many unachieved objectives 6. Declining corporate or business performance 7. Losing ground to rival firms 8. Revenue or earnings divided by number of employees or number of managers is low compared to rival firms

Product Positioning

Also called perceptual mapping; a two-dimensional, four-quadrant marketing tool designed to position a firm versus its rival firms in a schematic diagram in order to better determine effective marketing strategies.

The video says a firm's chair of the board should not also be the firm's ______.

Chief Executive Officer

Company's hierarchy of aims

Longterm

Horizontal consistency of objectives

Objectives need to be compatible across functions; for example, if marketing wants to sell 10% more, then production must produce 10% more.

Specific​ guidelines, methods,​ procedures, rules,​ forms, and administrative practices established to support and encourage work toward stated goals are known​ as:

policies Also instruments for strategy implementation - set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior let both employees and managers know what is expected of them, thereby increasing the likelihood that strategies will be implemented successfully - provide a basis for management control and allow coordination across organizational units - reduce the amount of time managers spend making decisions. Policies also clarify what work is to be done and by whom - promote delegation of decision making to appropriate managerial levels where various problems usually arise - clarify what can and cannot be done in pursuit of an organization's objectives

When Luttwak began the process of operationalizing the company, he was at what stage of the strategic management process?

strategy implementation

Matrix stucture

- most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication • For a matrix structure to be effective, organizations need participative planning, training, clear mutual understanding of roles and responsibilities, excellent internal communication, and mutual trust and confidence

Advantages of a divisional organization structure

1. Clear accountability 2. Allows local control of local situations 3. Creates career development chances 4. Promotes delegation of authority 5. Leads to competitive climate internally 6. Allows easy adding of new products or regions 7. Allows strict control and attention to products, customers, or regions

Strategic Marketing Issues

1. How to make advertisements more interactive to be more effective 2. How to take advantage of social-media conversations about the company and industry 3. To use exclusive dealerships or multiple channels of distribution 4. To use heavy, light, or no TV advertising versus online advertising 5. To limit (or not) the share of business done with a single supplier or business customer 6. To be a price leader or a price follower 7. To offer a complete or limited warranty 8. To extend an existing product line or create a new line of products

Perceptual map

Also called product-positioning map; a two-dimensional, four-quadrant marketing tool designed to position a firm versus its rival firms in a schematic diagram in order to better determine effective marketing strategies.

Marketing mix variables

Product, place, promotion, and price.

Which factor below commonly prohibits effective resource​ allocation?

Placing too great an emphasis on​ short-run financial criteria

Develop a Diverse Workplace

Six benefits of having a diverse workforce are: 1. Women and minorities have different insights, opinions, and perspectives that should be considered. 2. A diverse workforce portrays a firm committed to nondiscrimination. 3. A workforce that mirrors a customer base can help attract customers, build customer loyalty, and design/offer products/services that meet customer needs/wants. 4. A diverse workforce helps protect the firm against discrimination lawsuits. 5. Women and minorities represent a huge additional pool of qualified applicants. 6. A diverse workforce strengthens a firm's social responsibility and ethical position

Three marketing strategies represent​ marketing's most important contributions to strategic management. What are these three marketing strategies in the order they are​ executed?

market segmentation, target marketing, positioning

distributing an organization's assets across products, regions and segments according to priorities established by annual objectives is referred to as

resource allocation

Blackbird was challenged by finding a carbon fiber supplier at a price point low enough to justify using the material for its guitars; this, forced the company to abandon its initial designs. This type of challenge is best described as a ____.

strategic production decision

According to Alfred​ Chandler, ​______.

structure follows strategy structure largely dictates how objectives and policies will be established • Structure dictates how resources will be allocated

What is a key reason that policies are essential instruments for strategy​ implementation?

they promote delegation of decision making to appropriate managerial levels where various problems usually arise

Which of the following is mentioned in the video as being a strategic issue facing firms?

workplace romance

Linking performance and pay to strategies

• Decisions on salary increases, promotions, merit pay, and bonuses need to support the long-term and annual objectives of the firm • Gain sharing and bonus systems can be used

Monitoring Social Media

• Proponents of companies monitoring employees' social media activities emphasize that - a company's reputation in the marketplace can easily be damaged by disgruntled employees venting on social media sites - social media records can be subpoenaed, like email, and used as evidence against the company

Balance Work and Home Life

• Work and family strategies now represent a competitive advantage for those firms that offer such benefits as: - elder care assistance - flexible scheduling - job sharing - adoption benefits - onsite summer camp - employee help line - pet care - lawn service referrals

Firms must be cautious when​ ______ due to the increasing number of lawsuits based on noncompete agreements.

hiring employees from rival firms

Which of the following is a guideline for developing an organization​ chart?

Use Chairperson of the Board instead of Chairman of the Board

Which of the following is NOT cited as a benefit of a diverse​ workforce?

Women represent an additional pool of applicants that saves the firm money due to the pay gap.

According to the​ text, ______ is arguably the most important strategic decision facing large companies annually.

allocating resources across business segments Strategic management itself is sometimes referred to as a​ resource-allocation process. In​ fact, allocating resources across business segments​ (divisions) is arguably the most important strategic decision facing large companies annually.

When should the compensation of the person who sweeps the floor be linked to the firm's overall performance?

always

An organization needs to achieve desired milestones in order to ensure successful strategy​ implementation; these milestones are known as​ ______.

annual objectives

A divisional structure can be organized in all of the following ways except​ by:

function

What is the most widely used​ structure?

functional it is the simplest and least expensive - groups tasks and activities by business function, such as production/operations, marketing, finance/accounting, research and development, and management information systems

market segment

Areas in a perceptual map where there is a cluster of ideal points indicating an attractive group of potential customers to target.

Glass Ceiling

A term used to refer to the artificial barrier that women and minorities face in moving into upper levels of management.

When Blackbird realized that it would have to adjust its product design and production methods, it realized that adjustments to these production systems would ______.

be required to implement various strategies

The four types of structures described in the video include all of the following EXCEPT:

conglomerate

The title President in an organizational chart should be reserved for which executives?

division head persons

What is a type of organizational structure mentioned in the video?

divisional • Functional activities are performed both centrally and in each separate division • Organized by geographic area, product or service, customer, or process

Except for the smallest organizations, the transition from strategy formulation to strategy implementation requires a shift in responsibility from strategist to

divisional and functional managers

Which of the following is NOT a type of resource that can be used to achieve desired organizational​ objectives?

environmental These ARE: Financial Physical Human Technological