Strategic Management: Key Organizational Implications

Strategic Implications and Organizational Configuration

Key Strategic Implications (Potential Exam Focus)

1. Complexity: Especially significant in organizations with wide geographical scope (multinationals).
2. Uncertainty: Competent managers in other areas may fail if they are poor future predictors.
3. Alignment: Tactics and operations must align with strategy; strategic advantages are achieved at the tactic and operational levels.
4. Integration: Effective strategy requires integration. Managers must agree on what best serves the strategic goal, resolving their particular priorities.
5. External Relationships: Networks outside the organization (suppliers, customers, administration) are important in strategy formulation.
6. Change: Change is a crucial component of successful strategy.

Organizational Configuration Elements

1. Structural Design (Organigram: Know Your Boss

• Describing formal roles.
• Responsibilities: If standards, objectives, or goals are set, there must be an ultimate responsible party.
• Lines of Reporting: Everyone must know who their boss is. This can deeply influence the sources of an organization's advantage, particularly regarding knowledge management. Failure to adjust structures appropriately can undermine strategy implementation; however, structure alone is insufficient for success.

2. Processes

• These drive and support people within and around the organization.
• They have a major influence on success or failure by defining how strategies are made and controlled.

3. Relationships Connecting People

• Relationships connect people within and outside the organization, particularly:
  • Relationships between organizational units and the corporation (HQ), different divisions within one strategic unit, product lines, or unrelated business units.
  • External relationships: outsourcing and strategic alliances.

Key Configuration Challenges

1. Speed of Change and Uncertainty

Increased levels of uncertainty in business demand that organizations possess flexible designs and be skilled in reorganizing.

2. Knowledge Management

The importance of knowledge creation and knowledge sharing is a fundamental ingredient of strategic success.

3. Internationalization

This involves communicating across wider geography, coordinating greater diversity, and building relations across diverse cultures.