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Learning Objectives
To understand:
 functional strategies and their importance to
strategy implementation
 corporate and business level organizational
structures, and their strengths and weaknesses
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Internal and External
Analysis
Strategic
Direction
Strategy Formulation
(corporate and
business level)
Strategy Implementation
and Control
Strategic Restructuring
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Links Between Business and
Marketing Strategies
• For growth strategies - identify new customers, suggest
product opportunities, create advertising and promotional
programs, arrange distribution channels, and creates
pricing and customer service policies
• For stability or retrenchment strategies - focus on most
profitable segments by reducing number of customer
groups, distribution channels, and products in the product
line
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Links Between Business and
Marketing Strategies
• For low-cost competitive strategies - develop low cost
channels of distribution and low-risk product and market
development activities.
• For differentiation strategies - identify the attributes of
products that customers will value, price and distribute in
ways that capitalize on the differentiation, and advertise
and promote the image of difference.
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Links Between Business and
Operations Strategies
• Growth strategies - expand capacity, improve procedures
for scheduling customer orders, hire/train new employees,
increase quantities of inputs, cultivate new supplier
arrangements, invest in larger volume equipment.
• Retrenchment strategies - scale back numbers of line
employees, idle equipment, close plants.
• Differentiation strategies - develop higher quality standards,
make investments in technology, develop high skilled
workforce, cultivate special arrangements with suppliers.
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Links Between Business and R&D
Strategies
• Growth Strategies -- develop new products
• Low Cost/Retrenchment Strategies - develop low
cost processes
• Differentiation Strategies - develop unique
products and proprietary processes
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Information Systems Strategies
• At a minimum - provide the organization with the
technology and systems that are necessary for
operating, planning, and controlling the business.
• To support a competitive advantage - allow more
superior cost management and customer knowledge, by
providing more effective use of timely market
information, or by allowing integrated transactions
within the supply chain of customers and suppliers.
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Human Resources Strategies
• Establish the performance evaluation,
training, rewards, and benefits programs
that support chosen strategies
• Recruit management and employees that
fulfill the strategic needs of the
organization.
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Financial Strategies
• Decide the appropriate levels of debt,
equity, and internal financing needed to
support strategies. Trade-offs carry
significant implications.
• Determine hurdle rates for new
investments.
• Determine dividend policies and, through
preparation of financial reports,
communicate financial performance to
stockholders.
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Well-Developed Functional
Strategies
• Decisions made in each functional area are
consistent with each other
• Decisions made within one function are
consistent with those made in other
functions
• Decisions within functions are consistent
with the strategies of the business
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Functional Structure
General Manager
Marketing
Finance
Productio
n
HR
Organizing Framework
• - Inputs such as marketing and production
Degree of Centralization
• High
Competitive Environment
• Stable
Growth Strategy
• Market Penetration (efficiency or quality, etc.)
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Product/Market Structure
General Manager
Administrative Departments
Flight Simulators
Design
Manufac.
Design Graphics
Design
Manufac.
Organizing Framework
• Outputs such as product groups
Degree of Centralization
• Low
Competitive Environment
• Dynamic with External Market Pressures
Growth Strategy
• Market and/or Product Development (serving particular
markets well)
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Project Matrix Structure
General Manager
Administrative Depts.
Marketing
Production
Project A
Project B
Organizing Framework
• Inputs and Outputs
Degree of Centralization
• Decentralization with Sharing
Competitive Environment
• Dynamic with Dual Pressures
Growth Strategy
• Frequent New Product/Market Development
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Network Structure
Info.
Center
Organizing Framework
• Outputs
Degree of Centralization
• Very Low (High Decentralization)
Competitive Environment
• Conditions vary from region to region
Growth Strategy
• Market Penetration and Market Development
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Multidivisional
CEO
Corporate Staff
Division VP
Division VP
Division VP
• Moderate/low relatedness across divisions
• Moderate/low need for coordination across divisions
• Financial synergy may be available across divisions and some
operational synergy (although limited) only to the extent that
the divisions are related to each other
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Strategic Business Unit
CEO
Corporate Staff
SBU Manager
SBU Staff
Related Divisions
SBU Manager
SBU Staff
Related Divisions
SBU Manager
SBU Staff
Related Divisions
• Groups (SBUs) of related businesses
• Moderate need for coordination within each SBU; low need
for coordination between SBUs
• Financial synergy only across SBUs, potential exists for
operational synergy within SBUs
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Corporate Matrix
CEO and Staff
Division 1
Division 2
Marketing
Operations
R&D
•
•
•
•
Any number of businesses
Highly related businesses
Very high level of coordination required
Many opportunities exist for operational synergies (to
reduce costs, gain access or share innovation)
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Transnational
Function
Country
Product
•
•
•
•
Many businesses in different nations
Highly related businesses
Very high level of coordination is required
Many opportunities exist for operational synergies on a
world wide scale (to reduce costs, gain access or share
innovation)
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