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Chapter Thirteen Implementing Strategy in Companies That Compete Across Industries and Countries

“ It is not the strongest of the species that will survive, not the most intelligent, but the ones most responsive to change.” - Charles Darwin © RoyaltyFree/ Harnet/Hanzon/ Getty Images

Managing Corporate Strategy Through the Multidivisional Structure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Addresses the problems and economizes the costs of managing the handoffs between value-chain functions across industries. A company competing across industries and countries confronts a new set of problems and has to make a new series of organizational design decisions for a global and multinational business.

Multidivisional Structure Figure 13.1

Advantages of a Multidivisional Structure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Research suggests that large companies that adopt a multidivisional structure outperform those that retain the functional structure:

Problems in Implementing a Multidivisional Structure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Unrelated Diversification ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],For unrelated diversification, the multibusiness model is based on general managerial capabilities in entrepreneurship, organizational design, or strategy.

Vertical Integration ,[object Object],[object Object],[object Object],[object Object],[object Object],The vertically integrated company requires the centralized control – in order to achieve the benefits from the sequential flow of resources from one division to the next.

Related Diversification ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Principle benefits of related diversification come from transferring, sharing, or leveraging functional resources or skills and some exchange of distinctive competencies across divisions. High bureaucratic costs The aim is to design structure and control systems to maximize strategic benefits while economizing on costs.

Corporate Strategy and Structure and Control Table 13.1

Implementing Strategy Across Countries ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Need to coordinate and integrate global value-chain activities increases as company moves from a localization  to an international  to a global  to a transnational strategy

Global Strategy/Structure Relationships Table 13.2

“ Global managers have exceptionally open minds. They respect how different countries do things.” - Percy Barnevik © RoyaltyFree/ Stockdisc/ Getty Images

Implementing a Localization Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Companies using a localization strategy lose many of the benefits of operating globally. A company pursuing a localization strategy generally operates with a global area structure, establishing overseas divisions in regions or countries:

Global-Area Structure Figure 13.2

Implementing an International Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],A company shifts to an international strategy when it decides to sell domestically made products in markets abroad. This arrangement of tasks and roles reduces the transaction of managing handoffs across countries and world regions.

Global Division Structure Figure 13.3

Implementing a Global Standardization Strategy ,[object Object],[object Object],[object Object],[object Object],Company locates its manufacturing and other value-chain activities at the global location that will allow it to increase efficiency, quality, and innovation using a global product-group structure. Focus is on centralized control by product group. This makes it difficult for different product divisions to trade information an knowledge.

Global Product-Group Structure Figure 13.4

Implementing a Transnational Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],Many companies implemented a global-matrix structure to simultaneously lower their global cost structures and differentiate their activities. The task of integrating and controlling a global-matrix structure can be a difficult task.

Global-Matrix Structure Figure 13.5

Entry Mode and Implementation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Altering business models and strategies by finding new ways to use resources and capabilities to create value.

Implementation at General Mills

The Role of Information Technology ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],IT is having increasingly important effects on the way multibusiness companies implement their strategies:

IT, the Internet, and Outsourcing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The implications of IT for strategy implementation are still evolving - as new hardware and software reshape companies’ business models and strategies.

“ The best way to predict the future is to create it yourself.” - Peter Drucker © RoyaltyFree/ Harnet/Hanzon/ Getty Images

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