Notes

Strategic Levels in Organization
Strategic Management Framework
There are Primarily Three Levels of Strategies in The Organisation.
(1) Corporate Level: The corporate level of management consists of the chief executive officer (CEO),
other senior executives, the board of directors, and corporate staff. These individuals occupy the top- committee of decision making within the organisation. the CEO is the principal general manager. This role includes defining the mission and goals of the organisation, determining what businesses it should be in, allocating resources among the different businesses, formulating and implementing strategies that span individual businesses, and providing leadership for the organisation.
(2) Business Level: A business unit is a self-contained division (with its own functions-for example, finance, purchasing, production, and marketing departments) that provides a product or service for a particular market. the principal general manager at the business level, or the business-level manager, is the head of the division. The strategic role of these managers is to translate the general statements of direction and intent that come from the corporate level into concrete strategies for individual businesses. Thus, whereas corporate-level general managers are concerned with strategies that span individual businesses, business-level general managers are concerned with strategies that are specific to a particular business.
(3) Functional Level: Functional-level managers are responsible for the specific business functions or operations (human resources, purchasing, product development, customer service, and so on) that constitute a company or one of its divisions. Thus, a functional manager’s sphere of responsibility is generally confined to one organizational activity, whereas general managers oversee the operation of a whole company or division. although they are not responsible for the overall performance of the organization, functional managers nevertheless have a major strategic role: to develop functional strategies in their area that help fulfil the strategic objectives set by business & corporate-level general managers.
Moreover, functional managers provide most of the information that makes it possible for business & corporate-level general managers to, formulate realistic and attainable strategies. indeed, because they are closer to the customer than the typical general manager is, functional managers themselves may generate important ideas that subsequently may become major strategies for the company. thus, it is important for general managers to listen closely to the ideas of their functional managers. An equally great responsibility for managers at the operational level is strategy implementation: the execution of corporate and business-level plans.
Features of Strategy:
 Strategy is important to foresight, the uncertain events of firms/industries.
 Strategy deals with long term developments rather than routine operations.

 Strategy is created to deal behavior of customers and competitors. 94120
 Strategy is a well-defined roadmap of an organization. It defines the overall mission, vision and direction of an organization.
 The objective of a strategy is to maximize an organization’s strengths and to
 minimize the strengths of the competitors.
 Strategic Management is considered as either decision making and planning or a set of activities related
to the formulation and implementation of strategies to achieve organisational objectives
The Advantages and Disadvantages of Strategic Management
 Discharges Board Responsibility The first reason that most organizations state for having a strategic
management process is that it discharges the responsibility of the Board of Directors. Forces an Objective Assessment Strategic management provides a discipline that enables the board and senior management to actually take a step back from the day-to-day business to think about the future of the organization. Without this discipline, the organization can become solely consumed with working through the next issue or problem without consideration of the larger picture.
 Provides a Framework for Decision-Making Strategy provides a framework within which all staff can make day-to-day operational decisions and understand that those decisions are all moving the organization in a single direction.
 Supports Understanding & Buy-In Allowing the board and staff participation in the strategic discussion enables them to better understand the direction, why that direction was chosen, and the associated benefits. For some people simply knowing is enough; for many people, to gain their full support requires them to understand.
 Enables Measurement of Progress A strategic management process forces an organization to set objectives and measures of success. The setting of measures of success requires that the organization first determine what is critical to its ongoing success and then forces the establishment of objectives and keeps these critical measures in front of the board and senior management.
 Provides an Organizational Perspective Addressing operational issues rarely looks at the whole organization and the interrelatedness of its varying components.
Disadvantages
 The Future Doesn’t Unfold as Anticipated One of the major criticisms of strategic management is that it requires the organization to anticipate the future environment in order to develop plans, and as we all know, predicting the future is not an easy undertaking. The belief being that if the future does not unfold as anticipated then it may invalidate the strategy taken.
 It Can be Expensive There is no doubt that in the not-for-profit sector there are many organizations that cannot afford to hire an external consultant to help them develop their strategy.
 Long Term Benefit vs. Immediate Results Strategic management processes are designed to provide an organization with long-term benefits. If you are looking at the strategic management process to address an immediate crisis within your organization, it won’t. It always makes sense to address the immediate crises prior to allocating resources (time, money, people, opportunity, cost) to the strategic management process.
 Impedes (slow down) Flexibility When you undertake a strategic management process, it will result in the organization saying “no” to some of the opportunities that may be available. This inability to choose all of the opportunities presented to an organizationis sometimes frustrating. In addition, some organizations develop a strategic management process that become excessively formal.

 Discover organization strengths and weaknesses.
 Identify the available opportunities and possible threats
 Discover the objectives and goals in line with organizations strengths and available
 Implement changes to overcome weaknesses and manage the threats.
 Provide vision/mission or direction to future of organizations
 Build a dynamic and strong organization
 Help to achieve growing and stable organization.
opportunities
Strategy Planning
(i) An internal analysis that encompasses assessing company strengths and weaknesses, financial
performance, people, operational limitations, corporate culture, current positioning in the market(s), the overall characterization of the condition of the company and critical issues facing by the organization.
(ii) An external analysis that focuses on analysing competitors, assessing market opportunities and threats, evaluating changing technology that could impact the organization, analysing regulatory or legislative concerns, changes and trends in the market(s) the company operates in and other potential outside influences on the organization.
(iii) Summarizing the current situation based on the information gathered and evaluated in steps one and two. This step is important to the process because it brings together relevant and critical data and information and allows members of the planning team to more easily get a feel for what opportunities and obstacles lie ahead.
(iv) Development of a mission, vision or purpose statement. it really does not matter what it is called, but this step is important perhaps more because of the process that the team will go through to develop it than the words that eventually end up on paper. in this step, the team is starting the process of focusing the organization and its people on what the organization is all about and what is important to the organization.
(v) Goal setting - Every organization needs goals. Again, focus is a critical element in the success of any business. This step may be the most important of all of the strategic planning steps because it establishes the framework and basis for the development of the other key elements of the plan.
(vi) Defining objectives that support the goals - Objectives are more specific in nature and are supportive of the goal. They bring into even greater focus to the goals of the organization.
(vii) Development of strategies - Strategies begins defining how the goals and objectives are going to be achieved.

Organizational Structure : The successful implementation of strategy requires an effective organization 94120
structure. Organizational structure means the framework in which the organization defines how tasks are divided, resources are deployed and departments are co- ordinated. There are several types of organizational structure: (1) Functional structure (2) Geographic structure (3) Matrix structure (4) Hybrid structure
Functional structure: The functional structure is characterized by the simultaneous combination of similar activities and the separation of dissimilar activities on the basis of function. All cost accountants are located in the cost accounting Department, and the HOD of cost accounting is responsible for all cost related activities. A functional structure is most appropriate when the organization is small to medium size and relatively stable.
Geographic structure: Another basic form structural grouping is geographic structure, in which activities and personnel are grouped by specific geographic locations. Each geographic unit includes all functions required to produce and market products in that region. Organization according to geographic areas or territories is rather common structural form for large-scale enterprise whose strategies need to be tailored to fit the particular needs and features of different.
Matrix structure: Another way to achieve focus on multiple outcomes is with the matrix structure. The matrix structure creates a dual chain of command; two lines of budget authority and two sources of performance and reward. The key feature of the matrix is that product (or business) and functional lines of authority are overlaid to form a matrix or grid, between the product manager and functional manager.
Advantages:
(i) Useful for some specific industries like Information Technology, Healthcare etc.
(ii) Employee can see visible results of their efforts
(iii) Removebarriertocommunications
(iv) Managingprojectsareeasy
(v) Effective structures when environment is very dynamic
Disadvantages:
(i) Complex structure as this contains both vertical and horizontal flow of information
(ii) High cost approach due to more management positions
(iii) Duallinesofauthority
(iv) Conflictsarisesintheallocationofresources
Hybrid Organization and supplemental Methods: A single type of structural design is not always sufficient to meet the requirements of strategy. When this occurs, one opinion is to mix and blend the basic organizations forms, matching structure to strategy, requirement by requirement, and unit by unit. Hybrid structure is a form of departmentalization that adopts parts of both functional and divisional structures at the same level of management.
SBU Structure
Big organisation like Unilever, etc have many SBUs for their different categories of products like Cosmetics, Food products and Beverages, etc, and each is managed through separate unit head.

The three most important Characteristics of SBU are:

1. Itisasinglebusinessoracollectionofrelatedbusinesseswhichofferscopeforindependentplanningand which might feasibly standalone from the rest of the organisation.
2. Hasitsownsetofcompetitors.
3. Has a manager who has responsibility for strategic planning and profit performance, and who has control of profit-influencing factors.
Advantages:
a. Promotes accountability since units’ heads are responsible for individual SBU profitability
b. Careerdevelopmentopportunitiesarefurtherhigherinthisstructure
c. Allow better control of categories of products manufacturing, marketing and distributions
d. Helpstoexpandindifferentrelatedandunrelatedbusinesses
Disadvantages:
a. Mayprovideinconsistentapproachtotacklecustomers,etc,becauseeachunitmayworkinitsownway to handle situations
b. Highcostapproach


Strategic Control Systems:
• PersonalControl
It is the desire to shape and influence the behaviour of a person in a face to face interaction in order to achieve the organisation’s goals. Direct supervision is the most common form of personal control as it helps in identifying the problems faced by subordinates and better man management. Personal control may also come from group of peers when people work in teams. Here personal control is all about possibility of learning to occur and competencies to develop.
• Outputcontrol
This system involves the estimation and forecasting of appropriate performance goals for each unit/division, department and employees and then measure the actual performance relative to these goals. It is often observed that the organisation’s reward system is linked to performance on these goals. It can therefore be concluded that the output control system also provides an incentive structure for motivating employees at all levels of the organisation.
 Behaviour control
The establishment of a comprehensive system of rules and procedures to direct the actions or behaviour of divisions, functions and individuals is called behaviour control. The main purpose of having behaviour control is not to specify goals but to standardise the way of reaching them. It is felt that if rules are standardised then outcomes are predictable. It is of utmost importance that the management reviews behaviour controls over time. The rules that have been established tend to increase over time leading to inflexibility to react to the changing environment thereby adversely affecting the organisation’s competitive advantage.