This week, our focus is on organizational structure and strategy implementation. For this critical thinking assignment, read the case study, W.L. Gore (Gore) & Associates: Rethinking Management (Case # 22) from your textbook. In addition, read Chapter 6, “Organizational Structure and Management Systems: The Fundamentals of Strategy Implementation.”Name and describe a typical company that is organized as a hierarchy.Describe how the following are practiced at this company—specialization, coordination, cooperation, and control.How does this company’s structure and management system promote the effective implementation of the company’s strategy?Describe how the following are practiced at Gore—specialization, coordination, cooperation, and control.Given that typical control mechanisms are lacking at Gore, how is the company able to effectively operate?How do Gore’s organizational structure and management systems promote effective strategy implementation?Your well-written paper should meet the following requirements:Be 4 to 5 pages in length, which does not include the required title and reference pages, which are never a part of the content minimum requirements.Use academic writing standards and APA style guidelines.Support your submission with course material concepts, principles, and theories from the textbook and at least two scholarly, peer-reviewed journal articles unless the assignment calls for more.Module 5: Organizational Structure, Systems, and
Implementation
1. Strategy Execution
Strategic plans are typically developed by a smaller group within the organization, but
strategy implementation requires the participation of the entire organization.
Implementing organizational changes is time consuming and may require additional
resources (such as human power, widespread support, and money) to meet the strategic
goals.
Watch the following video to learn more about how to structure an organization so that
people at all levels are empowered to make decisions and respond to change:

What does it take to build the fast, flexible, creative teams needed to challenge
entrenched work culture? For transformation expert Martin Danoesastro, it all starts with
one question: “What are you willing to give up?”
Regardless of how clearly aligned the new strategy is with the external environment, the
company may not be able to follow through with the plan if it lacks the capability to
change, innovate, or apply the knowledge to complete strategic tasks. Strategy execution
requires both coordination and a method for completion.
Review the strategic planning cycle to see how strategy formulation and implementation
work together to execute the strategic plan.
Companies that can manage the strategic planning cycle will have more success with
strategic implementation and will adapt better to the fast-paced business world.
Interestingly, Harvard Business Review reported that on average, companies deliver only
63% of the financial performance after executing the strategic plan (Sull, Sull, & Homkes,
2015). This reinforces the importance of implementation along with organizational
capability.
Successful execution requires an investment in building the necessary skills and
capabilities in the form of organizational structure and systems.
2. Organizational Design
When business leaders see the opportunity to gain competitive advantage in the market,
it is tempting to jump in and act quickly. However, the business must be organizationally
prepared in order to deliver the results. Organizational strategy involves determining if
the company has the right structure and the right systems in place to reach the new
strategic goals. It also involves determining if the organizational structure or system
needs to be changed to align with outcomes.
Watch this video to explore the process of organizing a corporate structure and business
units to maximize the process:

This video contains a review of the components necessary to design an organizational
structure.
Click through the following tabs to explore the components of implementing a new
strategy:
Strategy: Improving Customer Service
Possible organizational change in structure and systems.
Consider: Organizational Strategies
Adjustment of organizational goals, policies, and structures in order to complement desired
outputs.
Internal and External Changes
Possible changes in communication (internally and externally) to promote a change.
Develop: Dynamic Organizational Relationships
Possible change to an entirely new organizational structure.
Workflow
Reduction of labor costs by elimination of positions.
Reconfigure: Organizational Structure
Possible small- or large-scale adjustments to align the organizational structure needed to
accomplish goals.
Review this diagram to see how resources and organizational structure support
organizational capability (David, 2016).
The design of the organization can impede or assist with goal accomplishment. Achieving
strategic goals and facilitating implementation requires having the right organizational
structure in place.
References
David, F. R. (2016). Strategic management: A competitive advantage approach, concepts and
cases. Essex, UK: Pearson.
Grant, R. M. (2019). Contemporary strategy analysis (10th ed.). Hoboken, NJ: John Wiley &
Sons.
Grant, R. M. (2019). Contemporary strategic analysis [PowerPoint slides]. Hoboken, NJ: John
Wiley & Sons.
Sull, D., Sull, R., & Homkes, C. (2015). Why strategy execution unravels—and what to do
about it. Harvard Business Review, March.
CONTEMPORARY STRATEGY ANALYSIS
tenth edition
Robert M. Grant
John Wiley & Sons Ltd., 2019
Chapter 6
Organizational Structure and
Management Systems:
The Fundamentals of Strategy
Implementation
1
Organization Structure and Management
Systems: The Fundamentals of Strategy
Implementation
OUTLINE

Strategy Formulation and Strategy Implementation

The Fundamentals of Organizing

Developing Organizational Capability

Organizational Design
Copyright © 2019 John Wiley & Sons, Inc.
2
STRATEGY FORMULATION AND STRATEGY IMPLEMENTATION
The Strategic Planning Cycle
Corporate
Guidelines
Draft
Business
Plans
Discussions
with
Corporate
Revised
Business
Plans
Approval
by
Board
Corporate
Plan
Forecasts/
Scenarios/
Planning
Assumptions
Operating Plan/
Operating Budget
Performance
Review
Copyright © 2019 John Wiley & Sons, Inc.
Performance
Targets
Capex
Budget
THE FUNDAMENTALS OF ORGANIZING
Basic Tasks of Organizing:
Cooperation and Coordination
High productivity requires specialization
The efforts of specialized individuals need to be integrated.
This creates two problems:
The need for cooperation
The need for coordination
–The Agency Problem:
Employees’ goals ≠ Owners’ goals
–Managing interdependency
Organizational solutions:




Control through hierarchical supervision
Performance incentives to align
individual and firm goals
Shared values to create common
purpose
Persuasion
Organizational solutions:

Rules and directives

Organizational routines

Mutual adjustment
ORGANIZATIONAL DESIGN: THE FUNDAMENTALS OF ORGANIZING
Emergence of the Modern Corporation
Key drivers:
1) Technological and economic developments

Developments in transportation (e.g. railroads) enabled firms to serve wider
markets

Developments in communication (e.g. telegraph, telephone) allowed firms to
organize across a wider geographical area.
2) Legal developments

The corporation as a legal entity

Limited liability.
3) Organizational innovations

Line and staff structure—the creation of corporate headquarters that
administered multiple operating units

The holding company—financial group of companies linked by parentsubsidiary relationships

The multidivisional structure—integrated companies with corporate
headquarters responsible for financial and strategic control and divisions
operating the individual businesses.
Copyright © 2019 John Wiley & Sons, Inc.
DEVELOPING ORGANIZATIONAL CAPABILITY
Integrating Resources to Create
Organizational Capability
ORGANIZATIONAL
CAPABILITIES
Processes
Organizational
Structure
Motivation
RESOURCES
TANGIBLE
INTANGIBLE
•Financial
•Physical
•Technology
•Reputation
•Culture
© 2019 Robert M. Grant,
www.contemporarystrategyanalysis.com
HUMAN
•Skills/know-how
•Capacity for
communication
& collaboration
•Motivation
DEVELOPING ORGANIZATIONAL CAPABILITY
Resources & capabilities in
professional soccer
ORGANIZATIONAL CAPABILITIES
Footballing capability
On-field capabilities: Attack, Defence, Set-piece,
Off-field capabilities, Scouting, Player appraisal, Team selection,
Commercial capability
Financial mgt., Sponsor relations, Negotiation, Marketing & distribution
Processes
Structure
Motivation
RESOURCES
Players, Coaches, Scouts, Medical personnel (doctors, physios),
Nutritionists, Psychologists, Executives, Fans
Finance, Training facilities, Stadium
Brand, Relationships
Culture
DEVELOPING ORGANIZATIONAL CAPABILITY
Reorganizing to Accommodate Capability Development:
Booz Allen Hamilton (Worldwide Commercial Business), 1992-1998
FUNCTIONAL PRACTICES
Strategy
Operations
IT
Financial
services
NY
Project Teams
Tokyo
Project Teams
I
N
D
U
S
T
R
Y
London
Project Teams
[A] 1992: “A colony of artists”
Copyright © 2019 John Wiley & Sons, Inc.
P
R
A
C
T
I
C
E
S
Energy
Telecom
Consumer
Engineering
Chemicals
/Pharma
NY
Tokyo
London
Project Teams
[B] 1998: Organizing for Capability
ORGANIZATIONAL DESIGN
Hierarchy as Control:
Weber’s Principles of Bureaucracy
• Rational-legal authority
• Specialization of labor
• Hierarchical structure
• Coordination and control through rules and standard
operating procedures
• Standardization of employment practices
• Separation of positions and people: authority assigned to
a position, not a person
• Formalization of administrative acts, decisions, and rules
Copyright © 2019 John Wiley & Sons, Inc.
ORGANIZATIONAL DESIGN
Hierarchy as Coordination:
[1] Hierarchy Economizes on Coordination Costs
(a) Self Organizing Team:
(b) Hierarchy:
10 interactions
4 interactions
But what about effectiveness of coordination?
–Depends upon the organization’s task
Copyright © 2019 John Wiley & Sons, Inc.
6
THE FUNDAMENTALS OF ORGANIZING
Hierarchy as Coordination: [2] Loosely-Coupled
Modular Systems Allow Decentralized Adaptation
Tightly-coupled,
integrated system:
Change in any part of the
system requires systemwide adaptation
Copyright © 2019 John Wiley & Sons, Inc.
Loose-coupled, modular
hierarchy: partially-autonomous
modules linked by standardized
interfaces permits decentralized
adaptation and innovation
ORGANIZATIONAL DESIGN
The Hierarchical Structure of
Organizational Capabilities: Oil and Gas
Exploration
Copyright © 2019 John Wiley & Sons, Inc.
ORGANIZATIONAL DESIGN
Ryanair Holdings plc:
Organizational structure
Board of Directors
CEO
(Michael O’Leary)
Finance
Legal &
Regulatory
Copyright © 2019 John Wiley & Sons, Inc.
Operations
Marketing
Human
Resources
Technology
ORGANIZATIONAL DESIGN
General Electric: Organizational
Structure, January 2018
Corporate Executive Office
Chairman & CEO
Corporate Staff
-Business Development
-Legal
-Commercial & Public Relations -Global Research
-Human Resources
-Finance
GE
GE
GE
Renewable Power Capital
Energy
GE
Digital
Copyright © 2019 John Wiley & Sons, Inc.
GE
Health
care
GE
Aviation
Current
GE
powered
Transby GE
portation
Baker
Hughes
ORGANIZATIONAL DESIGN
Royal Dutch/Shell Group, 1994: A Matrix Structure
© 2016 Robert M. Grant, www.contemporarystrategyanalysis.com
ORGANIZATIONAL DESIGN
Mechanistic versus organic organizational forms
Feature
Mechanistic forms
Organic forms
Task definition
Rigid and highly
specialized
Rules and directives
vertically imposed
Flexible and broadly
defined
Mutual adjustment,
common culture
Communication
Vertical
Vertical and horizontal
Knowledge
Centralized
Dispersed
Commitment and loyalty
To immediate superior
To the organization and its
goals
Environmental context
Stable with low
Dynamic with significant
technological uncertainty technological uncertainty
and ambiguity
Coordination and control
Copyright © 2019 John Wiley & Sons, Inc.
ORGANIZATIONAL DESIGN
Recent Trends in Organizational Design
• Limited evidence of a “revolution in organizational design”—basic
features of organizations (e.g. hierarchy, financial control
mechanisms, strategic planning) are still present
Major trends of past two decades:
• Delayering—organizational hierarchies becoming flatter
• Adhocracy and team-based organization—emphasis shared
values, high participation, flexible roles and communication, lack
of authority
• Project-based organizations—dynamic structures with timelimited project teams
• Network structures—organizations and groups of organizations
where coordination based upon informal social linkages
Copyright © 2019 John Wiley & Sons, Inc.

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