Key concepts of strategic management
The adage “from strategy to structure” has proven effective when followed by organizations such as Spin. The goal is to formulate a strategy and subsequently design a structure to effectively implement the plan. Organizations should ask themselves questions involving issues such as whether or not the company can operate with domestic divisions (or whether it requires international departments), the basis on which the organization should be structured, and how to maximize necessary cooperation and coordination. There are three relevant levels of strategy; the organizational level – defining the business, the business level – understanding target customers and developing value proposition, and the operational tactical level – the method of delivery for the organization’s value proposition.
All MNE’s have strategic dispositions that influence their decisions. Of the four major categories (see appendix), Spin’s expansion into the USA involves a regiocentric orientation. This type of orientation reflects the company’s basic mission for both public acceptance and profitability, while maintaining regional values and utilizing flexible manufacturing. Governance is negotiated between regions and subsidiaries, and connected to the product organization with a matrix-structure. The regiocentric approach combines both ethnocentric and polycentric strategies, but maintains the ability to address both local and regional needs.
Using the organization structure to execute the chosen strategy is the process known as strategy implementation. The three most critical components of implementation are location, ownership decisions, and functional area implementation. Location is an important consideration as the producer is able to gain a cost advantage when parts or labour can be obtained inexpensively and close to the facility.Regional incentives are also a...
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