Implementing Strategies

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CHAPTER 12
Implementing Strategy in Companies That Compete in a Single Industry

Synopsis of Chapter
Chapter 12 examines how managers can best implement their strategies in single-industry firms in order to achieve a competitive advantage and superior performance. First, the main elements of strategy implementation—structure, control systems, and culture—are analyzed in detail, focusing on the way they work together to create an organizing framework.

Then the chapter turns to the topic of using structure, control, and culture at the functional level to build distinctive competencies. After that, the chapter addresses the challenges of implementing the generic business strategies of cost leadership or differentiation in a single industry.

The final section covers restructuring and reengineering, two strategies that single-business firms can use to improve corporate performance.

The next chapter takes up where this one leaves off and examines strategy implementation across industries and across countries—that is, implementing corporate and global strategy in firms that compete in more than one industry.

Teaching Objectives
1.Introduce the main elements of strategy implementation—structure, control systems, and culture—and their relationships to each other.

2.Demonstrate how structure, control, and culture can build distinctive competencies at the functional level.

3.Describe the use of structure, control, and culture in implementing a single-business firm’s generic business strategy.

4.Discuss the use of restructuring and reengineering in improving the performance of a single-business firm.

Opening Case: Strategy Implementation at Dell Computer

Dell Computer grew rapidly from its founding as one-person, dorm-room operation in 1984. As the company has grown, Dell’s structure, control systems, and culture has changed to keep the firm on track to reaching its strategic goals. Michael Dell hired managers with computer industry experience from firms such as IBM and Compaq. Together, they formed a functional structure with a taller hierarchy, in which Michael Dell delegated authority to his functional managers. Dell’s organizational culture emphasized hard work and customer service, leading to high profits and satisfied buyers. However, as Dell continued to grow, its functional structure could not support higher levels of coordination and specialization. So Dell moved to a customer structure, with divisions focused on the unique needs of each customer segment. As Dell grew even more, it developed even more specialized teams for different segments, and it increasingly turned to the Internet for coordination, allowing the firm to decentralize and become flatter.

Teaching Note: Dell has been forced to change its structure, control systems, and strategy several times as it has grown and the industry has matured. This situation is one that has been played out, over and over again, in many different companies. You can give other examples to students, such as the way in which GM moved to a divisional structure after acquiring competitors such as Cadillac, Pontiac, and Buick. Another discussion point is the interrelatedness of structure, control systems, and culture, which is shown in Dell’s centralization and subsequent decentralization, its taller then flatter structure, and so on.

Lecture Outline
I.Overview
A.A well thought-out strategy can lead to success only if it is properly implemented, thus the study of implementation is critical to an understanding of strategy. B.This chapter introduces concepts related to implementation, with a focus on functional- and business-level strategy implementation. Strategy implementation refers to the ways a firm creates, uses, and combines organizational structure, control systems, and culture to pursue strategies that lead to a competitive advantage and superior performance. II.Implementing Strategy Through Organizational Structure, Control,...
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