Corporate Planning & Strategy Report - Organizing to Execute Strategy

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  • 7/29/2019 Corporate Planning & Strategy Report - Organizing to Execute Strategy

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    ORGANIZING TO EXECUTE

    STRATEGY

    REPORTED BY:

    LEIZYL MORALES

    MBA-GRADSTUDENT

    PROFESSORIAL LECTURER:

    MR ENRIQUE PINOS, CPA, MBA

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    CREATING OPERATING DIVISIONS THATMATCH STRATEGY

    The simplest organization form that aids theexecutions of strategy is a series of operating

    divisionsone for each strategic business-unit.

    Each business divisions is semi-autonomousmaking

    almost all its own operating decisions and also

    largely self-contained-having direct supervision over

    most of the activities necessary to carry out its

    mission. It is like a single-line company, except that it

    operates with the guidance, constraints, andassistance of its corporate owner

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    ADVANTAGES OF SEMIAUTONOMOUS,

    SELF-CONTAINED BUSINESS DIVISION

    1. The management of each division can be suited to itsstrategy.- By creating each division with relatively narrow focus,its total management design can be tailored to thatparticular purpose.

    2. The narrower focus prompts adequate attention toexternal and internal threats and opportunities.

    3. Prompt integrated response to threats andopportunities is more probable.

    4. The morale of key people can be more easily tied todivision accomplishments.5. Control is more direct. The people accountable for

    achieving strategy targets are few and clearly defined.

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    3 CONDITIONS ARE MET WHEN TO ESTABLISH ASEPARATE BUSINESS UNIT

    1. A distinct cluster of products or services are sold

    2. To an identifiable group of customers

    3. In competition with a well-defined set of

    competitors.

    WHEN TO COMBINE OR SPLIT OFFBUSINESS-UNITS

    WAYS OF DEALING WITH ORGANIZING OPERATINGDIVISIONS

    1. Include all major functions in businessunit concept

    2. Combine very small business units into related operatingdivision.

    3. Use Product Managers, Not business-units, when a cleanbreak is not feasible.

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    ORGANIZING CORPORATE HEADQUARTERS TOSUPPORT STRATEGY

    VITAL CORPORATE ACTIVITIES WHICH SHOULD BE PERFORMED

    IN THE OPERATING DIVISIONS NOT TOBE USURPED BY THEHEADQUARTERS STAFF:

    1. Serving as outside directors for existing divisions.

    2. Planning the future corporate portfolio and supportive

    moves.

    3. Making acquisitions and divestments of businesses.4. Developing new ventures internally

    5. Reinforcing corporate input strategy

    In a small, diversified corporation two or three senior executives

    may personally perform such of these activities as their strategyrequires. Very large corporations, on the other hand, may haveseparate officials or even offices for each. A closer look at what isinvolved will help in deciding how much superstructure isappropriate for a specific corporation.

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    Board of Directors Function for Existing Divisions

    THE FOLLOWING INCLUDES THE DUTIES OF OUTSIDE DIRECTORS OF EACH

    DIVISION

    1. Ensuring that a sound strategy has been formulated, and that the

    strategy is consistent with corporate guides for that division as todomain, risk levels, target results, and the like.

    2. Selecting capable executives qualified to execute the approved

    strategy.

    3. Insisting that tough actions be taken when necessary, even though

    such actions may personally unpleasant for the division executives.

    4. Rewarding key people for outstanding performance, and ifnecessary removing key people for poor performance.

    5. Making sure internal control system will provide early warning of

    major detectable problems.

    6. Giving final approval to very large transactions that will significantlyaffect the future division. (For example, ten percent of assets.

    7. Serving as a sounding board; asking discerning questions; providing

    objective advice.

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    PLANNING FUTURE CORPORATE PORTFOLIO AND SUPPORTIVE MOVES

    CORPORATE STRATEGY INVOLVES:1. The choice of businesses to operate.

    2. The corporate input strategy.3. The moves necessary to attain that preferred position.

    BROADER INTEGRATED PLANNING HAS TO BE DONE AT CORPORATEHEADQUARTERS. DECISIONS ARE NEEDED WITH RESPECT TO:

    1. Expansion or contraction of existing business2. New businesses to enter3. Charters for existing and new business-units, including the

    objectives, values, and planning assumptions communicatedearly enough to aid lower-level planning.

    4. Resource allocations- long and short term capital, perhaps keypersonnel or critical materials, permissible high technological orpolitical risks.

    5. Results targets for both long-run and intermediate stages.

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    MAKING ACQUISITIONS AND DIVESTMENTS OF BUSINESSES

    If a corporation decides to change its portfolio of business-units,Acquisitions or divestments are likely. Someone has to identify good

    prospects for acquisition-or buyers for businesses to be sold-andsomeone has to engage in that often time-consuming and specializedprocess of negotiating a deal

    REINFORCING CORPORATE INPUT STRATEGY

    The headquarters organization of a diversified corporation shouldalways provide1. Senior Executives who can fill the outside director roles for each ofthe business units.

    2. Executives plus a staff assistant who formulate the corporatestrategic plan3.Further diversification.4. Internal Entrepreneurship5. Corporate Input synergies, then additional provisions will be needed.

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    THE END

    THANK YOU!