Company Structure and Strategy

Company Structure

Pyramidal structure (hierarchical or line structure): Top-down system Small organisation

Functional structure Divided into departments Specialized set of tasks

Company Structure Matrix structure:

arranged according to project and group employees by both function and product.

both vertical and horizontal employee works as a team member and reports

to two bosses Staff position:

employees who advise and assist the responsibility of providing information and

advice to personnel in the line position combines the flow of information from the line

structure with the staff departments that service, advise and support them

Pyramidal structure

…

Advantages Line structures are clear and easy to

understand for those working in them. The president or CEO can easily

provide information and direction to subordinates, thus allowing decisions to be made quickly.

Lines structures are fairly informal and involve few departments, making the organizations highly centralized.

Disadvantages Line structures would not suitable for

large companies. The president is often responsible for

wearing many “hats” and being responsible for many activities, but she/he cannot be an expert in all areas.

People at lower levels are unable to make important decision, but have to pass on responsibility to their boss.

Functional structure

Advantages of the functional structure By creating specific job categories for

specific task the efficiency of the labor needed to accomplish the task increases.

It is easy for the development of professional expertise

Coordination and specialization of tasks are centralized, which makes producing a large number of products efficient, predictable and inexpensive.

Disadvantages of the functional structure The lesser interaction between the other

departments Functional structures encourage internal

competition or battles among departments which have incompatible goals.

It is difficult to motivate employees because of similar nature of tasks.

Matrix structure

Advantages Faster decentralized decision. Improve global and regional projects. Flexibility of tasks; greater learning. Easy to organize and motivate because

individuals working on the project could operate as a team.

Disadvantages Chaotic situations when two bosses

present opposing points of views. Insecurity to the project members

because the project will only be for a period of time.

Not very good for decision-making within the project or team unit.

Staff position

Advantages

This structure is necessary to provide specialized, functional assistance to all managers, to ensure adequate checks and balance, and to maintain accountability for end results.

Disadvantages

The decision-making process is slow because there are more layers and presumably more guidelines to follow.

The structure is generally more formal in nature and has many departments.

Company Structure Organization by function:

Different departments

Organization by product: Different products

Organization by customer type: Different sectors

Organization by geographical area: Different regions

Strategic Management

Strategy is “the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carry out these goals.”

Strategic Management

Strategic management is the set of managerial decisions and action that determines the long-run performance of a corporation.

The process of strategic management includes: Strategic planning Strategic implementation

Strategic Management Process

Implementstrategies

Implementstrategies

Evaluateresults

Evaluateresults

Formulate strategies

Formulate strategies

Analyze theorganization’sresources &capabilities

Analyze theorganization’sresources &capabilities

Analyze the environment

Analyze the environment

Identify the organization

’s current mission,

objectives & strategies

Identify the organization

’s current mission,

objectives & strategies

1

2 3

4 5

6 7 8

Identify the opportunities

& threats

Identify the opportunities

& threats

Identify thestrengths &weaknesses

Identify thestrengths &weaknesses

SWOT Analysis

Strategic Management Process

Mission The organisation’s purpose or fundamental

reason for existence. Analysing external environment

Scanning General & specific environment Addressing all possible influences on the

organisation Opportunities and Threats

Opportunities are positive trends in external environmental factors

Threats are negative trends in external environmental factors

Strategic Management Process

Analysing the internal situation Provides information about an organisation’s

resources and capabilities

Strengths and Weaknesses Strengths: any activities the organisation does

well or any unique resources that it has Weaknesses: any activities the organisation

does not do well or any unique resources that it does not possess.

Business Strategy

Business strategy focuses on improving the competitive position of product/service within specific industry or market segment.

Business strategy can be: Competitive strategy

Cooperative strategy

Competitive strategies

Competitive strategies address questions:

Should the firm compete on the basis of lower cost (and thus price), or should it differentiate its products/services on some basis other than cost?

(Types of competitive advantage)

Should the firm compete head to head with its major competitors or should it focus on a niche? (Competitive scope)

Types of Competitive Advantage and strategies

Lower Cost

Differentiation(Non-Price Value)

CompetitiveAdvantage

CompetitiveAdvantage

The ability of a firm or business unit to design, produce and market a comparable product more efficiently than its competitors

Lower cost strategy:

The ability of a firm or business unit to provide unique and superior value to the buyer in terms of product quality, special features, or after-sales service

Differentiation strategy:

Focus strategies

Cost leadership and Differentiation strategies aim at the broad market.

Focus on a particular buyer group or geographic market.

Cost-based focus strategy. Differentiation-based focus strategy.

Strategic Positioning: Basic Concepts

Cost Leadership Differentiation

Differentiation-based Focus

Cost-based FocusC

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tLow-Cost Differentiation

References

Emmerson, P. (2007) Business English handbook – Advanced, Macmillan.

Mackenzie, I. (1997) Management & Marketing, Heinle Cengage Learning.

Mr. Ngo Quy Nham – Lecture series on Management – Faculty of Business Administration - FTU.