Slide 1Slide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Organizing to Organizing to Implement Implement Corporate Corporate DiversificationDiversificationChapter 8Chapter 8Strategic Management & Competitive Advantage – Barney & Hesterly2Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly22Mission ObjectivesExternalAnalysisInternalAnalysisStrategicChoiceStrategyImplementationCompetitiveAdvantageThe Strategic Management ProcessImplementingCorporateDiversificationStrategic Management & Competitive Advantage – Barney & Hesterly3Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly33Implementation IssuesHow Information FlowsWhere and By Whom are Decisions MadeHow to Influence the Behavior of People• how can the interests of employeesbe aligned with the interests of the firm?Strategic Management & Competitive Advantage – Barney & Hesterly4Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly44The Need for Organizational StructureInformation Processing Requirements• as organizations become larger and more complex,information processing requirements exceed individual capacity • bounded rationality• organizational structure divides informationprocessing into manageable blocks (span of control)Strategic Management & Competitive Advantage – Barney & Hesterly5Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly55Strategic PlanningCorporate FinanceCorporate R&DCorporate MarketingM-Form StructureProductionFinanceEngineering AccountingHuman ResourcesDivisionDivisionDivisionSales &MarketingSenior ExecutiveCorporateHumanResourcesBoard of DirectorsStrategic Management & Competitive Advantage – Barney & Hesterly6Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly66The Agency RelationshipA Trade OffM-Form StructureDivides InformationProcessing RequirementsInto Manageable BlocksDivides OwnersFrom ManagersInterests of Owners andManagers May DivergeStrategic Management & Competitive Advantage – Barney & Hesterly7Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly77IndividualShareholdersInstitutionalShareholdersPrincipalsAgentsSeniorExecutivesCorporateStaffDivisionGeneralManagersSharedActivityManagersMonitorsThe Agency RelationshipBoardOfDirectorsManaging AgencyDualRoleStrategic Management & Competitive Advantage – Barney & Hesterly8Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly88The Office of the PresidentChairmanof theBoard(monitoring)ChiefExecutiveOfficer(strategy formulation)ChiefOperatingOfficer(strategy implementation)ChairmanCEOCOOChairmanCEOCOOChairmanCEOCOOChairmanCEOCOOStrategic Management & Competitive Advantage – Barney & Hesterly9Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly99Information Filtering• information about the divisions’ businesses is filtered as it rises to the senior executive• the senior executive can ‘manage’ the informationflow• information flow should not exceed thebounded rationality of managers at anylevel in the organization• information should flow should be matchedwith decision-making authorityThe Office of the PresidentStrategic Management & Competitive Advantage – Barney & Hesterly10Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly1010Strategic PlanningCorporate FinanceCorporate R&DCorporate MarketingDivision General ManagersProductionFinanceEngineering AccountingHuman ResourcesDivisionDivisionDivisionSales &MarketingSenior ExecutiveCorporateHumanResourcesStrategic Management & Competitive Advantage – Barney & Hesterly11Organizing to Implement Corporate DiversificationOrganizing to Implement Corporate DiversificationCopyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney &