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Strategy and Size of an Organization - Lesson Summary

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The key points from this module are:

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

In Layman's terms, Strategy is often used interchangeably with goals.

Defining new basic goals involve decisions such as:

- Expanding the volume of activities.
- Setting up distant plants and offices.
- Moving into new economic functions.
- To become diversified along many lines of business.

Levels of Strategy include:
Functional-level Strategy
Business-level Strategy
Corporate-level Strategy
Global Expansion

We talked about the four dimensions of Strategy, and they are:
Innovation
Marketing differentiation
Breadth
Cost control

Raymond Miles and Charles Snow classify business organization into four strategic types:
Defenders - Seek stability by producing only a limited set of products directed at a narrow segment of the total potential market.
Prospectors - Their strength is in exploiting new-product and market opportunity.
Analysers - They seek to minimize risk and maximize opportunity for profit.
Reactors - Respond inappropriately, perform poorly, and as a result, are reluctant to commit themselves aggressively to a specific strategy for the future.

Michael Porter proposed that management can choose from among of the following generic business strategies:
Cost Leadership - Answers the question; how do firms gain a cost advantage over their competitors.
Differentiation - Used by firms that seek to be unique in their industry in ways that are widely valued by buyers.
Focus - The goal of this strategy is to exploit a narrow segment of a market.

Limitations to the strategic imperative include:
Managers may be severely restricted in their discretion when organizations are highly matured.
Capital-to-labour ratio in an organization will affect the impact of strategy on structure.
If the ratio is low (i.e labour intensive), then managers have much more flexibility to exercise change and influence structure.
When management implements a new strategy, there is often no immediate change in structure.

Organization Size is defined by over 80% of studies using it as a variable as the total number of employees in an organization.

Organizations with fewer than 1500 employee tend to be labelled as "small", and large organizations are defined as ones having approximately 2000 or more employee.