ITM Summary Chapter 8 & 9

COMSATS UNIVERSITY ISLAMABAD
ASSIGNMENT NO.1
Chapter 8 & 9
INTRODUCTION TO MANAGEMENT
Prepared By:
Mohammed Mustansir
FA19-BAF-070
Prepared For:
Mrs. Uzma Naeem
CHAPTER 8: STRATEGIC MANAGEMENT
CORPORATE PORTFOLIO ANALYSIS

Collection of businesses, and then do their analysis to see in which we are declining, stabilizing,
or which one is mature, in terms of growth and market share.
Managers manage this by a matrix;
BCG matrix
 Developed by the Boston Consulting Group
 Consider market share and industry growth rate.
Classifies firms as:
1: Cash cows: Low growth rate, high market share
2: Stars: High growth rate, high market share.
3: Question marks: High growth rate, low market share.
4: Dogs: Low growth rate, low market share
RENEWABLE STARTEGIES:
 Developing strategies to counter organization weaknesses
 Strategies that brings organization towards right direction
 That convert competitive disadvantages to competitive advantages
1. Retrenchment: (means to retreat) focusing on eliminating non-critical weaknesses and
restoring strengths to overcome current performance problems.
2. Turnaround: addresses critical long-term performance problems through the use of
strong cost elimination measures and large-scale organizational restructuring solutions.
STABILITY STRAGTEGY:
 Not to expand nor to contract the market
 Maintain the status to deal with the uncertainty of a dynamic environment
 If market is unstable then manager will use stability strategy
 Or if owner decide not expand for any reason
COMPETITIVE STRATEGIES:
 Focused on how an organization will compete in each of its SBUs (strategic business
units).
 How our different business units can be competitive or how they manage
 If we talk about the business units’ strategies then it is called competitive strategies
 It has two main objectives: 1. Improvement of our own business units 2. Improve in such
a way that over all organizational performance also increases
Competitive Advantage:
Attribute which allows an organization to outperform its competitors.
● Quality; Discuss in terms of productivity and reliability.
● Continuous Improvement.
● Happy customers
FIVE PORTER FORCES:
● New entrant; threat from competitors.
● Suppliers; they have a bargaining power, because we as a firm are dependent upon a
supplier
● Substitutes; offering products, but more of same kind are produced now
● Buyers; bargaining power
COST LEADERSHIP STRATEGY

Increase outputs, decrease inputs, also decrease costs through any means.
Revenues – cost = More profit.
DIFFRENTIATION STRATEGY:
● Create a unique product
● Distinctive from other same product line.
● Price may also vary
● Not all segments can afford this product; because cost rise
Manage competition through good means.
FOCUS STARTEGY:
Focus on some segments of market; few.
● More expenses
● High priced
● Customized product
● Not everyone can afford
CREATING STRATEGIC FLEXIBILITY:
●
● Monitor, measure results
● Encourage employees, back them up to disclose everything
● E- BUSINESS; bidding, order processing
● Customer service
● Innovation Look outside the organization for good ideas
● Have multiple alternatives
● Learn from mistakes
INNOVATION STRATEGIES
Possible events: Radical breakthrough in products. Application of existing technology to new
uses.
Strategic Decisions about Innovation:
 Basic research
 Product development
 Process Innovation
First Mover: An organization that brings a products innovation to market or use a new process
innovation.
CHAPTER 9: ORGANIZATION AND STRUCTURAL DESIGN
ORANIZATIONAL STRUCTURE:
Organizing means arranging; based on some characteristics, organize things, people to some
criterions.
Example:
Arranging Jobs on certain level
STRUCTURE:
● Defining jobs in a formal manner
● Arranging over all jobs within an organization.
ORGANIZATIONAL DESIGN:
Involves decision about six elements;
● Work specialization; specific job you are good at
● Departmentalization; according to product basis, or customer basis or
geographical basis. How departments are based within an organization structure.
● Chain of command; who is answerable to whom? Who will report whom?
● Span of control; How many subordinated are managed by a manager
● Centralized; few people at top management has decision making power
● Decentralization; empower employees
● Formalization; The degree to which rules and procedures are followed
PURPOSE OF ORGANIZING:
● Task should be done through departmentalization so that over all load should be divided
● Individuals should have their own personal tasks to pursue.
● Put all jobs in a structure.
● Relate diverse tasks together through organizing.
● Clustering jobs into unit
● Maintain good relationship between departments, humans etc.
● Respect for higher authorities
● Higher authorities should help employees
● Power with all designations in a company
● Authority with superior should be confirmed
● Allocate and manage resources; human, financial and technological.
● Resources depends upon size, department, human source, sales etc.
OVER WORK SPECIALIZATION:

● Jobs and tasks mismatch.
● Extraordinary work from some employee
● Work is not taken according to his skills
This all causes fatigue, absentees, no settlement of employees.
Departmentalization
● Functional; based on functions, different functional unit.
Marketing department.
● Product; based on product line. On the basis of products
● Geographical; grouping of jobs on the basis of territory or area. Province etc.
● Process; based on customer flow, or product.
Such as knitting of cloth and cutting of cloth etc.
● Customers; Types of customer, and their needs.
STRUCTURAL DESIGN INFLUENCE
● As they grow in size they change from organic to mechanistic organizations

● It follows strategy
● Firms adapt structures from the technology they use
● Organic structure
It requires dynamic environment
● Mechanistic structure
It requires stable environment
FRAME WORK OF STRATEGY

● Meaningful innovations always favors organic structuring
● As organizations grows larger it changes their structure
Organic to mechanistic
● If we focus on cost minimization then mechanistic structure is required
THE TECHNOLOGY AND ITS STRUCTURE

Classifications
● Unit production single units of small batches
● Mass production large batches of output
● Process production continuous process of outputs
Routine technology = mechanistic organizations
Non-routine technology = organic organizations
ENVIRONMENTAL UNCERTAINTY AND ITS STRUCTURE

Mechanistic organizational
Its structure is effective in stable and effective environment
Organic organizational
Its structure is effective for dynamic and complex environment
COMMON ORGANIZATIONAL DESIGNS

Traditional design:
 Simple structure: Low departmentalization, little formalization, wide span of control.
 Functional structure: Operation, finance, marketing, human resource
 Divisional structure: Composed of separate businesses units or division
Contemporary Organizational Designs
Team Structures:
The entire organization is made up of work groups or self-managed teams of empowered
employees.
Boundary-less Organization:
An unstructured organizational design that’s intended to break down external barriers between
the organization and its customers and suppliers.
 Removes internal horizontal boundaries.
 Eliminated external boundaries:
Virtual Organization: An organization that consists of a small core of fulltime employee and
that temporarily hires specialists to work on opportunities that arise.
Network Organization: A small core organization that outsources its major business functions
in order to concentrate on what it does best.
Modular Organization: A manufacturing organization that uses outside suppliers to provide
product components for its final assembly operations.

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COMSATS UNIVERSITY ISLAMABAD

CORPORATE PORTFOLIO ANALYSIS

COST LEADERSHIP STRATEGY

CHAPTER 9: ORGANIZATION AND STRUCTURAL DESIGN

OVER WORK SPECIALIZATION:

STRUCTURAL DESIGN INFLUENCE

● As they grow in size they change from organic to mechanistic organizations

FRAME WORK OF STRATEGY

THE TECHNOLOGY AND ITS STRUCTURE

ENVIRONMENTAL UNCERTAINTY AND ITS STRUCTURE

COMMON ORGANIZATIONAL DESIGNS

Contemporary Organizational Designs

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