Strategic Management question 2.

Just being able to conceits bold new strategies is not enough. The general
manager must also be able to translate his or her strategic vision into concrete steps
that "get things done
Strategy formulation entails heavy doses of vision, analysis, and
entrepreneurial judgment, successful strategy implementation depends on the skills
of working through others, organiing, motivating, culture!building, and creating
stronger fits be!teen strategy and how the organiation operates "ngrained behavior
docs not change just because a new strategy has been announced.
#ractitioners emphatically state that it is a whole lot easier to develop a
sound strategic plan than it is to $%make it happen." &et s look at what strategy
implementation involves'
(hat makes the job of the strategy manager so complicated when it comes to
implementation is the number of tasks involved and the variety of ways to approach
each task. Strategy implementation has to be tailored to the organiation$s overall
condition and selling, to the nature of the strategy and the amount of strategic
change involved and to the manager$s own skills, style, and methods.
)our broad areas stand out'
*. #erforming the recurring administrative tasks associated with strategy implemen!
tation.
2. +reating "fits" between strategy and the various internal "ways of doing
things" in order to align the whole organiation behind strategy accomplishment.
, )iguring out an agenda and a set of action priorities that matches
*
up well
with the organiation$s overall situation and the conte-t of the! sluing in which
implementation must take place.
.. (hat managerial approach and leadership style to adopt in inducing the needed
organiational changes.
The strategy implementers challenge in performing these tasks is to bring /he
organiation$s conduct of internal operations into good alignment with strategy and
to unite the total organiation! behind strategy accomplishment. The implemented
job is one of building such enthusiasm and commitment up and down the ranks that
a virtual organiation wide crusade emerges to carry out the chosen strategy.
Strategy!supportive matches arc needed with organiational skills \ and
capabilities, functional area activities, organiation structure, reward systems ,
and incentives, policies and procedures, information systems and control
mechanisms, budgets and programs, and shared values and cultural norms.
The Administrative Aspects of Strategy Implementation
The 0anager$s role in the implementation process is to leading and keynoting
the tone' pace, and style of strategy implementation. There are many ways lo
*
proceed. 1 strategy implementer can opt for an active, visible role or a low!key,
behind the scenes role. 2e or she can elect to make decisions authoritatively or
on the basis of consensus, lo delegate much or little, to be deeply involved in the
detail% of implementation or to remain aloof from the day!to!day problems. "t is
up to the strategy implementer to decide whether to proceed swiftly /launching
implementation initiatives on many fronts3 or lo move deliberately, content with
gradual progress over a long period.
To some e-tent, therefore, each strategy implementation situation is uni4ue
enough 5o re4uire the strategy manager to tailor his or her action agenda to fit the
specific $organiational environment at hand! This forces the manager to be
conscious of all that strategy implementation involves and to diagnose carefully the
action priorities and in what se4uence things need to be done. The manager$s role is
thus all!important 2is or her agenda for action and conclusions about how hard
and how fast to push for change are decisive in shaping the character of
implementation and moving the process along.
Successful strategy e-ecution depends greatly on good internal organiation
and competent personnel. 6uilding a capable organiation is thus always a top
strategy implementation priority. Three organiational issues stand out as
dominant'
7eveloping an internal organiation structure that is responsive
to the needs of
7eveloping the skills and distinctive competences in which the
strategy grounded and seeing that the organiation has the
managerial talents, technical e-pertise, and competitive
capabilities it needs.
Selecting people for key positions.
Matching Organization Structure to Strategy
The following five!se4uence procedure serves as a useful guide for fitting
structure to strategy'
#inpoint the key functions and tasks re4uisite for successful strategy e-ecution
8eflect on how the strategy!critical functions and organiational units relate
to those that are routine and to those that provide staff support!
0ake strategy!critical business units and functions the main organiational
building blocks.
7etermine the degrees of authority needed to manage each organiational
unit, bearing in mind both the benefits and costs of decentralied decision
making.
#rovide for coordination among the various organiational units.
. #inpoint the key functions and tasks re4uisite for successful strategy e-ecution
"n any organiation, some activities and skills are always more critical to
strategic success than others are.
9
The strategy!critical activities vary according to the particulars of a firm$s
strategy and competitive re4uirements.
To help identify what an organiation$s strategy!critical activities are, two 4uestions
can usefully be posed' "(hat functions have to be performed, e-tra well and on
lime for the strategy to succeed:" and ""n what areas would mal performance
seriously endanger strategic success
*
:"$The answers to these two 4uestions should
point s4uarely at what activities and skills are crucial and where to concentrate
organiation!building efforts
2. ;nderstanding the 8elationships among 1ctivities
1ctivities can be related by 5he flow of material through the production
process, the type of customer served, the distribution channels used, the technical
skills and know!how needed to perform them, a strong need to centralie authority
over them, the se4uence in which tasks must be performed, and geographic location,
to mention some of the most obvious ways. Such relationships are important because
one /or more3 of the interrelationships usually become the basis for grouping
activities into organiational units. "f the needs of strategy are to drive organiation
design, then the relationships to look for are those that link one piece of the strategy
to another.
!. <rouping 1ctivities into =rganiation ;nits
"f activities crucial to strategic success are to get the attention and visibility
they merit, then they have to be a prominent part of the organiational scheme.
(hen key functions and critical tasks take a backseat to less important
activities. the politics of organiational budget making usually leads to them being
given fewer resources and accorded less significance than they actually have. =n
the other hand, when they form the core of the whole organiation structure,
their role and power in the overall scheme of things is highlighted and
institutionalied. Senior managers can seldom give a stronger signal as to what is
strategically important than by making key function and critical skills the most
prominent organiational building blocks and, further, assigning them a high
position in the organiational pecking order.
". 7etermining the 7egree of 1uthority and independence to <ave >ach ;nit
1ctivities and organiational units with a key role in strategy e-ecution
should not made subordinate to routine and non!key activities. 8evenue!producing
and results!producing activities should not made subordinate to internal support or
staff functions. (ith few e-ceptions, decisions should delegate to those managers
closest to the scene of the action. +orporate!level authority over operating
decisions at the business!unit level and below should held to a minimum. The crucial
administrative skill is selecting strong managers to head up each unit and delegating
them enough authority to formulate and e-ecute an appropriate strategy for their
unit.
#. #roviding for +oordination among the ;nits
,
#roviding for coordination of the activities of organiational units is
accomplished mainly through positioning them in the hierarchy of authority.
0anagers higher up in the pecking order generally have authority over more
organiational units and thus the power to coordinate, integrate, and otherwise
arrange for the cooperation of the units under their supervision. The chief e-ecutive
officer, to chief operating officer, and business!level managers are
,
of course
central points of coordination because they have broad authority. 6esides
positioning organiational units along the vertical scale of managerial author ity,
coordination of strategic efforts can also achieved through informal meetings,
project teams, special task fortes, standing committees, formal strategy reviews,
and annual strategic planning and budgeting cycles. 1dditionally, the formulation
of the strategic plan itself serves a coordinating role? the whole process of
negotiating and deciding on the objectives and strategies of each organiational
unit and making sure that related activities mesh suitably help coordinate
operations, across organiational units.
$o% Structure &volves as Strategy &volves' The Stages Model
)our distinct stages of strategy!related organiation structure have singled out'
Stage1 Stage * organiations, are small, single!business enterprises managed
by one person. The owner!entrepreneur has close daily contact with employees and
each phase of operations. 0ost employees report directly to the owner, who mates
all the pertinent decisions regarding mission, objectives, strategy, and daily
operations.
Stage II organiations differ from Stage " enterprises in one essential aspect' an
increased scale and scope of operations force a transition from one!person
management to group management.
Stage III consists of organiation whose operations, though concentrated in a single
field or product line, are scattered over a wide geographical area and large enough to
justify having geographically decentralied operating units. These units all report to
corporate head4uarters and conform to corporate policies, but they are given the
fle-ibility to tailor their unit$s strategic plan to meet the specific needs of each
respective geographic area. =rdinarily, each of the geographic operating units =f a
Stage """ =rganiation is structured along functional lines.
The key difference between Stage "" and Stage """, however, is that while the
functional units of a Stage "" organiation stand or fall together /in that they are
built around one business and one end market3, the geographic operating units of a
Stage """ firm can stand alone /or nearly so3 in the sense that the operations in
each geographic unit are not dependent on those in other areas. Typical firms in
this category are breweries, cement companies, and steel mills having production
capacity and sales organiations m several geographically separate market areas.
.
Stage I( includes large, diversified firms decentralied by line of business. Typically,
each separate business unit is headed by a general manager who has profit!and!loss
responsibility and whose authority e-tends across all of the unit$s functional areas
e-cept, perhaps, accounting and capital investment /both of which are traditionally
subject to corporate approval3. 6oth business strategy decisions and operating
decisions are concentrated at the line!of!business level rather than at the corporate
level
The Strategy)*elated +ros and ,ons of Alternative Organization -orms
There are essentially five strategy!related approaches to organiation' /*3
functional specialiation, /93 geographic organiation, /,3 decentralied business
divisions, /.3 strategic business units, and /@3 matri- structures featuring dual
lines of authority and strategic priority.
The -unctional Organization Structure
<enerally speaking! organiing by functional specialties promotes full
utiliation of the most up!to!date technical skills and helps a business capitalie on
the efficiency gains resulting from use of 5hose technical skills? it also helps a
business capitalie an the efficiency gains resulting from the use of specialied
manpower, faculties, and e4uipment. These are strategically important
considerations for single!business organiations, dominant!product enterprises, and
vertically integrated firms, and account for why they usually have some kind of
centralied, functionally specialied structure.
.eographic -orms of Organization
;sed by large!scale enterprises whose strategies need to be tailored to fit the
particular needs and features of different geographical areas.
"n the private sector, a territorial structure is typically utilied by chain store
retailers, power companies, cement firms, and dairy products enterprises. "n the
public sector, such organiations as the "nternal 8evenue Service, the Social Security
1dministration, the federal courts, the ;.S. #ostal Service, the state troopers, and
the 8ed +ross have adopted territorial "structures in order to be directly accessible to
geographically dispersed clients.
/ecentralized 0usiness 1nits
<rouping activities along business and product lines has been a clear!cut trend
among diversified enterprises for the past half!century, beginning with the pioneering
efforts of 7u #ont and <eneral 0otors in
the *A9Bs. Separate businessCproduct divisions emerged because diversification
made. a functionally specialied manager$s job incredibly comple-
Strategy implementation is facilitated by grouping key activities belonging to
the same business under one organiational roof, thereby creating line!of!business
units /which then can be subdivided into whatever functional subunits suit the key
activitiesC critical tasks makeup of the businessD. The outcome is not only a
structure, which fits strategy, but also a structure that makes the jobs of managers
@
more doable. The creation of separate business units is then accomplished by
decentraliing authority over the unit to the business!level manager. The approach,
very simply, is to put entrepreneurial general managers in charge of the business
unit, giving them enough authority to formulate and implement the business Strategy
chat they deem appropriate, motivating them with incentives, and then holding than
accountable for the results they produce. 2owever, when a strung strategic fit
e-ists across related business units, it can be tough to get autonomy!conscious
business!unit managers to cooperate in coordinating and snaring related
activities. They are prone to argue long and hard about "turf" and about held
accountable for activities not totally under their control.
Strategic 0usiness 1nits
1 strategic business unit /S6;3 is a grouping of business units based on some
important strategic elements common to each? the possible elements of relatedness
include an overlapping set of competitors, a closely related strategic mission, a
common need to compete globally, an ability to accomplish integrated strategic
planning, common key success factors, and technologically related growth
opportunities.
Matri2 -orms of Organization
1 matri- organiation is a structure with two for more3 channels of command,
two lines of budget authority, and two sources of performance and reward. The key
feature of the matri- is that product /or business3 and functional lines of authority
are overlaid /to form a matri- or grid3, and managerial authority over the activities
in each unitCcell of the matri- is shared between the product manager and
functional manager.
Selecting +eople for 3ey +ositions
1ssembling a capable management team is an obvious part of the strategy
implementation task. The recurring administrative issues here center on what kind
of core management team is needed to carry out the strategy and finding the
people to fill each slot. Sometimes the e-isting management team is suitable and
sometimes the core e-ecutive group needs to strengthened andCor e-panded, either
by promoting 4ualified people from within or by bringing in skilled managerial
talent from the outside to help infuse fresh ideas and fresh approaches into the
organiation$s management. "n turnaround situations, in rapid!growth situations,
and in those cases, where the right kinds of managerial e-perience and skills are not
present in!house, recruiting outsiders to fill key management slots is a standard part
of the organiation!building process.
Infosys
<lobal 2ead4uarters' 6angalore, "ndia
)ounded in *AE*
<lobal #resence' ,F Sales =ffices in *G countries, ,G <lobal 7evelopment +entres
"nfosys is one of the largest "T companies in "ndia with *99,.FE employees /including
subsidiaries3 as of 9B*B.
F
"t has offices in ,, countries and development centres in "ndia +hina, 1ustralia, ;H, +anada
and Japan.
(ision
o "(e will be a globally respected corporation."
Mission
o "To achieve our objectives in an environment of fairness, honesty, and courtesy
towards our clients, employees, vendors and society at large."
-ounder4s 5ey to 6uilding Infosys
&eadership
o 8aise aspirations
o 0otivate employees
o 0entor for responsibilities
Iision
o Joble vision
o >levating self!esteem
o 6enefitting everyone
6enchmarking
o <lobal standards
0easuring to improve
o 0easures critical attributes
o "mproves
Shared values
o >nduring value system
o )inest corporate governance system
(alues and Organization ,ulture
Ialues ! +&")>
o +ustomer 7elight
o &eadership by e-ample
o "ntegrity
o )airness
o #ursuit of >-cellence
+ulture
o Spirit of innovation
o +ontinuous personal K professional development
o >-cellence
"mplementation methods
o "nfosys leadership institute
o Training programs
Organizational +rocess
Systematic way a company defines organies and implements its operations through the
stages of the product life cycle.
"nclude strategic measures to improve business performance, proprietary models and
intellectual property that contribute to an organiations goals and objectives.
, stages of organiational process
G
o &m6ryonic stage ! the group of activities related to defining and analysing the
initial re4uirements
o /evelopmental stage ! organiation of resources in preparation for the
implementation of the companyLs business objectives takes place
o Implementation stage ! the integration of the companyLs core business activities.
<lobal 7elivery 0odel is the most important process followed by "nfosys.
6ased on the principle of taking work to the location where the best talent is available,
where it makes the best economic sense, with the least amount of acceptable risk.
"n a project team, team members become role sender and role receivers
)ocal role is that of a project manager.
8ole clarification and role mission are very important in this case.
Infosys4 ,ompetitive &dge
Jamed "ndiaLs most respected company in business!(orld 9B** survey for the Ath
consecutive time.
1djudged "ndiaLs best managed company in a study conducted by 6usiness Today
-or6es' M"nfosys is "ndiaLs role model company.
M7ream company to work for in "ndia and amongst the M*BB best places to work for in "T
in ;S.
0usiness7ee5' 1mong the top , "T service companies in the world.
(ired rated "nfosys among its top .B companies that have reshaped the global economy.
"nfosys is maintaining its competitive edge due to many factors, out of which organiation
structure is the main factor. 1round ABN of the total revenue comes from repeat business
that highlights the faith of the clients in "nfosys.
,ompetitive &dge I01 Structure
Software programmers who wrote custom applications for corporations are able to leverage
past e-perience most effectively.
To achieve these economies of e-perience, the primary organiational construct within
"nfosys is the industry business unit /"6;3. "6; are very nice e-ample of using both
centraliation and decentraliation.
The company assigns new employees to an "6; and they tend to stay there for several years.
"n multidivisional organiations, an "6; structure can greatly facilitate strategy!
implementation efforts. "t establishes coordination between divisions having common
strategic interests facilitates strategic management and control of large, diverse organiation,
)i-es accountability at the level of distinct business units.
,ompetitive &dge
>very operation is e-pected to be M#S#7 O predictable, sustainable, profitable and de!
risked.
"nfosys uses <lobal 7eliver system /<S73 which is most successful outsourcing model
amongst all other models.
<70 enables its customers to leverage varied locations across the globe that provide
optimied values for every component, advantage of covering 9.-G service spread, lower
cost of ownership, domain e-pertise and increased 4uality of deliverables.
To summarize8 the strengths of people8 process and technology converge seamlessly %ithin
Infosys to fulfil client4s end to end IT needs.


E

Organization Structure
Infosys in the 6eginning
"nfosys was a start!up founded by G individuals.
>arly days were a constant struggle
7ynamic >nvironment.
+ompanies focus was on delivering a single product based on single technology in a single
marketplace.
&ow degree of )ormaliation, low comple-ity and high centraliation.
+eriod from 9:9 ) 2;;2
"n *AEA, company lost some key accounts.
7rastic change in the overall strategy.
The period after liberaliation led to massive growth.
Started catering to different market segments and different clients.
+ompany had to adhere to a new set of guidelines and streamline process due to the "#= in
*AA9.
The company structure was split up into functional units.
#roject 0atri- Structure was employed within the production unit.
+haracteried by increasing comple-ity, moderate formaliation and moderate degree of
centraliation.
2;;! on%ards
+ompany had become too big to carry on without modifying the e-isting structure.
+oncept of decentraliation was brought in.
+ompany divided into "6;Ls. >ach "6; concentrated on a particular sector.
0ade the company more customers focused. 1 <amma 6 transformation.
0anagers of each "6; were empowered to take decisions to further the "6;Ls prospects.
8ole >nlargement and 8ole Specialiation.
7ecentralied system with an ability to take 4uick.
+rucial as a result of the dynamic world order after the Sept ** attacks and 1sian financial
crisis.
A
(ithin each "6; the project matri- structure was carried forward.
"n 9BBG, the "6; concept was further refined to take into account geographic growth
opportunities.
The 9BBG reorganiation was also for role enlargement of the second line of business
leaders.
The Mc3insey <S -rame%or5
6y Tom #eters and 8obert (aterman' 2elps analyse how well the organiation is positioned
to achieve its intended objective.
o The GS model can be used in a wide variety of situations where an alignment
perspective is useful, for e-ample to help you'
o "mprove the performance of a company.
o >-amine the likely effects of future changes within a company.
o 1lign departments and processes during a merger or ac4uisition.
o 7etermine how best to implement a proposed strategy.
The 0cHinsey GS model can be applied to elements of a team or a project as well. The
alignment issues apply, regardless of how you decide to define the scope of the areas you
study.
The 0cHinsey GS model involves seven interdependent factors which are categoried as
either "hard" or "soft" elements
"2ard" elements are easier to identify and management can directly influence them' These
are strategy statements? organiation charts and reporting lines? and formal processes and "T
systems.
"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible
and more influenced by culture.
The Mc3insey <S -rame%or5
#lacing Shared Ialues in the middle of the model emphasies that these values are central to
the development of all the other critical elements.
The company$s structure, strategy, systems, style, staff and skills all stem from why the
organiation was originally created, and what it stands for.
The original vision of the company was formed from the values of the creators.
1s the values change, so do all the other elements.
Organization Strategy
"nfosys has adopted a client!focused strategy to achieve growth
)ocuses on limited number of large organiations throughout world
"nfosys commands premium margins
*B
+ompany has a image of 4uality driven model rather than cost!differentiating model
"ncrease business from e-isting and new clients.
>-pand geographically
>nhance solution set
"t has added new service offerings, such as consulting, business process management,
systems integration and infrastructure management, which are major contributors to its
growth.
7evelop deep industry knowledge >nhance brand visibility #ursue alliances and strategic
ac4uisitions
MA*3&T +&=&T*ATIO= ST*AT&.>'
o ,urrent Mar5ets' ;S1 and >urope
o ,urrent +roducts' 170, 6#=, H#= etc.
MA*3&T /&(&?O+M&=T ST*AT&.>'
o =e% Mar5et' "ndia, 0iddle!east and 1ustralia
o ,urrent +roduct' 170, 6#=, H#= etc.
+*O/1,T /&(&?O+M&=T ST*AT&.>'
o ,urrent Mar5et' ;S1 and >urope
o =e% +roduct' +onsultancy and package implementation services in relatively
growing sectors esp. healthcare, life sciences etc.
/I(&*SI-I,ATIO='
o =e% Mar5et' "ndia, 0iddle!east and 1ustralia
o =e% product' +onsultancy and package implementation services in relatively
growing sectors esp. healthcare, life sciences etc.
Other Strategies
+=J+>JT81T"=J'
o ABN of "nfosys revenues from 1merican and >uropean nations.
o I>8T"+1& "JT><81T"=J'
"nfosys recently bid to ac4uire a >uropean major O 1-on consultancy.
"JJ=I1T"=J'
o The Software >ngineering and Technology &abs /S>T &abs3 at "nfosys! centre for
technology research in software engineering K enterprise technology
o "nfosys promotes a favourable work environment that encourages innovation and
meritocracy.
<>J>8"+ ST81T><">S
o &ittle differentiation in low!end services of value chain? high differentiation in high
end services of value chain like software products and package solutions.
o )ocus on 4uality, customer relationship management, and timely!delivery.
The /imensions' ,reating 0alance
"nfosys pioneered the <lobal 7elivery 0odel /<703 to ensure the distribution of application and
business process lifecycle activities and resources.
**
/ifferentiation v@s Integration
There is high degree of "ntegration in the company.
There are onsite and fi-ed office teams working on same projects and integrating at the end.
There is bi!directional flow of information between the teams.
,entralization v@s /ecentralization
There cannot be a clear distinction between centraliation and decentraliation in case of
"nfosys.
There are small organic teams which do not follow stringent rules and codes.
6ut "nfosys at a holistic level has complete centraliation within its operations and
organiation.
So, the structure followed by "nfosys is +ontingency structure which incorporates both
+entraliation and 7ecentraliation.
Standardization v@s Mutual AdAustment
1t the holistic level it strictly follows a Standardied structure in which each and every
individual has to follow certain rules and regulations before taking any step or implementing
any new policy.
)rom the mouths of employees of "nfosys!M (e need to re4uest and take permission even
before installing a new software or any third party application in our company systems.
6ut wherever small organic teams come into picture a bit of mutual adjustment is induced
implicitly.
*9