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Identify the organizational structure of a hospitality organization (here you can use the same company as selected in the discussion forum or another hospitality organization). Discuss the business-level structure and the corporate-level structure (if applicable to this organization). Identify how the business is structured and discuss the strengths and weaknesses of the structures. Differentiate what business structure would be most effective in times of rapid change and with high levels of competition.

Chapter 7
ï‚® Managing
ï‚­ Stakeholder relationships and
ï‚­ Organizational resources
ï‚® To move the organization towards the successful
execution of its strategies
ï‚® Consistent with strategic direction
1
ï‚® Resource Acquisition
ï‚­ Gain access to a particular resource, such as capital,
employees with specialized skills, intimate knowledge
of a market, or a modern production facility.
ï‚® Speed to Markets
ï‚­ Firms with complementary skills partner to increase
speed to market with hope of capturing first-mover
advantages.
ï‚® Enter Foreign Market
ï‚­ Often the only practical way to gain access to a foreign
market.
ï‚® Economies of Scale
ï‚­ High fixed costs sometimes require firms to find
partners to expand production volume.
2
ï‚® Risk and Cost Sharing
ï‚­ Allows two or more firms to share the risk and cost of a
particular business endeavor.
ï‚® Product / service development
ï‚­ Provides firms the opportunity to pool their skills to develop new
products and/or services
ï‚® Learning
 Provide participants with the opportunity to “learn” from their
partners (e.g. lean manufacturing, product development, human
resource management in an unfamiliar country)
3
ï‚® Strategic Flexibility
ï‚­ A valuable alternative to acquisitions, because they do not have
to be as permanent. They also require less of an internal
resource commitment, which frees up resources for other uses.
ï‚® Collective Political Clout
ï‚­ Can increase collective clout and influence governments into
adopting policies favorable to their industries or circumstances.
ï‚® Neutralizing or Blocking Competitors
ï‚­ Firms can gain the competencies and market power needed to
neutralize or block the moves of a competitor
4
Formal Power
Economic
Power
High
Importance
Political Power
Influence on
Environmental
Uncertainty
Facing the
Firm
Possession of
Knowledge or
Resources not
Found in Firm
Strategic
Importance
of External
Stakeholder
Low
Importance
Partnering and
Inclusion in the
Firm’s Activities
Monitoring and
Traditional
Management
Techniques
5
Traditional Management Partnering / Inclusion
ï‚®
Customers
ï‚­
ï‚­
ï‚­
ï‚­
ï‚­
ï‚®
ï‚®
Customer service departments
Marketing and marketing research
On-site visits
800 numbers
Long-term contracts
ï‚­ Involvement on design teams or
product testing
ï‚­ Joint planning sessions
ï‚­ Joint training/service programs
ï‚­ Financial investments
ï‚­ Interlocking directorate
Suppliers
ï‚­ Purchasing departments
ï‚­ Encourage competition among
suppliers
ï‚­ Sponsor new suppliers
ï‚­ Threat of
ï‚­ Long-term contracts
Customers
ï‚®
Suppliers
ï‚­ Involvement on design teams for new
products
ï‚­ Integration of ordering system with
manufacturing
ï‚­ Shared information systems
ï‚­ Interlocking directorate
6
Traditional Management Partnering / Inclusion
ï‚®
Competitors
ï‚®
ï‚­ Joint ventures
ï‚­ Consortia or Alliances
ï‚­ Trade associations for information
sharing and collective lobbying
ï‚­ Informal price leadership
ï‚­ Collusion (may be illegal)
ï‚­ Direct competition based on
differentiation
ï‚­ Intelligence systems
ï‚­ Corporate spying and espionage
(ethical problems)
ï‚®
Government
ï‚­ Legal, tax or government relations
offices
ï‚­ Lobbying and political action
committees
ï‚­ Campaign contributions
ï‚­ Personal gifts to politicians (ethical
problems)
Competitors
ï‚®
Government
ï‚­ Jointly or government sponsored
research
ï‚­ Joint foreign development projects
ï‚­ Problem solving task forces on
sensitive issues
ï‚­ Appoint retired government officials
to board
7
Traditional Management Partnering / Inclusion
ï‚®
Local Communities
ï‚®
ï‚­ Task forces to work on special
community needs
ï‚­ Cooperative training and
educational programs
ï‚­ Development
committees/boards
ï‚­ Joint employment programs
ï‚­ Community relations offices
ï‚­ Public relations advertising
ï‚­ Involvement in community
service
ï‚­ Donations to local causes
ï‚®
Activist Groups
ï‚­ Organizational decisions to
satisfy demands
ï‚­ Public/political relations efforts
ï‚­ Financial donations
Local Communities
ï‚®
Activist Groups
ï‚­ Consultation with
representatives on sensitive
issues
ï‚­ Joint research and development
programs
ï‚­ Appointments to the board
8
Traditional Management Partnering / Inclusion
ï‚®
The Media
ï‚®
ï‚­ Exclusive interviews or early
release of information
ï‚­ Inclusion in social events and
other special treatment
ï‚­ Public/political relations efforts
ï‚­ Media experts/press releases
ï‚®
Unions
ï‚­ Union avoidance through
excellent treatment of
employees
ï‚­ Hiring professional negotiators
ï‚­ Mutually satisfactory labor
contracts
ï‚­ Chapter XI protection to renegotiate contract
The Media
ï‚®
Unions
ï‚­ Contract clauses that link pay to
performance
ï‚­ Joint committees on safety and
other issues
ï‚­ Joint industry/labor panels
ï‚­ Inclusion on management
committees
ï‚­ Appointments to the board
9
Traditional Management Partnering / Inclusion
ï‚®
Financial Intermediaries
ï‚­ Financial reports
ï‚­ Close correspondence
ï‚­ Finance and accounting
departments
ï‚­ High-level financial
officer
ï‚­ Audits
ï‚®
Financial Intermediaries
ï‚­ Inclusion in management
decisions requiring
financing
ï‚­ Contracts and linkages
with other clients of
financier
ï‚­ Shared ownership of
projects
ï‚­ Appointments to the
board
10
ï‚® Carefully study and select a partner
ï‚® Define roles of partners
ï‚® Develop a strategic plan
ï‚® Keep top managers involved
ï‚® Meet often, informally, at all managerial levels
ï‚® Appoint someone to monitor partnership
ï‚® Maintain enough independence to develop your
own expertise
ï‚® Anticipate and plan for cultural differences
11
ï‚® Functional-level strategy is the collective pattern
of day-to-day decisions made and actions taken
by managers and employees who are
responsible for value-creating activities within a
functional area
ï‚­ Paying attention to the details
ï‚­ Many companies are successful because of excellence
at the functional level
ï‚® The following characteristics are essential:
ï‚­ Decisions made within each function are consistent
ï‚­ Decisions made within one function are consistent with
decisions made within other functions
ï‚­ Decisions made in all functional areas are consistent
with and support the strategies of the business
12
ï‚® Marketing Strategy
 Target Customers—few vs. many, what groups, what regions
 Product Positioning—premium commodity, multi-use,
specialty use
 Product Line Mix—a mix of complementary products
 Product Line Breadth—a full-line offering of products
 Pricing Strategies—discount, moderate, premium prices
 Promotion Practices—direct sales, advertising, direct mail,
Internet
 Distribution Channels—few or many, sole contract
responsibilities
 Customer Service Policies—flexibility, responsiveness, quality
 Product/Service Image –premium quality, good price, reliable
 Market Research—accuracy, frequency and methods for
obtaining marketing information
13
ï‚® Operations Strategy
 Capacity Planning—lead demand to ensure availability
or lag demand to achieve capacity utilization
 Facility Location—near suppliers, customers, labor,
natural resources or transportation
 Facility Layout—continuous or intermittent flow
 Technology and Equipment Choices—degree of automation,
use of computers and information technology
 Sourcing Arrangements—cooperative arrangements with a
few vs. competitive bid
 Planning and Scheduling—make to stock, make to order,
flexibility to customer requests
 Quality Assurance—acceptance sampling, process control,
standards
 Workforce Policies—training levels, cross-training, rewards,
use of teams
14
ï‚® Facility Size and Process Choice vs. Market
Forecasts
ï‚® Facility Location vs. Market Planning
ï‚® Production Schedules vs. Forecasts, Orders and
Promotions
ï‚® Operating Policies
15
ï‚®
Human Resources Strategy
 Recruitment—entry level vs. experienced employees, colleges,
technical schools, job services
 Selection—selection criteria and methods
 Nature of Work—part-time, full-time, or a combination, on site or off
site, domestic or foreign
 Performance Appraisal—appraisal methods and frequency, link to
rewards
 Salary and Wages—hourly, piece rate, commission, fixed, relationship
to performance, competitiveness
 Other Compensation—stock ownership programs, bonuses
 Management Compensation—stock awards, stock options, bonuses
linked to performance, perquisites, low interest loans
 Benefits—medical, dental and life insurance, paid leave, vacations,
child care, health club
 Personnel Actions—disciplinary plans, outplacement, early
retirements
 Training—types of training, availability of training to employees,
16
tuition reimbursement
ï‚® Strategy implementation involves
managing relationships with internal and
external stakeholders as well as managing
other organizational resources. These
processes overlap.
ï‚® One of the most important reasons for
interorganizational relationships is to acquire
need resources, especially knowledge
ï‚® Stakeholders that are high priority for
partnerships possess a large amount of formal,
political or economic power, have a large impact
on the uncertainty facing the firm or possess
needed resources
17
ï‚® A set of traditional monitoring and management
techniques apply to stakeholders that are not high
priority for partnerships
ï‚® Strategies are implemented through day-to-day
decisions. The challenge is to create a pattern of
integrated, coordinated functional-level decisions that
meets the needs of stakeholders and fulfills the planned
strategies of the organization
18
Chapter 8
ï‚® Hierarchy of Authority
ï‚® Degree of Centralization
ï‚® Complexity
ï‚® Specialization
ï‚® Formalization
ï‚® Professionalism
19
General Manager
Marketing
Finance
Operations
HR
R&D/Eng
20
ï‚® Organizing Framework
ï‚­ Inputs such as marketing and production
ï‚® Degree of Centralization
ï‚­ High centralization
ï‚® Competitive Environment
ï‚­ Stable, demands for internal efficiency or
functional specialization
ï‚® Growth Strategy
ï‚­ Market penetration
21
ï‚® Strengths
ï‚­ Economies of scale
ï‚­ Functional expertise and specialization
ï‚­ Best if few products or services
ï‚® Weaknesses
ï‚­ Slow response time
ï‚­ Hierarchy overload
ï‚­ Sometimes poor coordination across
departments
ï‚­ Can restrict view or broader organizational goals
22
Vice President
Administrative Departments
Western Region
Marketing
Operations
Eastern Region
Marketing
Operations
Vice President
Administrative Departments
Economy Travelers
Marketing
Operations
Luxury Travelers
Marketing
Operations
23
ï‚® Organizing Framework
ï‚­ Outputs such as customer groups or markets
ï‚® Degree of Centralization
ï‚­ Decentralized
ï‚® Competitive Environment
ï‚­ Dynamic with pressure to satisfy particular market
needs very well
ï‚® Growth Strategy
ï‚­ Market and/or product development
24
ï‚® Strengths
ï‚­ Suited to fast change in an unstable environment
ï‚­ High levels of client satisfaction
ï‚­ High coordination across functions
ï‚­ Best in larger organizations with several products or
markets
ï‚® Weaknesses
ï‚­ Loss of economies of scale within functional areas
ï‚­ Some redundancy of functions
ï‚­ Loss of in-depth functional specialization
ï‚­ May lead to poor coordination across product lines
or markets
25
ï‚® Organizing Framework
ï‚­ Outputs
ï‚® Degree of Centralization
ï‚­ Very decentralized
ï‚® Competitive Environment
ï‚­ Conditions vary from region to region
ï‚® Growth Strategy
ï‚­ Market penetration or market development
26
ï‚® Strengths
ï‚­ Units can focus on specific needs of markets
ï‚­ High levels of client satisfaction
ï‚­ Works well in larger organizations with highly
differentiated markets
ï‚® Weaknesses
ï‚­ Loss of economies of scale
ï‚­ Duplication of resources
ï‚­ Hard to coordinate units when coordination is
necessary or desirable
ï‚­ Can be confusing to customers with locations in
multiple regions where the firm operates
27
General Manager
Support
Functions
Marketing
Manager
R&D
Manager
Operations
Manager
Project
Manager A
Project
Manager A
Project
Manager A
28
ï‚® Organizing Framework
ï‚­ Inputs and outputs
ï‚® Degree of Centralization
ï‚­ Decentralization with shared authority
ï‚® Competitive Environment
ï‚­ Responds well to internal pressure for
efficiency or specialization AND
external market pressure to satisfy
particular market needs or customers
ï‚® Growth Strategy
ï‚­ Frequent changes to products and
markets (allows flexible use of human
resource)
29
ï‚® Strengths
ï‚­ Achieves coordination
ï‚­ Flexible use of human resources
ï‚­ Works well in medium-sized firms with multiple
products
ï‚® Weaknesses
ï‚­ Dual authority can cause frustration and
confusion
ï‚­ Excellent interpersonal skills needed
ï‚­ Additional training can be expensive
ï‚­ Time consuming, frequent meetings
ï‚­ Great effort to maintain power balance
30
CEO
Corporate Staff
Division VP
Division VP
Division VP
ï‚­ Few businesses compared to the other corporate
structures
ï‚­ Moderate/low relatedness across divisions
ï‚­ Moderate/low need for coordination across divisions
ï‚­ Financial synergy may be available across divisions
and some operational synergy (although limited) only
to the extent that the divisions are related to each
other
31
CEO
Corporate Staff
SBU Manager
SBU Staff
Related Divisions
SBU Manager
SBU Staff
Related Divisions
SBU Manager
SBU Staff
Related Divisions
ï‚­ Many businesses, some of which are related to each
other
ï‚­ Groups (SBUs) of related businesses
ï‚­ Coordination needed within each SBU; low need for
coordination across SBUs
ï‚­ Financial synergy across SBUs, potential exists for
operational synergy within SBUs
32
CEO and Staff
Division 1
Division 2
Marketing
Operations
Development
ï‚­ Any number of businesses
ï‚­ Highly related businesses so people can easily transfer
ï‚­ Very high level of coordination is required
ï‚­ Many opportunities exist for operational synergies
(for innovation, to reduce costs, or serve multiple
markets well)
33
ï‚® Determine Broad Goals
ï‚® Establish Links Between Broad Goals and
Resource Areas or Activities of the Organization
ï‚® Create Measurable Operating Goals for Each
Resource Area or Activity
ï‚® Assign Responsibility for Goal Accomplishment
ï‚® Develop Specific Action Plans
ï‚® Allocate Resources
ï‚® Follow Up
34
Near-Term Measures
ï‚®
Customers
Long-term Measures
ï‚®
ï‚­ Growth in sales
ï‚­ Turnover of customer base
ï‚­ Ability to control price
ï‚­ Sales $ and volume
ï‚­ New customers
ï‚­ New customer contacts
ï‚®
Suppliers
ï‚­
ï‚­
ï‚­
ï‚­
ï‚®
Cost of materials
Delivery time
Inventory
Availability of materials
Financial Community
ï‚­
ï‚­
ï‚­
ï‚­
EPS
Stock Price
Number of “buy” lists
ROE
Customers
ï‚®
Suppliers
ï‚­ Growth rate of material cost,
delivery time or inventory
ï‚­ New ideas from suppliers
ï‚®
Financial Community
ï‚­ Ability to convince Wall
Street of strategy
ï‚­ Growth in ROE, EPS, or stock
price
35
Near-Term Measures
ï‚®
Employees
ï‚­ Number of suggestions
ï‚­ Productivity
ï‚­ Number of grievances
ï‚®
ï‚®
Consumer Advocates
ï‚®
Environmentalists
ï‚­ Number of meetings, hostile
encounters, coalitions formed,
EPA complaints or legal actions
Congress
ï‚­ Number of new regulations that
affect industry
 Ratio of “cooperative” vs.
“competitive” encounters
ï‚®
Consumer Advocates
ï‚­ Number of changes in policy due
to CA
 Number of CA-initiated “calls for
help”
ï‚­ Number of meetings, hostile
encounters, coalitions formed or
legal actions
ï‚®
Employees
ï‚­ Number of internal promotions
ï‚­ Turnover
Congress
ï‚­ New legislation affecting firm
ï‚­ Access to key members and
staff
ï‚®
Long-term Measures
ï‚®
Environmentalists
ï‚­ Number of changes in policy due
to environmentalists
 Number of environmentalist “calls
36
for help”
Performance
Feedback
Compare
Goals to
Outcomes
Organizational
Outcomes
Feedback Control
Establish
Strategic
Direction
Formulate
Basic
Strategies
Implementation
Strategies and
Controls
T
I
M
E
Goals and
Objectives
37
Analyze Broad
Environment
Analyze
Resources
& Strategies
Analyze
Operating
Environment
Business
Intelligence
Feedforward Control
Establish
Strategic
Direction
Formulate
Basic
Strategies
Implementation
Strategies &
Controls
38
Establish
Strategic
Direction
Formulate Basic
Strategies
Behavioral Controls
Bureaucratic Controls
(Rules, procedures and
policies
Clan Controls
(Socialization & cultural
processes
Implementation
Strategies and
Controls
Process
Controls
(Used to guide
daily processes
and work
activities; with
real-time
feedback)
39
ï‚® Signal Detection
ï‚® Preparation / Prevention
ï‚® Containment / Damage Limitation
ï‚® Recovery
ï‚® Learning
40
ï‚® Strategic Actions
ï‚® Technical and Structural Actions
ï‚® Evaluation and Diagnostic Actions
ï‚® Communication Actions
ï‚® Psychological and Cultural Actions
41
ï‚®
ï‚®
Centralization, formalization, specialization, and other key dimensions
are important to characterizing organizational structures.
Organizations usually employ one of the following structures: functional,
geographic/customer group, product/service group, or project matrix.
Each of the structures exhibit strengths, weaknesses, and fit with
particular strategic choices.
ï‚® The functional form encourages functional specialization and focus,
but discourages coordination between functions or departments.
ï‚® Geographic or customer structures are grouped by various locations
or customer types.
ï‚® The project-matrix structure employs a dual-reporting relationship
that is intended to balance functional focus and expertise with
responsiveness to customer needs. However, it is expensive and may
create ambiguity and hinder decision making if managed improperly.
42
ï‚®
ï‚®
ï‚®
ï‚®
Multidivisional and strategic-business-unit (SBU) structures divide businesses into
divisions.
ï‚® The multidivisional structure creates the potential for financial synergy as
managers allocate financial resources to the most promising divisions.
The SBU structure combines divisions into groups based on commonalities, thus
allowing for the creation of operating synergy within an SBU.
Corporate-matrix structures are intended to exploit economies, learning, and
resource sharing across businesses; however, they require extra measures of
coordination to avoid divided loyalties, sluggish decision making, and
management conflicts.
Lateral relationships range from simple direct contact, networks, and
communities of practice to teams, task forces, and even formal integrators such
as knowledge officers. These horizontal coordinating mechanisms are essential
for effectively addressing the deficiencies of the vertical structures and for getting
work done across departments and divisions.
43
ï‚®
ï‚®
ï‚®
ï‚®
Strategic controls consist of systems to support managers in
tracking progress toward organizational vision and goals and in
ensuring that organizational processes and the behavior of
organizational members are consistent with those goals.
Feedback control provides managers with information concerning
outcomes from organizational activities; the information is then
used as a basis for comparison with the targets that have been
established.
Feedforward control helps managers anticipate changes in the
external and internal environments, based on analysis of inputs
from stakeholders and the remote environment.
The learning processes associated with strategic control form the
basis for changes to strategic direction, strategies,
implementation plans, or even the goals themselves, if they are
deemed to be unreasonable given current conditions.
44
ï‚®
ï‚®
ï‚®
Crisis-prevention and crisis-management systems are a special type of
controls, specifically designed to prevent major disasters.
ï‚® Organizational crises are critical situations that threaten high-priority
organizational goals, impose a severe restriction on the amount of
time in which key members of the firm can respond, and contain
elements of surprise.
Companies can take steps to control organizational crises.
ï‚® Crisis-prevention and crisis management activities fall into the
general categories of strategic actions, technical and structural
actions, evaluation and diagnostic actions, communication actions,
and psychological and cultural actions.
While the potential for crisis is a threat to an organization, effective crisis
prevention and management may also represent an opportunity to
develop a distinctive competence.
45

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