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Strategic Management
, Sixth Edition
Charles W. L. Hill, University of Washington
Gareth R. Jones, Texas A&M University
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Chapter Summaries
Chapter 13: Implementing Strategy in Companies That Compete Across Industries and Countries
- At the corporate level, a company must choose the combination of structure,
control systems, and culture that will allow it to operate a multibusiness
model in a way that will lead to superior profitability.
- As a company grows and diversifies, it adopts a multidivisional structure.
Although this structure costs more to operate than a functional or product
structure, it economizes on the bureaucratic costs associated with operating through a functional structure and gives a company
the capability to handle its value creation activities more effectively.
- As companies change their corporate strategies over time, they must change their structure because different strategies are managed in different ways.
In particular, the move from unrelated diversification to vertical integration
to related diversification increases the bureaucratic costs associated with
managing a multibusiness model. Each requires a different combination on structure, control, and
culture to economize on those costs.
- To encourage internal new venturing, companies must design an internal venturing
process that gives new-venture managers the autonomy they need to develop new products. Corporate managers
need to provide the oversight that keeps new-venture managers motivated and
on track.
- The profitability of mergers and acquisitions depends on the structure and control systems that companies adopt to manage them and
the way a company integrates them into its existing businesses.
- IT is having increasingly important effects on the way multibusiness companies
implement their strategies. Not only is it helping improve the efficiency with
which the multidivisional structure operates, it also allows for the better
control of complex value chain activities. The growth of outsourcing has
also been promoted by IT and some companies have developed network structures to coordinate their global value
chain activities.
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