Chapter8MissionObjectivesExternalAnalysisInternalAnalysisStrategicChoiceStrategyImplementationCompetitiveAdvantageTheStrategicManagementProcessImplementingCorporateDiversificationImplementationIssuesHowInformationFlowsWhereandByWhomareDecisionsMadeHowtoInfluencetheBehaviorofPeople? howcantheinterestsofemployees bealignedwiththeinterestsofthefirm?TheNeedforOrganizationalStructureInformationProcessingRequirements? asorganizationsbecomelargerandmorecomplex, informationprocessingrequirementsexceed individualcapacity? boundedrationality? organizationalstructuredividesinformation processingintomanageableblocks(spanofcontrol)StrategicPlanningCorporateFinanceCorporateR&DCorporateMarketingM-FormStructureProductionFinanceEngineeringAccountingHumanResourcesDivisionDivisionDivisionSales&MarketingSeniorExecutiveCorporateHumanResourcesBoardofDirectorsTheAgencyRelationshipATradeOffM-FormStructureDividesInformationProcessingRequirementsIntoManageableBlocksDividesOwnersFromManagersInterestsofOwnersandManagersMayDivergeIndividualShareholdersInstitutionalShareholdersPrincipalsAgentsSeniorExecutivesCorporateStaffDivisionGeneralManagersSharedActivityManagersMonitorsTheAgencyRelationshipBoardOfDirectorsManagingAgencyDualRoleTheOfficeofthePresidentChairmanoftheBoard(monitoring)ChiefExecutiveOfficer(strategyformulation)ChiefOperatingOfficer(strategyimplementation)ChairmanCEOCOOChairmanCEOCOOChairmanCEOCOOChairmanCEOCOOInformationFiltering? informationaboutthedivisions’businesses isfilteredasitrisestotheseniorexecutive? theseniorexecutivecan‘manage’theinformation flow? informationflowshouldnotexceedthe boundedrationalityofmanagersatany levelintheorganization? informationshouldflowshouldbematched withdecision-makingauthorityTheOfficeofthePresidentStrategicPlanningCorporateFinanceCorporateR&DCorporateMarketingDivisionGeneralManagersProductionFinanceEngineeringAccountingHumanResourcesDivisionDivisionDivisionSales&MarketingSeniorExecutiveCorporateHumanResourcesSharedActivityManagersProductionFinanceEngineeringDivisionDivisionDivisionHumanResourcesSales&MarketingProductionFinanceEngineeringSharedActivitiesCostCentersProfitCentersManagementControls3IssuesEvaluatingDivisionalPerformanceAllocatingCapitalTransferringIntermediateProductsMeasurement:? accounting? economicvalue added(EVA)Ambiguity:? allocatingcosts &revenuesPlayingGames:? managerswant tolookgood? zero-based budgetingSettingPrices:? negotiation? cost? market-based? dualpricingCompensationPoliciesCompensationCommitteeIntheory…? representsinterestsofownersinsettingcompensation oftopexecutiveteam? setscompensationbasedonperformanceormarketInpractice…? sometimesappeartobebeholdentoexecutives? compensationdecisionsoftenbearlittlerelationship toperformanceCompensationPoliciesAligningIncentivesSalaryCashBonusStockGrantsStockOptionsNotTiedtoPerformanceTiedtoPerformanceLongTimeHorizonShortTimeHorizonResearchshows…Theorypredicts…RefocusingCorporatelevelstrategymaycallforexitingabusiness? aconglomerationdiscountmayexist? thecorporationmaylacknecessaryskills? expectedeconomiesofscopemaynotexist? thecorporationmayneedfundsforcoreactivitiesDivestAssetsSpin-offMBOIPOor,InternationalImplementationGlobalStrategyMulti-DomesticStrategyCentralizedHub:? facilitatesglobal integration? exploitsa globalproduct? exploitsscale economiesDecentralizedFederation:? highlyautonomousunits? veryresponsivelocallyCoordinatedFederation:? lessautonomous? somesharedactivities betweendivisionsInternationalImplementationTransnationalStructure? facilitatesbothlocalresponsiveness andglobalintegration? countrymanagersareresponsiblefor exploitingeconomiesofscope? corporateHQconstantlyscansthe globelookingforbestpracticesSummarySuccessfulimplementationisamatterof:? ap