Organizational Design &

Strategy
Four levels of strategy
 Functional Level
 Business Level
 Corporate Level
 Global Expansion

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Functional Level Strategy
 A plan of action to strengthen an organization’s
functional and organizational resources, as well
as co-ordination abilities, to create core
competences
 In order to gain a competitive advantage, an
organization must be able to perform functional
activities:
 At a cost lower than its rivals for cost
leadership; or
 In a way to differentiate its products from
rivals’ to charge premium prices
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Porter’s Business Level Strategies

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Business level Strategy & Structure

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Corporate Level Strategy

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Global Expansion Strategy
 A multi-domestic strategy
 Local responsiveness; decentralized controls to subsidiaries to
produce and customize products to local markets
 An international strategy
 R&D and marketing centralized to home country and other
value creation functions decentralized
 A global strategy
 Oriented toward cost reduction with all principal value-creation
functions centralized at lower cost global location
 A transnational strategy
 Focused to achieve local responsiveness and cost reduction-
some functions are centralized while others are decentralized
at the global location best suited to achieving these objectives

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Strategy-Structure relationship for
International Environment

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Choosing the right strategy
 Understand your circumstances
 Can I map the five forces to my industry?
 Where do my products fit in terms of product life cycle?
 Take stock of your resources
 Tangible and intangible
 Strategically important resources are valuable, rare,
inimitable & non-substitutable
 Determine the relationship among
resources
 Loosely-linked / tightly linked

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Porter’s Five Forces Model

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Different Strategies
Position Leverage Opportunity
Strategy Strategy Strategy
Strategy Selecting a valuable Build strategically Pick a few strategic
and unoccupied important processes with
industry position resources for deep and swift flows
and then building up current markets. of opportunities.
defenses Leverage them into Learn simple rules
(FORTRESS) attractive to capture
new products and opportunities
new markets (SURFING)
(CHESS)
Environment Stable Moderately dynamic Dynamic

Resources Often mundane Strategically Opportunity-rich

important strategic processes
guided by simple
rules
Relationship Tightly inter-linked Moderately linked Loosely linked

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