Strategic Management: Formulation and Implementation

Grouping Activities Into Organization Units

The chief guideline here is to make strategycritical activities the main building blocks in the organization structure. If activities crucial to strategic success are to get the attention and visibility they merit, they have to be a prominent part of the organizational scheme.

When key business units and strategycritical functions take a bakseat to less important activities, they usually get fewer resources and end up with less clout in the organization's power structure than they deserve. When key units form the core of the whole organization structure, their role and power is highlighted and institutionalized.

Determining The Degree Of Authority And Independence To Give Each Unit

Companies must decide how much authority and decisionmaking latitude to give managers of each organization unit.

There are several guidelines for delegating authority to various units:

One of the biggest exceptions to decentralizing strategy related decisions arises in diversified companies with related businesses in their portfolios, in such case, capturing strategic fit benefits is sometimes best done by centralizing decisionmaking authority.