Strategy and ICT
The Information Society
Companies as drivers of change
Competition and strategy
ICT and Strategy
ICT
acceptance
Competitive advantage
Transaction costs, value chain
The New Capitalism
So far
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Developments in society
Developments in economy
Companies as drivers of change
The existence/size/limits of companies:
- Transaction costs
- Value chain
To do
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Explain the form of companies
Explain the conduct of companies
Company structure (
Morgan and Mintzberg
)
Basic Concepts
Organizational Structure: The formal
configuration between individuals and groups
with respect to the allocation of tasks,
responsibilities, and authorities within
organizations.
Organizational Chart: A diagram representing
the connections between the various
departments within an organization: a graphic
representation of organizational design.
Sample Organizational Chart
Structure Concepts I
Hierarchy of Authority: A configuration of the
reporting relationships within organizations; that
is, who reports to whom.
Division of Labor: The process of dividing the
many tasks performed within an organization
into specialized jobs.
Span of Control: The number of subordinates
in an organization who are supervised by an
individual manager.
Modern Trends: Delayering
As today’s organizations restructure, the middle layers of
organizational hierarchies tend to get removed. The result is a
flatter organizational structure, which puts managers closer to
the issues about which they have to make decisions.
Division of Labor
Tall vs. Flat Organizations
Structure Concepts II
Line Positions: Positions in organizations in which people
can make decisions related to doing its basic work.
Staff Positions: Positions in organizations in which people
make recommendations to others but who are not
themselves involved in making decisions concerning the
organization’s day-to-day operations.
Decentralization: The extent to which authority and
decision making are spread throughout all levels of an
organization rather than being reserved exclusively for top
management (centralization).
Decentralization
Departmentalization
The process of breaking up organizations into
coherent units.
Functional Organization: The type of
departmentalization based on the activities or
functions performed (e.g., sales, finance).
Product Organization: The type of
departmentalization based on the products (or
product lines) produced.
Matrix Organization: The type of
departmentalization in which a product or
project form is superimposed on a functional
form.
Functional Organization
Product Organization
Matrix Organization
Organizational Design
The process of coordinating the
structural elements of an organization in
the most appropriate manner.
 Approaches include

• Classical and Neoclassical Approaches
• The Contingency Approach
• Mintzberg’s Framework
• The Boundaryless Organization
Classical vs. Neoclassical Theory
Classical Organizational Theory: The approach that
assumes that there is a single best way to design
organizations.
•
This approach assumes that managers need to have close
control over their subordinates and calls for designing
organizations with tall hierarchies and a narrow span of
control.
Neoclassical Organizational Theory: An attempt to
improve on the classical organizational theory that argues
that not only economic effectiveness, but also employee
satisfaction, should be goals of an industrial organization.
•
This approach assumes that managers do not have to
carefully monitor their subordinates and calls for designing
organizations with flat hierarchies and a wide span of
control.
Classical vs. Neoclassical Theory
Typology (
)
Morgan
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Machines
Organism
Brains
Culture
Political systems
Psychic prisons
Flux & transformation
Instruments of domination
The machine
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Bureaucracy
Functional specialisation
Scientific management (Taylor)
The organism
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Adjust to environment
Organisation as an open system
Mintzberg
Henry Mintzberg
Mintzberg’s Framework


Mintzberg claims that
organizations are
composed of five basic
elements, or groups of
individuals, any of which
may predominate in an
organization.
The element that
predominates will determine
the most effective design in
that situation.
Mintzberg: Five Basic Elements
Operating Core: Employees who perform the basic work
related to an organization’s product or service.
Strategic Apex: Top-level executives responsible for
running an entire organization.
Middle Line: Managers who transfer information between
higher and lower levels of the organizational hierarchy.
Technostructure: Organizational specialists responsible
for standardizing various aspects of an organization’s
activities.
Support Staff: Individuals who provide indirect support
services to an organization.
Five parts of an organisation
1.
2.
3.
4.
5.

Strategic apex
Middle line
Support staff
Technostructure
Operating core
Illustrations borrowed from
presentations of Bolman and
Deal (Wiley Interscience)
Coordination
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Mutual adjustment
Direct supervision
Standardisation of work processes
Standardisation of work outputs
Standardisation of skills
Standardisation of norms
Mintzberg: Organizational Designs I
Simple Structure: An organization characterized as
being small and informal, with a single powerful
individual, often the founding entrepreneur, who is in
charge of everything.
Machine Bureaucracy: An organizational form in which
work is highly specialized, decision making is
concentrated at the top, and the work environment is
not prone to change (e.g., a government office).
Professional Bureaucracy: Organizations (e.g.,
hospitals and universities) in which there are lots of
rules to follow, but employees are highly skilled and free
to make decisions on their own.
Mintzberg: Organizational Designs II
Divisional Structure: The form used by many large
organizations, in which separate autonomous units are
created to deal with entire product lines, freeing top
management to focus on large-scale, strategic decisions.
Adhocracy: A highly informal, organic organization in
which specialists work in teams, coordinating with each
other on various projects (e.g., many software
development companies).
Simple structure
Machine bureaucracy
Professional bureaucracy
Divisional form
Adhocracy
Mintzberg: A Summary
Boundaryless Organization
An organization in which chains of command are
eliminated, spans of control are unlimited, and rigid
departments give way to empowered teams.
Modular Organization: An organization that
surrounds itself by a network of other organizations
to which it regularly outsources noncore functions.
Virtual Organization: A highly flexible, temporary
organization formed by a group of companies that
join forces to exploit a specific opportunity.
Affiliate Networks: Satellite organizations affiliated
with core companies that have helped them
develop.
Boundaryless Organization
Modular Organization
Virtual Organization
Strategic Alliances
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Mutual Service Consortia: A type of strategic alliance in
which two similar companies from the same or similar
industries pool their resources to receive a benefit that
would be too difficult or expensive for either to obtain
alone.
Value-Chain Partnerships: Strategic alliances between
companies in different industries that have
complementary capabilities.
Joint Ventures: Strategic alliances in which several
companies work together to fulfill opportunities that
require the capabilities of one another.
Back to Morgan: Brains
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Self learning system
Cybernetics
Negative feed back
Culture
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Shared values and norms
Institutionalisation
Political systems
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Interest groups
Power/influence
Instruments of domination
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The multinational
Strategy
Organisation and Management
2007 © Wolters-Noordhoff

SWOT
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Structure Conduct Performance
Resource Based View
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The strategy perspective
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Structure-Conduct-Performance model
(Porter, 1980, 1985)
Porter’s five forces model
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Organisation and Management
2007 © Wolters-Noordhoff
Question

Are there industry characteristics (based
on the five forces model) which explain
the use of the Internet as a channel?
Disappearance of barriers of
entry
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Economies of scale
Product differentiation
Switching costs
Access to distribution channels
(Shin, 2001; Lucas, 2002)
Existing rivalry
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Winner takes all
First mover advantage
(Source: Coltman, 2001)
Strategies
Relative
resource
costs
Lower
Parity
Higher
Relative resource-produced value
Lower
Parity
Higher
+
+
-
0
+
-
-
?
?
Strategies to realize competitive
advantage (
)
Porter, Treacy and Wiersema
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Cost leadership/operational excellence
Differentiation/product leadership
Focus/customer intimacy
Question

Mention examples of companies that use
the Internet to create a competitive
advantage
Boston Consultancy Group Portfolio Matrix
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Organisation and Management
2007 © Wolters-Noordhoff
Organisation and Management
2007 © Wolters-Noordhoff
Organisation and Management
2007 © Wolters-Noordhoff
Growth according to Ansoff
(1965)
PRODUCT
Existing
Existing
Penetration
New
Product development
MARKET
New
Market development
Diversification
Strategy (2)
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Horizontal integration
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Forward vertical integration
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Backward vertical integration
The role of ICT in companies
Strategic Alignment Model
Business
ICT
Impact
Business Strategy
ICT Strategy
Infrastructure and
processes
Organizational
infrastructure
Alignment
Alignmentmodel Venkatraman & Henderson
Strategic Alignment: levering Information Technology for Transforming Organisations
IBM Systems journal, 32 (1) 1993, p 4-16
Strategic Alignment Model
Four dominant alignment perspectives
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1.
2.
3.
4.
Strategy execution
Technology transformation
Competitive potential
Service level