BUS501 Study Guide

4a. Analyze commonly used execution strategies, such as growth and retrenchment

• When might an organization use horizontal integration?
• What are the advantages of diversification for a company?
• In what situations do you think a company would use a retrenchment strategy?

A growth strategy aims to fuel growth in revenues and earnings. Growth strategies include horizontal integration, which is a merger or acquisition of a new business. They can engage in vertical integration, which occurs when a company integrates successive stages in the production and marketing process. For example, when a gas station acquires an oil refinery. Diversification is a strategy in which a company acquires or establishes a business other than what it currently does. A retrenchment strategy is when an organization shrinks one or more business units. Often this means to lay off employees and, in other words, get smaller. Sometimes companies will also restructure, which can include divestment, which means to sell off parts of a company's assets. They might also liquidate, which means to shut down portions of a company's business.

Review

To review, see:

• Growth Strategy
• Corporate Strategies

4b. Analyze organizational design methods to assist in strategy execution

• What is a functional organizational design?
• How are organizational design and strategy related?

When developing and executing a strategy, organizational design should be considered. The way a company is structured, such as using a functional, multidivisional, matrix, or boundaryless approach, directly influences how well it can implement its strategy. A functional structure groups employees by specialty, a multidivisional structure organizes by products or regions, a matrix structure combines functional and project reporting, and a boundaryless structure removes barriers to encourage collaboration across all areas. In addition, the importance of organizational controls, including output, behavioral, and clan controls, which help guide employee actions and ensure strategic goals are met. When considering organizational structure, there is a need for alignment between structure, control systems, and strategy. 

Review

To review, see:

• Executing Strategy Through Organizational Design
• Organizational Culture

Unit 4 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• boundaryless
• diversification
• divestment
• functional 
• horizontal integration
• liquidate
• organizational design
• matrix
• multidivisional 
• restructure
• retrenchment strategy
• vertical integration