ABSTRACT
This chapter dealt with strategy implementation—how companies develop and implement strategies. Specifically, we looked at a variety of organizational structures (such as functional, divisional, and matrix) and systems, with a particular emphasis on routines such as strategic planning. The key issues here are (i) achieving a balance between specialization and coordination when designing structures, and (ii) integrating structures with the existing systems and routines of the company. When we look at strategic planning, the key issue here is one of ensuring that a company’s strategic plans actually relate to strategy, and that the plans have the buy-in of people who will be implementing them.
The second part of this chapter examined corporate governance. While agency theory dominates discussions of corporate governance, stockholders face two problems. First, how do we ensure that boards of directors—a primary mechanism for monitoring management—perform their tasks effectively? Second, how do we address issues of CEO and top management compensation and, in particular, ensure a link between performance and compensation?
