The purpose of the master thesis was to develop a framework for evaluating what should be the contribution of each organizational level in the strategy process in multidivisional corporations. Based on the analysis of the empirical findings the conclusions presents a refined framework, providing a suggestion of what should be the contribution of the branch of operations level at Skanska.
First, it was confirmed that the organizational structure is linked to the diversification strategy of the company. Depending on the diversification strategy a combination of the three multidivisional structures can be used. It was also found that the organizational structure provides the foundation through which the strategy process is structured. In turn, in the strategy process it is commonly that one step in the process represents an organizational level. Further, at each level coordination is sought so that synergies can be reached. Therefore it can be concluded that it is important to match the organizational structure to the strategy, since it provides the prerequisites for creating synergies.
It can also be concluded that loss of managerial autonomy is a conflict in attempting to create coordination between districts and/or regions and/or branches of operations that is valid for Skanska. Therefore it is important that Skanska finds a balance between autonomy and control. This is of essence, in order to not limit the ambition and creativity of the employees and to not overload them with top management decisions that would make them loose all autonomy. In light of this, the thesis provides some guidance to Skanska in the pursuit of this balance.
There is no solution applicable to all companies so instead, Skanska must find its own balance. In light of Skanska’s increased level of centralization, it can be concluded that it has increased its level of cooperation. However, it was verified through the comparative study that cooperation comes at a higher cost and that full cooperation is not always desirable. It has to be kept in mind that Skanska has both specialized and generalized regions and districts in the branch of operations as well as large geographical distances. It can be concluded that these factors presents constraints to the possibility of sharing tangible and intangible resources. Therefore, it can be concluded that for Skanska full cooperation is not desirable since it would impose too high costs compared to the possible benefits. These possibilities will be accounted for further below.
It can be concluded that Skanska are taking some of the measures to increase the level of cooperation suggested in literature and verified through the comparative study. It can be concluded that these are facilitated through the strategy process. Specialist functions are one
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of these mechanisms thorough which Skanska for example can increase its purchasing power and linking this to the strategy process, the BO level for example was described as a forum in which contact between the line and the specialist functions was established. Also the strategy process provided other forums in which contact between people in the organization was established. Also, rules and regulations that govern the work are provided through the strategy process like the company values for example. However, it was concluded that Skanska is prone to a conflict which will negatively affect the success of coordination initiatives that the company launches, rewards based on individual performance. It was also shown through the comparative study that the strategy staff, which is active participating in the strategy process at all organizational levels, can help in holding the strategy together and supporting the strategy process.
In the analysis and discussion it was argued for the importance of focus in the strategy process for multidivisional companies. Focus in the meaning of prioritization of strategic issues to achieve a division of workload among the strategy areas. The importance to achieve focus was argued for from the viewpoint of Roles and responsibilities, but also from the Communicative viewpoint. The conclusion is that focus in the strategy process will raise performance by narrowing the number of issues that are dealt with on each level in the strategy process. For Skanska, this implies a selection of strategic focus areas for each of the levels; corporate level, BO level and region level.
Figure 29 below presents a schematic picture of how this division of strategic areas should be preformed, according to the findings of this research project. In the figure, each square represents a strategy area at Skanska that is applied today. The filled squares with text point out on which level this specific strategy area should be handled. The shaded squares with arrows pointed on them represents that this level will be provided with guidelines on how they shall handle this issue. The shaded issues shall not be the focus of the region level, but they will be handled on this level before the district level. There is a difference from the ONE Skanska area at BO level, which is not shaded and shall not be handled at all on this level, even though the issue is handled on the above level. The reason for this is that the BO level shall focus on Green construction and Productivity. It is the belief of the researchers that the BO level in this way can achieve a focus on Green construction and Productivity that is similar to the focus on marketing, innovation and branding that the middle level at SCA, called Global Hygiene Category, achieves.
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Figure 29 Focus in the strategy process
It should be clarified that this division is regarding the ongoing strategy work, which takes place each year in the form of smaller corrections and updates of the strategies. For the larger strategy work, with a more long-term focus (five years ahead), each strategy area shall be concerned at corporate level, to provide the sufficient guidance for the levels below. The motivation for the division of strategy areas rests on the findings from the case study at Skanska, which are explained in the analysis above.
In the analysis of the comparative study it was argued for the need to, under certain circumstances, apply a formal decision process. Further, in the analysis of the Skanska case, arguments were found to apply a formal decision process, such as the RAPID model described in theory. This would have a positive effect by clarifying decision roles concerning BO. Since today time and effort are wasted in the product groups at BO, it is the conclusion of this research to implement a formal decision process model to the work performed in the product groups at Skanska. In the light of the above conclusions regarding what strategic areas to deal with on each level, the assignment of decision roles should be facilitated by a narrowed scope of the BO level. Simply put, the main issues to be dealt with have shrunk from six to two; Productivity and Green construction. An example is also provided in the case analysis of how the assignment of roles regarding the product group might look, but it is outside the scope of this thesis to analyze it further.
As described in the discussion, a main concern for the research was the examination of what an organizational level can contribute within the strategy process. For Skanska, the main issue was regarding the contribution of the BO level. A number of opportunities for value creation of this level have been identified and it is the viewpoint of the researchers that these presents good and accurate examples of what an organizational level can contribute with. It was found that the BO level at Skanska can contribute with; functioning as a filter to the regions, that they only receive actions that are applicable to their circumstances; create an operational focus by utilizing the expertise of the region and district managers to create shared knowledge; shared learning and best practice regarding customer relations, forming opportunities for coordination between the regions; lifting some strategy areas from the region level (Green construction and Productivity) and thereby facilitating a focus in the below
ONE Skanska
Green
Construction Productivity
Employees Safety Customers
Corporate level
BO level
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levels. Further, as argued for in the analysis regarding communication above, BO has an important role to fill as communicator by creating personal carriers of strategy. The meetings and discussions within BO serve as a forum for involvement, which legitimizes the strategy through the organization.
Finally, it can be concluded that tools such as strategy plans, balanced scorecards and strategy maps are helpful in the communication of the strategy. Based on the result it can however be concluded that while strategy plans was used at almost all companies to structure the strategy process, using the balanced scorecard in turn to structure its content, the strategy plan in itself is not the best communicative tool at Skanska. Rather, Skanska is in need of an easy, visible and communicative tool. The strategy map has been described as a visual tool to help show the link between the individual employee’s job and the overall goal, providing a more forward oriented process, and increasing the enthusiasm and creativity by providing a more flexible frame. These are benefits that are considered beneficial for Skanska. Also, keeping mind the above conclusions, the strategy maps can be used as a tool for clarifying the decision roles and to visualize the focus areas in the current strategy process.