Strategy Implementation: Organizational Structure
A key aspect of implementing strategy is the need to institutionalize that strategy so that it permeates daily decisions and actions in a manner consistent with long term strategic success. The fit between the internal organization of an enterprise and its strategy is central to strategic management. Inappropriate internal organization can prevent or impede the development and implementation of a strategy.
Three fundamental elements must be managed to "fit" the strategy if that strategy is to be effectively institutionalized: organizational structure, leadership and culture.
In this chapter, I look at the key issues of the nature of organization structure and the linkages between strategy and structure by examining a number of alternative structural forms.
In the next chapter, focus will shift to the leadership of top management in the accomplishment of strategic objectives and on organizational culture.
Organizational structure is a major priority in implementing a carefully formulated strategy. Research on the linkage between corporate strategy, organization structure, and performance has a long history.
This chapter has six major aims:
- to present the basic elements of organizational structure;
- to present structural alternatives, their advantages and disadvantages, and their role in strategy implementation;
- to discuss the factors that influence organizational structure;
- to discuss the alternative approaches to organizational design;
- to examine how managers can determine whether an organization's structure is appropriate for implementing the organization's strategy;
- to delineate how strategy and structure can be matched.