Strategic Management: Formulation and Implementation

Matching Strategy And Structure

There is no one optimal organizational design or structure for a given strategy or type of organization. What is appropriate for one organization may not be appropriate for a similar firm. The choice of structure must be determined by the firm's strategy.

Matching Organization Structure To Strategy

All of the basic organizational form have their strategyrelated strengths and weaknesses, thus the best organizational arrangement is the one that best fits the firm's situation at the moment.

The following fivesequence procedure is a useful guide for fitting structure to strategy:

  1. Pinpoint the key functions and tasks necessary for successful strategy execution.
  2. Reflect on how strategycritical functions and organizational units relate to those that are routine and to those that provide staff support.
  3. Make strategycritical business units and functions the main organizational building blocks.
  4. Determine the degrees of authority needed to manage each organizational unit bearing in mind both the benefits and costs of decentralized decision making.
  5. Provide for coordination among the various organizational units.