Strategic Management: Formulation and Implementation

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.

Pinpointing The Strategy Critical Activities

Two questions help identify what an organization's strategycritical activities are:

"What functions have to be performed extra well and in timely fashion for the strategy to succeed?" and "In what areas of the organization would malperformance seriously endanger strategic success?"
(Peter Drucker).

The answers generally show what activities and areas are crucial and where to concentrate organizationbuilding efforts.