Strategic Management: Formulation and Implementation

Understanding The Relationship Among Activities

Activities can be related by the flow of material through the production process, the types of customer served, the distribution channels used, the technical skills and knowhow needed to perform them, a strong need for coordination, the sequence in which tasks must be performed, and by geographic location, and so on.

Such relationships are important because one (more) of the interrelationships usually become the basis for grouping activities into organizational units. If strategic needs are to drive organization design, the relationships to look for are those that link one piece of the strategy to another.

Grouping Activities Into Organization Units

The chief guideline here is to make strategycritical activities the main building blocks in the organization structure. If activities crucial to strategic success are to get the attention and visibility they merit, they have to be a prominent part of the organizational scheme.

When key business units and strategycritical functions take a bakseat to less important activities, they usually get fewer resources and end up with less clout in the organization's power structure than they deserve. When key units form the core of the whole organization structure, their role and power is highlighted and institutionalized.