Strategic Management: Formulation and Implementation

Organizational Structure - Summary

One of the principal implementationrelated duties of toplevel management involves choosing an organizational structure that facilities implementation activities. Many factors must be considered when selecting an organizational structure.

This chapter examined six fundamental organizational structures: functional, geographic organization, decentralized business divisions, strategic business units, matrix structures, and hybrid structure; and the advantages anddisadvantages of each were identified.

Some strategies and structures seem to be better matches in terms of likely success: simple structure, machine bureaucracy, divisional form, adhocracy or prospector, analyzer, defender, and reactor. The forces which influence and determine the structure were discussed.

The key issues in this chapter is how an organization can implement its strategy by designing its structure appropriately. Although some take the position that strategy determines structure, and others argue that structure limits and determines strategy. The real issue is whether the strategy and the structure are consistent.

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. Numerous internal and external forces affect an organization. When a firm changes its strategy in response to these forces, the existing organizational structure may become ineffective. It is also undeniable that structure can influence strategy.

Thus, if certain new strategy require massive structural changes, that fact make the strategy less attractive. Therefore, a important concern is determining what types of structural changes are needed to implement new strategies.

The last section of this chapter have indicated the need to match the organization's structure with strategy.