‘Structure follows strategy’
Introduction
According to Chandler, structure is referred as the organization design which is made from effective communication and authority from administrative offices (Chandler, 2003). These aspects are essential in creating effective coordination and planning the organization goals and policies. Chandler implementing a strong thesis which asserts that ‘structure follows strategy’ and the important purpose of this thesis is to clarify that structure is created when various basic strategies are made. In order to understand that strategy play a great role in forming a structure, Chandler asserts that organization structure is made by two types of strategies namely, vertical integration strategy and diversification strategy (Chandler, 2003). Vertical integration strategy is applied when planning to implement administrative office in local areas, forming departmental structure and forming multidepartimental structure. Diversification strategy is applied when forming a multidivisional structure in the internal scale or in others when developing new products. From above explanation, it is clear that structure follows strategy since the organization must first create clear strategies and then develop a structure. Strategy comes first for the purpose of defining organization objectives, examining the external and internal environment and examining the organization opportunities and weaknesses in order to form a structure (Chandler, 2003). Structure and strategy are related in every organization in that strategy is defined as what the organization is aiming to achieve and structure is defined as how the aimed things will be achieved. Generally, organization creates strategies and then forms a structure which impacts the organization performance.
An effective organizational strategy creates a strong organization structure which brings the success of a firm. An organization cannot start a business if it has not positioned the strategies to follow in order to achieve the success. Hill & Jones (2012) asserts that an organization must hold various strategies such as prospector and this is a business strategy which helps the business to identify new opportunities and the capability of implementing new innovations. Second, business must follow the strategy called analyser in order to examine the customers’ behavior and the activity of competitors in order to compete successfully through providing comparable products with affordable prices. Third, business must follow the low cost defenders strategy which entails the targeting of segments market and providing standardized practices and products with low cost. Last, it is important for an organization to follow the strategy of differentiated defenders which is based on targeting markets by providing differentiated products (Hill & Jones, 2012). All these strategies helps to understand that before creating an organization structure, it is important to analyze strategic ways which the structure will follow in order to maintain the business. In corporate strategy, executives start by analyzing the industrial condition which operations are done. They carry out all the important roles such as analyzing the competition, strength and weaknesses and they create a strategic position where they can build a competitive advantage. For the organization to achieve its competitive advantages, it applies various strategies such as human resources management, manufacturing, budget allocation and more (Shafiee, Razminia & Zeymaran, 2016). This indicates that strategy shapes structure since it first plans on the vision and then organization structure in which the vision will be accomplished.
Organization structure is an important factor which determines organization effectiveness through encouraging relations in administration hierarchy and providing control. It improves performance by ensuring that there are effective operational processes, responsible supervision and effective flow of information (Shafiee, Razminia & Zeymaran, 2016). Generally, organization structure improves performance by ensuring accountability, responsibility and availability on human resources. Performance is highly achieved through the framework which helps smooth operations. There are different types of structures such as functional, network, matrix and more and all these ensure that performance through different elements is highly achieved. According to Frankenberger (2016) there are four elements of organization structure with holds the type of structures needed for smooth operations. First, performance is achieved through span of control and this entails the number of supervisors who ensures proper coordination, accountability, level of management and task processes. Thus, span of control as important element of organization structure improves performance since corporate leaders are responsible and accountable for better management and employee development to (Frankenberger, 2016). Second, performance is achieved through departmentalization which entails the grouping of workers into different departments such as function network. Thus, centralization is a special element in corporate structure which ensures that there is an effective decision making from the upper level. Performance is achieved through workplace harmony, reduction of production cost and solving organization crisis. Last, corporate structures ensure good performance by applying an important element called decentralization which is based on decision making by lower levels. Employees are empowered and they are able to adapt and to react to organizational changes (Frankenberger, 2016).
A corporate structure has a significant effect on organization performance and various researches and studies have confirmed that many organizations fail due to lack of a definite structure. Structure in an organization play a significant role in division of task and activities coordination in order to achieve the organization goals and objectives. Organization is made up by different departments such as manufacturing, advertising and sales and all these departments play a crucial role of shaping the organization structure. This means that unless the department and culture supports the structure, then the structure would be meaningless (Janićijević, 2013). Therefore, organization structure determines the performance and success since it holds the management decision. Organization structure and strategic decisions impacts the organization level-outcomes. Corporate strategy empowers the organization to realize its set objects, protects shareholders and meets legal requirements. Corporate structure has a mutual impact on organization performance since the structure has the power to understand the peoples’ behavior (Schein, 2010). On the point of people’s behavior, the article asserts that organization performance is achieved from organization culture which is made by organization structure. Culture in an organization acts as an intrinsic factor and it is valued as it determines the behavior of people in organization operations with respect to the norms, attitudes and assumptions. Organization structure acts as an in extrinsic factor in people’s behavior and it influences the way people conduct themselves through authority distribution, coordination and more. Thus, culture and structure are related since they influence each other in determining behavior toward organization performance (Schein, 2010). Organization culture involves structural dimensions based on examining the members’ behavior toward achieving organization goal. Structure involves different models which influence culture since people use the models to make decisions, conduct activities and coordinate with organization.
Wabha (2015) asserts that corporate structure includes knowledge management which improves performance. Knowledge management is defined as the process of producing, storing and sharing valuable information. Organization structure consists of principle of knowledge management which is derived from availability of resources, effective management of information system, management of organization change and management of human resources. For example, corporate structure has educational programs, good library and more and these resources improve organization’s knowledge management (Wahba, 2015). Organization structure ensures good performance through knowledge management in that it shapes communication patterns, implement effective decision making and new ideas. It is important to note that knowledge management itself improves performance as it acts as a strategic tool in operational efficiency, provision of best practices, provision of abilities for strategic organization plans, generating new revenues, protecting intellectual capital, improves decision making and helps in other many areas (De, 2014). Due to the rapid change in organization in terms of information technology, quality structure play a great role in addressing the environment variables in order to meet a balance of stability and change. Thus, knowledge acts as a strategic resource and learning the knowledge is the strategic capabilities for smooth operations. Knowledge which is produced by the organization structure ensures smart decision, effective planning and design of provisions intuitive. In the application of knowledge, corporate structure focus on the distribution of power and making decision making in the internal structure and the ability of personnel in creativity. Organization structure provides formal mechanism of relationships, communications and authority between superiors and subordinates (Csaszar, 2012). Focusing on the various elements of organizational structure, it is important to note that the units applies knowledge management to the structures which requires environment changes and ensures performance by ensuring smooth operations. Corporate structure is also responsible for performance by focusing on market development through the provision of strategy-performance link. Corporate structure provides strategies based on marketing organization, international markets, multi-channel systems and more. In addition, it employs a specialized structure which helps in the behavior adjustment and adapting to market changes which are unpredictable. Structure provides the managers with strategies which should be used in market perspectives (Csaszar, 2012).
Lee, Kozlenkova and Palmatier (2014) brings in another concept of organization structure in organization and asserts that organizational performance is achieved in the areas of marketing as a result of organization structure. Different designs of organization structure contribute to marketing outcomes and objectives and furthermore it helps the organization with new concepts of structural marketing (Bellini, Pereira & Becker, 2016). Organization structure play a significant role in marketing since the structure is designated as a tool of achieving competitive advantage from local and international l markets. First, organization structure improves performance from marketing concepts as it acts as a driver of market innovation. The market orientation theory asserts that factors of organizational design, both formal and informal foster the market orientation toward business performance (Burton & Obel, 2004). In addition, resource-based theory improves performance by providing job satisfactions which impacts the employees operations. In corporate structure, managers apply dynamic capabilities and structural flux to understand the adapting structure and performance implication. Corporate structure also plays a crucial role in innovation (Royo, Lázaro & Moreno, 2015). On this point, team structure ensures firm collaboration with an aim of achieving new services, products and development of new knowledge to customers. Team structure is more interested in innovation and it focuses on creating wise managerial decisions and cross-functional integration. The findings also assert that organization structure helps the managers to set organization goals and applies new concepts of reaching the customers, improving the brands and developing market learning (Horn & Faulkner, 2008). Structural marketing improves performance since managers are able to improve the speed of meeting the customers demand and they are able to adapt to the changes in order to meet the relational outcomes.
Relationship between findings and own experience from my organization
According to the research, some findings relate with my organization and there are new concepts which the organization must apply in order to gain an effective organization performance. First, the organization achieves performance as a result of applying strategies in different areas. Our organization formed structure and then employed different strategies which support the structure in moving on the business (Goswami, 2010). With relation to the Chandler’s theory, our organization sets strategic objectives which are followed by different structures in order to improve performance. Other thing is that my organization ensures that there is a positive organization culture which values the organization behavior and norms. Through accountability, involvement, consistency and mission, my organization culture brings effectiveness and improves employee perception, understanding as well as behaviors. Furthermore, my organization culture improves performance through knowledge management. There is availability of resources and it is able to adapt to the environmental changes and this helps to maintain competitive advantage (Ushijima, 2016).
The current literature to current organization
There are new findings which must be applied in my current organization to ensure effective organization performance. Though the organization has implemented strategic methods, good culture, and knowledge management and has enjoyed benefits from marketing, there is need for proactive management in order to maintain the organization performance (Ruddle, 2016). The new findings assert that organization must create a well defined structure and things should be done in a new way and the organization structure should follow new strategies which are derived from four perspectives. In order to create a corporate value, first the organization should focus on financial perspective and this means that the organization must institute a resource allocation process to an enterprise-level in order to implement new business units and be in a position to negotiate with external entities (Tatarynowicz, Sytch & Gulati, 2016). Other new approach which the organization must adapt is customer perspective. This means that the organization must leverage relationships in multiple units and provide low prices and greater convenience to customers and this is a way of generating corporate synergies more than the specialized competitors can offer. Note that the cross-unit integration will develop a value proposition and this will improve performance (DuBrin, 2012). Other new model in organization structure is called process perspectives. It is important for the organization to form a multiple business units and share common processes and gain core competencies based on innovation. Last, a new approach is based on learning and growth and this mean that the organization must integrate in cross-unit collaboration and develop human capital and knowledge management and this is the key drive to enterprise-level synergies (Thornton, Ocasio & Lounsbury, 2012).
Conclusion
Corporate structure and organization play a significant role in organization performance. Theories and researches have confirmed that in order to create an effective structure, it is important to apply strategies which will support the structure since it cannot stand on its own if there are strategies which the managers and employees will follow. In addition, organization performance is achieved from organization structure in different angles. Structure provides quality culture, marketing concepts knowledge management and different elements which contain different function and all these ensures smooth organization operations thereby leading to organization performance. According to the findings, my organization has similar features since the structure ensures that there is quality culture, marketing management and other significant concepts but the new findings have implemented new approaches which the organization must implement in order to ensure effective organization performance.
References
Bellini, C. P., Pereira, R. F., & Becker, J. L. (2016). Organizational structure and enterprise systems
implementation. Information Technology & People, 29(3), 527-555. doi:10.1108/ITP-04-2014-
0076
Shafiee, H., Razminia, E., & Zeymaran, N. K. (2016). Investigating the Relationship between
Organizational Structure Factors and Personnel Performance. International Journal Of
Management, Accounting & Economics, 3(2), 160-165.
Hill, C. W. L., & Jones, G. R. (2012). Strategic Management. Cengage Learning.
Chandler, A. D. (2003). Strategy and structure: chapters in the history of the American industrial
enterprise. Washington: Beard Books.
Wahba, M. (2015). THE IMPACT OF ORGANIZATIONAL STRUCTURE ON KNOWLEDGE MANAGEMENT
PROCESSES IN EGYPTIAN CONTEXT. Journal Of Developing Areas, 49(3), 275-292.
doi:10.1353/jda.2015.0173
Lee, J., Kozlenkova, I., & Palmatier, R. (2015). Structural marketing: using organizational structure to
achieve marketing objectives. Journal Of The Academy Of Marketing Science, 43(1), 73-99.
doi:10.1007/s11747-014-0402-9
Frankenberger, S. (2006). Management of regulatory influences on corporate strategy and structure.
Wiesbaden: Deutscher UniversitSts-Verlag.
Burton, R. M., & Obel, B. (2004). Strategic organizational diagnosis and design: The dynamics of fit.
Sáenz-Royo, C., Gracia-Lázaro, C., & Moreno, Y. (2015). The Role of the Organization Structure in the
Diffusion of Innovations. Plos ONE, 10(5), 1-13. doi:10.1371/journal.pone.0126076
De, S. U. (2014). Knowledge management practice in organizations: The view from inside.
Janićijević, N. (2013). THE MUTUAL IMPACT OF ORGANIZATIONAL CULTURE AND STRUCTURE.
Ekonomski Anali / Economic Annals, 58(198), 35-60. doi:10.2298/EKA1398035J
Csaszar, F. A. (2012). Organizational structure as a determinant of performance: Evidence from mutual
funds. Strategic Management Journal, 33(6), 611-632. doi:10.1002/smj.1969
Segal-Horn, S., & Faulkner, D. (2008). International strategy. London: Thomson Learning.
Ushijima, T. (2016). Diversification, Organization, and Value of the Firm. Financial Management (Wiley-
Blackwell), 45(2), 467-499. doi:10.1111/fima.12108
Schein, E. H. (2010). Organizational culture and leadership. San Francisco: Jossey-Bass.
Goswami, C., & Goswami, S. (2010). Role of Organisation Structure in Facilitating Marketing.
Global Business & Management Research, 2(2/3), 162-183.
Ruddle, I. (2016). Understanding the New HR Services Operating Models. Workforce Solutions Review,
7(1), 4-7.
Tatarynowicz, A., Sytch, M., & Gulati, R. (2016). Environmental Demands and the Emergence of Social
Structure. Administrative Science Quarterly, 61(1), 52-86. doi:10.1177/0001839215609083
DuBrin, A. J. (2012). Essentials of management. Mason, Ohio: South-Western/Thomson Learning.
Thornton, P. H., Ocasio, W., & Lounsbury, M. (2012). The institutional logics perspective: A new approach
to culture, structure, and process. Oxford: Oxford University Press
