Philadelphia Business Daily

What is the connection between organizational structure and organizational strategy?

What is the connection between organizational structure and organizational strategy?

Public Comments

1. Your strategy will more or less define your structure. Just like when playing a chess game where, you try to put all your pieces in a certain positions ( structure) to support your strategy ( that is to check mate). In a business parlance, the strategy is your process to achieve your business goal, and you make a organized structure ( man, machine,method,material) to support that goal. I hope its clear to you.
2. Strategy is supposed to dictate structure.... ideally. The philosophy is that to best match your environment as an organization, you should design all aspects of an organization to this end; including its structure. Alfred Chandler, who died last week, was the biggest proponent of this in MBA literature, and it makes sense. The reality is that structure defines what kind of strategy you choose in that it both constrains your view and attention to the environment so that you only see a select set of issues as important. This shapes your firms' ideas of what it can or wants to do with respect to the environment. The resulting strategy may change the structure, but again, part of the structure of the organization is the decision makers. Besides structure directing organizational attention, it also directs incentives within the organization. How often do people decide their way out of a bonus, or even a job for their organization's best interests? Usually, we as decision makers choose options that are slightly less optimum for our firm, yet preserve our own interests. Finally, research on structural changes in organizations over time shows an amazing resistance to any real structural change in any firms. Firms remain fixed in their structures left by their founders as long as 400 years ago. Family firms remain patriarchal (example most ship building and agriculture firms formed over 150 years ago), functional business firms remain functionally structured (example, railroads and agricultural implement manufacturers founded over 100 years ago), multibusiness firms remain as such. Arthur Stinchcombe discover this in 1965, but others like Hannan & Freeman and Robert Aldrich still find no real structural changes in firms. No doubt, the organizations are forming strategies, but the scope of the strategies rarely include fundamental organizational structure. So, we got structure defines strategy defines structure.... It should be strategy completely defines structure, but it is impossible to completely precipitate this outcome.
3. The organizational structure is who's who in what position of the company set out in a tree like pattern called organisational chart. Organizational strategie is the plan you put in place to manage this. The key people you may not have yet but will put in top levels as money allows etc.