The Relationship Between Strategy and Organizational Structure

This literature review examines the relationship between strategy and organizational structure. It discusses how the two elements are interconnected and how they impact the overall success of an organization. The review explores the importance of aligning strategy and structure to achieve organizational goals and mission.

Literature review
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Abstract:
There is class relationship between an organisation structure and interlinking it across various
sub units that can help in creation of a effective structure in organisation. The overall
organisation structure is regarded as the patter in which different activities of a organisation
interconnected or interrelated, it involves various issues as to how the organisation activities will
be divided and has assigned with different positions, divisions, departments, groups. That has to
be necessary accomplished in order to achieve the laid objectives. Presently the report aligns that
there is a strong correlation between these two business aspects that have to be combined
together to focus on overall laid organisational vision and mission in long term.
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Table of Contents
Introduction......................................................................................................................................4
Main body........................................................................................................................................4
Recommendations:.........................................................................................................................11
Conclusion.....................................................................................................................................14
REFERENCES..............................................................................................................................15
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Introduction
Organisational strategy is related to planning for the whole business that sets out survey
organisations can use the major resources. Organisation strategy is regarded as a plan of action
that is aimed to reach specific goals with respect to vendors and clients. Organisational structure
is the way different pieces of organisation can fit mutually internally for this organisation has to
deliver the approach, plan and structure that have to be woven jointly seamlessly (Mckeown, ,
2019). Organisational structure is a term used to emphasize the way organisation thinks
regarding its hierarchy assigned the task to its workers and ensures that the employees are
working collaboratively to achieve a common objective. Present report is based on making a
detailed evaluation of the way different types of relationship that exist between a strategy and
overall organisational structure. For this purpose there is a literature review that is prepared to
analyse the different associated aspects of this topic with respect to lead organisational vision
and mission statements.
Aim: “A review of the literature exploring the relationship between strategy and
organizational structure”.
Main body
Organisations strategy is the basic direction and scope of an organisation that can assist in
attainment of benefits through configuration of resources with the challenging environment to
meet the overall marketing needs and fulfil all the stakeholder expectations. There are certain
elements of a strategy statement that are explained as below:
Objective:
This term is related with goals that is the domineering purpose an organisation mission is
designed in seemingly simple terms that is enable top executives to empathise on the essential
business strategy: It is regarded as the connection with organisational goals and regarded as the
anticipation of future state of organisation (Kim. and Takashima, 2019). Vision is an aspiration
that can help in mobilise the energy & passion of an organisation.
It is clear cut and a quantifiable stamen of organization goals that is spread over a time period. It
refers to the profitability to enhance the present market share of a private organisation.
Objectives introduce the discipline strategy that is what has to be accomplished in the coming
time period for overall workforce of the organisation.
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(Source: Which Precedes the other? Organizational Strategy or Organizational Structure)
There is a connection between the process of strategy formulation, its implementation and the
structure of an organisation. In this manager has to define the firm’s strategy and after the focus
has to be shifted on its implementation process. Strategy implementation motion of putting
policies and strategy into actual behaviour in short term. But again Aldawai (2001) has argued
that strategy performance means putting the result into real life activities.
There are two major aspects of organisational design that includes integration and differentiation,
differentiation is regard as the differences in emotional orientations and cognitive aspects among
managers who are working across departments (Crammond and et.al., 2018).. There is need of
quality of collaboration that is required to achieve unity of efforts in the organisation. The
experience of McKinney supports the view point that nether strategy or the structure can be
determined independently. If structure cannot stand along with the strategy it may lead to non
achievement of success as per requirement of appropriate laid aims and objectives. In all large
sector organisation it can e viewed that delayed organisation structure can affect the plans and
may lead to priority of ineffective structure.
Organisational structure is regarded as the way jobs are separated and decision are completed
depending on the employment roles that have to be coordinated in coming future period
(Miśkiewicz, 2017). It specify the form’s formal coverage of controls, actions, relationships and
author and overall decision making process. Structure indicates the area of accountability,
authority and responsibility of the business. It specifies the way work has to be done and its
influence on the managers working. Structure is generally apprehensive with the official
understanding of jobs & reporting relationships that have to be co ordinates, controlled and
inspired to work as a team to achieve the firm’s objectives.
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Components of organisational structure:
Formalisation: It is the extent to which working relationships and decisions are administer by
procedures and rules. Actions and regulations serve as means for proper behaviours.
Hierarchical structure: It is determination of levels of organisation that is from the lowest to
highest level there is slow decision making process while in case of flat hierarchal structure
concentrates the decision making process.
Centralisation structure: The centralisation decision making process is starting with the top
administration with clear cut lines of statement and flowing of responsibilities.
Problems associated with strategy before structure: In some instances there are researchers gave
a view point that strategy should come before structure in some instances (Taylor, 2018). They
had a belief that strategy then arrangement paradigm can be too inflexible to cope up with the
fast altering environment in new millennium.
Organisational structure
Organisational structure helps in defining the organisational strategy for the purpose of building
of an effective structure. The structure of an organisation is based on analysing the strategy. This
is used to decide the areas of attention and the ways to place itself to achieve higher success.
As per view points of Jorge Morales Pedraza (2020), One of the initial steps in this is to make
detailed assessment of the overall operational environment for the purpose of deeming the
conditions n which has to operate. It involves checking of the customer trends, competition,
culture and other associated factors (Nwachukwu, Chládková and Fadeyi, 2018). Further based
on this the organisation has to set and find out about the strength and weakness of the
competition, economic capabilities and buying habits of the customers. The overall relationship
between strategy and structure becomes clearer when an organisation policy is in place. With
development of clear focal point of what organisation is willing to accomplish further they can
prove to align with the overall structure and the manner to achieve this in given time period. It
leads to a requirement of allocating of responsibilities with context of organisational functioning.
It is related with allocation of responsibilities of optimal results, deciding whether individual
efforts or group participating is the greatest method for achievement of the laid objectives, the
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strategy and structure together are combined with the organisation tone so that it can assist in
determination of overall organisational strategy (Ashok, Madan,. and Dzandu, 2021).
Structure is not a simple organisational chart but it includes procedures, people, positions,
processes, technology, culture and other such type of essentials that include the whole
organisation. It basically defines the way parts, pieces & process effort jointly (Salim, Rahman,
and Abd Wahab, 2019). The composition of organisation has to be integrated with the strategy to
achieve its overall laid goals and mission. Structure supports the strategy in case of organisation
change when a new strategy has to be implemented there is requirement to develop a common
strategy that can support it in a positive manner. The structure acts like a cord that pulls the
organisation back to old strategy.
As per views of Loadster (2020), Strategy is the main driver that decides the structure of an
organisation. In case of a structure is not synchronised with the strategy that can it can help in
achievement of set targets. A company with diversified products portfolio and has an associated
functional structure. That has to be organised as per various functions that includes finance,
marketing and operations that have to compete effectively in the product categories, Structure
plays a significant position in achievement of an organisations overall scheme. Another notable
characteristic is that structure & strategy had to be inter correlated to each other. For instance
coca cola operates a multi divisional structure where the company has planned its global business
as per different regions of world (Fernando, Fitrianingrum,. and Richardson, 2017). Coca cola
has five geographic effective segments that are operating as strategic business units. The SBUs
report to the parent company based on corporate headquarters. Coca cola operate through a SBU
model that has adopted a related linked strategy therefore it can be observed from this example
that coca cola is a brand that has successfully developed a related linked strategy that best serves
as per the goals of this brand. It has a related diversified business that is a strategy helps to
provide enough space for the SBU decision making process (Relationship between Strategy and
Structure, 2020).
Strategy and structure
Strategy and structure are the two self-governing fundamentals that are co dependent on each
other, the strategy is related to structural elements that are connected with business elements and
some of the business has shape and inverse strategy that is based on its structure. With combine
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of forces effectively it leads to development of a cohesive business model that functions to attain
commonly laid business goals.
Strategy fits in business: scheme is the actionable feature of running a business. It include
different pricing models, branding tactics and pricing models that can help in making better
competitor assessment. Formulation of scheme is done to decide the way company fits in the
market and how it can compete (Küng, 2017). Designing of a strategy requires some specific
setting up of goals and development of a big picture for the business. There can be formation of
strategy or moding the structure that can assist to work with strategy. It can be said that an
established business has seem firm structure members that can help in formulation of a strategy
based on existing processes and the existing structures.
Elements of strategy: There are some key aspects of a business that involves niche business
model. The arrangement begins with the various job executive roles for management, executives
and department needs. There are other common universal departments that include human
resources, accounting, operation, sales and product development associated with a specific
business model that includes manufacturing department such as shipping, floor production, and
supply chain logistics and so on.
Different types of organisation structure: There are different type sof organisation structure that
includes administrative structure which signifies the division of labour in organisation ir includes
dividing the roles that is logistics, operations and transportation. Further all these elements have
to be combined into administrative units that are divisions, departments and branches as per
regions and functions. Structure depicts the organisation charts that are equipments and tables of
organisation.
Responsibility structure: It includes division of authority and responsibility as per individuals in
the organisation.
Control structure: it includes the organisation system if evaluating and measuring of
performance based on administrative and responsibility structure of an organisation.
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Relationship between strategy and organisation structure
As per the Strategy and structure in organisation, 2021 it is analysis that organisation
structure will always follows the strategy. While the strategy will also follow the structure of an
organisation. As the manager of company will formulate its strategy according to the structure of
organisation. From this it is analysis that organisation structure and strategy will have a
reciprocal relationship (Green, 2019). It was analysis that organisation structure was a significant
part of successful strategy execution process. It was analysis that the success of an organisation
is based on how well firm business strategies are match with their organizational structure. It was
analysis that initial an organisation structure which successfully supports the strategies of
business is quite difficult and for successful execution an government will require to follow
various characteristics which are discussed below:
Structural stability- This characteristic will define that an organisation will require
providing a capacity to successfully administer its daily work routine and business operations.
Both the strategy and structure will assist in maintaining stability in organisation.
Structural flexibility- This will provide an opportunity to business to achieve
competitive possibilities and effectively allocate resources to achieve the competitive advantage
in market the firm will need to be successful in future.
It was analysis that strategies will has a much more significant influence on arrangement
than reverse. But in the end it is analysis that structure of an organisation will offer sufficient
stability and flexibility which is very essential for successfully execution of strategy (Strategy
and structure in organisation, 2021.).
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Structure follows strategy
As per view points of Aldred chandler that is structure follows strategy. Strategy follows the
structure that is a based on strategy that fit in the existing structures. Combing the above made
two arguments it can be said that structure is a decisive part of successful scheme execution
process. Success of an organisation depends on the way strategy of organisation is matched with
the structure. For the purpose of successful implementation of a strategy the structure its have
some of the specific characteristics that includes structural stability that is ability to successfully
supervise the daily work schedules, another is structural flexibility to provide firm a opportunity
to discover all the competitive potential and then assign the resources to various performance
that can help in shaping the competitive advantage to be successful in coming future time period.
Evolutionary pattern of organisational strategy and structure: It is related with different form
of structures that are very useful in the process of managing different activities in an
organisation. Such as there is bureaucratic structure that includes some degree of standardisation
and can be helpful in managing the complex and other large scale organisation.
Another structure is functional structure that is more centralised and standardised. In the
organisation is divided in spate functional divisions. In this employees are perform work in as
effective division at a particular time period, this type of structure usually helps organisation in
production of standardised foods and services at low cost but the volume is very high. Such as in
case of retail sector organisations like TESCO such type of structures are adopted in the
organisation that is very helpful in providing and manufacturing of standardised products at large
scale production.
Divisional structures: it is also regarded as the product structure in some instances. Every
organisation is separated into division and each of the distribution has their own function and
resources. In these divisions is based on product services and other geographies (Ahmad and
Murray, 2019).
Matrix structure: It is the structure that combines both the divisional and functional structure of
the organisation.
Strategy formulation process: strategy has a more significant control on the structure whenever
an organisation is willing to start its business and decide about the strategy they are willing to
follow. There are generally four diverse business strategies that have to be followed in this case.
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Such as first one is prospector: the primary challenge faced by the firms in this is to identify &
exploit the new opportunity of the industry in the primary capability is innovation,
Analyser: Analysers are the ones who are fast followers. They are working towards closely
monitoring the customer reactions and activities of competitors. It can help in having a
improvement of useful competitor product offering and further offering a comparable product at
reduced costs
Low cost defenders: In this firms are usually targeting the stable segment of market (Laforet,
2017). The major emphasis of this strategy is to achieve higher efficiency through better
standardised practises and offering low cost products rather than just focussing on innovation
aspects.
Differentiated defenders: In this firms can also goal stable segment of market but their main
stress is on high quality and differentiated products rather than offering products on low cost.
Strategy implementation: Organisation structure is a critical functioning that is important
features that can help in formalisation, standardisation and centralisation.
Formalisation: It is the level to which working relations that are governed by the formal rules.
Formal rules low administrative cost and enhancement efficiency (Yazdani, Hafeziand Gholami,
2020). Forms are having formal rules and regulations are regarded as mechanist and with few
formal rules are called organic.
Centralisation: It defines the level of decision making authority held by the top administration.
It includes the centralised organisation communication lines of accountability and
communication clearly defined.
Recommendations:
There are several recommendations that are drawn based on above made analysis of the
information that is relation of structure with overall organisational goals:
 The close association of the structure with strategy suggest that the organisation must
relate the strategy with its structure in this there is need to design the structure as per
requirement of effective implementation procedure. That leads to requirement of
coordination among the existing functions. That leads to major two aspects that are
required to be evaluated in detail by the organisation. Such as what are the functions &
activities that have to be performed as per success of the strategy. Another aspect is
whether the structure is adaptable to the pressure of changing external environment.
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 Symptoms of organisational malfunctions are not always explicit. So managers in
organisation have to formulate a three aspect strategy that can contribute towards a
systematic procedure for having a smooth optimisation of activities. First is related
implementation of strategy properly as per requirement of performing certain functions.
Second aspect as activities contribution of the strategy has to be as per the placement and
rank of the organisation hierarchy. Result producing or revenue earning activities must
never subordinate to support activities.
 It is important to delegate decentralise the strategic planning process and authority for
business. It can help in analysing the unknown areas of opportunities. Strategic planning
is associated with the unknown areas that have to be centralised as per requirement of top
management. The critical early chokes in unknown fields can lead to some unpredictable
risks on resource allocation process and various technological commitments.
 It is recommended that with respect to organisations overall strategy and structure the
more emphasis has to be n result oriented aspects rather than on profitability of business.
Decentralisation can be confined to key support areas and operating functional areas that
can help organisation in solving their trade off issues that can be resolved quickly by
subordinate managers.
 Organisations have to interact continually with the environment and there is requirement
of laying interactive channels that can help in bringing required structure. For the purpose
of saving costs it is suggested that duplication expenses have to be avoided in a
organisation so that there can be development of more areas that require better
investment of resources. Strategic panning for unknown areas have to be centralised as
there is need of close supervision from top management the critical early choices can lead
to major unpredictable risks on technological commitments and resource allocations.
 Organisational control is prime driver for an organisational change. When there is
requirement of organisational strategy it leads to a requirement of effective strategy. It is
a very helpful mechanism for having a proper control and implementation strategy. With
the growth of organisation there can be control of the complex that has to be coping up as
per requirement of changed environment. Organisation structure has to be in control with
the mechanism of implementing strategy.
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 Co alignment is about realising a plan and then implement it as a appropriate means of
structure resources & activities. Co alignments is described best fit relationship between
organisation structure and target there is a observation from above made analysis that
without proper co alignments there can be no strategy, structure or environment that may
lead to difficulty in achievement of long-term success.
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Conclusion
The present strategy reviews the various articles on organisational strategy, structure,
performance and its association with the organisational performance. Based on this study it has
been founded that strategy & structure are always consistent with each other. It means that if in
any organisation there is no proper alignment of strategy and structure then it may negatively
affect the performance of organisation. Strategic business managers are paying more attention to
appropriately establish the relationship connecting the organisations overall strategy & its
structure that can contribute towards its effective functioning in long run. Entrepreneurial
business manager determine the firm’s approach. The structure is the key implementation for the
purpose of achieving the laid business objectives.
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REFERENCES
Books & Journal
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performance: evidence from exporting firms in Batam, Indonesia. International Journal of
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Stalker. Routledge.
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Laforet, S., 2017. Effects of organisational culture on brand portfolio performance. Journal of
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African Perspective.
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Taylor, S.P., 2018. Organisational behaviour, leadership and change. International Journal of
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Yazdani, H., Hafezi, S. and Gholami, A., 2020. Designing an organisational virtuousness model
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Online
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strategy#:~:text=Organizational%20structure%20and%20strategy%20are%20related%20because
%20organizational%20strategy%20helps,the%20analysis%20of%20organizational
%20strategy.>
Relationship Between Strategy and Structure, 2020[online], Available through<
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https://www.scribd.com/doc/53326038/Relationship-between-strategy-and-structure>
Which Precedes the other? Organizational Strategy or Organizational Structure , 2020 [online],
Available through<http://eprints.covenantuniversity.edu.ng/9267/1/Which%20Precedes%20the
%20other%20%20Organizational%20Strategy%20or%20Organzational%20Structure>
Strategy and structure in organisation, 2021. [Online] Available through
<ukessays.com/essays/commerce/relationship-between-strategy-and-structure-commerce-
essay.php>
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