Strategy vs. Structure: Analysis with Unilever Case Study Report

This report delves into the intricate relationship between organizational strategy and structure, exploring the debate of "strategy follows structure" versus "structure supports strategy." The analysis uses Unilever as a comprehensive case study, examining its adoption of various international strategies, including global, multi-domestic, transnational, and international approaches, as defined by Bartlett & Ghoshal (1989). The report highlights how Unilever's structure has evolved to support its strategic objectives, emphasizing the importance of aligning structure with strategy for optimal performance and market penetration. The study stresses the need for flexibility, adaptability, and competitive capabilities within a transnational model, providing insights into how companies like Unilever can achieve global competitiveness while maintaining local responsiveness. The report concludes by emphasizing the critical role of top management in crafting, aligning, and executing strategy within the organizational structure, ensuring long-term sustainability and success.

Strategy Management
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In today’s competitive business world, the planning of strategy in the company is essential
for setting out the reason of using major resources. In simple world, planning a strategy for
taking action aims at accomplishing goals specifically and maintains good relationships with
vendors and customers. It is important for an organisation to deliver its plans, the structure
and the strategy where structure is used to define way of company’s thinking based on
hierarchy, making sure about its staff working together and assigning tasks to employees for
achieving common goal (Al-Zu'bi, 2014). In the paper, the aim is to analyse the idea of
“strategy follows structure” or “structure supports strategy” by knowing the relationship
between structure and strategy of an organisation. The discussion is based on four
international strategies followed by Unilever taken as an example of the company to
understand the idea of relationship between strategy and structure.
In the company, the goal is to avoid confusion of employees and task overlapping for creating
a strong base. It is done for long-term productivity where overlapping and confusion
generates costs, lack of accountability and inefficiencies. This occurs because of not
assigning clear responsibility to employees. Structures help in improving efficiency, creating
synergy, promoting teamwork, or creating or eliminating cost reduction or new department
when restructured (Kim & Mauborgne, 2009). Accordingly, structure and strategy are
interdependent as restructuring will not end up with a better outcome if there is no adoption
of good strategy. In an organisation, the relation between strategy and structure shows that
strategy helps in building and defining its organisational structure. Further, the structure is
based on the analysis outcome of organisational strategy.
Thus, this is used for examining areas in the company to concentrate and positioning the
success. It is essential to assess operational environment at first to examine conditions for
operating that consists of competition check involvement, culture, consumer trends and
others. Also, the requirement of finding company’s strengths and weaknesses in relation to
competition has been fulfilled including consumers’ buying habits and its economic
capabilities as well. The placement of the correct strategy shows the connection between
strategy and structure of the company focusing clearly on wants to achieve (Sjoorda, 2017).
Moreover, the company proceed with its structure alignment for achieving the wants by
allocation of responsibilities to attain optimal outcomes, taking decision related to
participation of group or individual efforts, and creating branches along with the best method
for achievement of goals.
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The decision of helping within the company through its strategy and structure is done by
informal, strictly formal or semi-formal tone. Structure includes procedures, people, culture,
positions, technology, processes and relatable components compromised by the company. It
shows all the processes, pieces and parts working together integrated with strategy to achieve
the company’s goals and mission. Hence, “structure supports strategy” where if the company
is changing its strategy, the structure needs to get changed as well for supporting new strategy
(Kavale, 2012). The change in strategy defines change in the doing of everything within an
organisation where the structure is change and not the strategy requiring fitting with the new
one. However, the realization to the management of the company related to the strategy shifts
in an adverse way.
The company’s structure is a force of power in real that is capable to support strategy for
successful working. Any major change made by the company need to think for every aspect
of the structure required in supporting the strategy to ensure about executing improvements
that last. In an organisation, it is essential to take care of every individual working through
fulfilling the needs as per focusing on the direction and vision (Shapiro, 2015). Thus, it takes
appropriate structure for the success of a strategy and it is the duty of management to focus
on the outcomes by directing everyone towards work by driving their attention within the
company. The actions might carried out individually due to their different way of working
but required to lead to the integration of supporting strategy through the company’s direction
attaining sustainability in future.
Moreover, implementing strategic shift after proclaiming new strategy, vision and direction
and expecting from every person to follow it requires a change as a whole within the
company. The decision made for required change needs every individual effort through
structural change analysing the cause and effect as well. Thus, it is essential for strategy
supported by the changes after following the definite structure. Both engagement approach
and better leadership implementation is necessary with evaluating the effect of a company’s
ability of carrying out its present strategies (Tandon, 2016). Thus, strategy helps company in
market penetration where creation of structure helps in execution. So, structure follows
strategy by supporting within an organisation radically. Though, it is important to execute
change as the strategy is itself.
There are direct or indirect links from strategy to structure where direct links define the
diversity and nature of the products and company’s market. And, indirect links define
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characteristics of technology determined as employed through variations in and nature of the
environment, and by size as well. It is essential to notice the after formulation impact on
structure of strategy and impact at the time of formulation of the existing structure on
strategy. Thus, relationship between strategy and structure has an impact on organisational
performance (Lazzari & Seidel, 2019). So, the top management is involved from the start
while crafting strategy, and aligning, formulation and execution within the structure
following the strategy. There is a strategy structure fit imperatively where organizational
capabilities and environmental factors make the strategy work through building a great
structure.
Strategic growth of the company results through the needs-created and opportunities
awareness with change in technology, population, and income for expanding or employing
existing resources more profitably that requires to run operations efficiently. In strategic
management, the order between organisational structure and corporate strategy is necessary.
The scope and direction of the company is the role of strategy for achieving the long-term
advantage through organizing resources in a challenging environment. Also, strategy helps in
meeting markets’ needs and fulfilling the expectations of stakeholder (Rhodes, 2011). The
achievement of goals is done through determining long-term objectives and goals, adopting
action courses and associated resources allocation as required in directing strategy. Moreover,
focusing on making decisions concerned with the scope of an activities of the company and
attaining advantage through resources and competences in a changing environment.
Further, structure is a notion consisting intangible, fundamental or tangible referring to the
nature, recognition, permanence, and observation of entities patterns hand relationships.
Thus, it is clear that “structure follows strategy” as strategy is affected by structure with the
change in the environment. So, when the company is setting the strategies then they also need
to make changes in the structure for better execution. Moreover, the restructuring effort
resulting in strategy change and the company is required to review the company’s strategy
and needed to attain a different structure (Adner, 2017). Even, the imbalance between
structure and strategy might lead to inefficiency that results in less than optimal output or
input ratio. Hence, structure requires proper attention while expanding strategic plans and not
to lead under inefficiency and fall out of error.
According to Bartlett & Ghoshal (1989), the model or matrix of international strategies
explains the relationship between strategy and structure well indicating strategic options for
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businesses that wanted to manage operations internationally based on global integration and
local responsiveness pressures. The model of international strategy consists of global,
transnational, international and multi-domestic strategies. These strategies are stretched
broadly in companies due to increasing globalization that helps in raising businesses abroad
and to cross national borders. The highly globally integrated businesses have an objective of
costs reduction while creating economies of scale as well with the offering of product
standardisation globally (B2U, 2017).
Multi-domestic strategy works with low integration and high responsiveness where company
aims at meeting the requirements and needs of the local market globally. It is done by
tailoring and customizing their products and services broadly and often are decentralized with
a loosely combined structure. As across the globe, subsidiaries operates independently and
autonomously relatively from headquarter (HQ). Global strategy works with low
responsiveness and high integration that is opposite of multi-domestic companies offering
standardized product across the globe. And, the company works with maximizing efficiencies
as a goal for reducing costs at maximum extent. The companies using global strategy have
dependent subsidiaries on the HQ. They are highly centralized playing a role of executing the
decisions of parent company and acting as products and strategies pipelines also known as the
“hub-and-spoke” model (Ramakrishna, 2016).
Transnational strategy works with high responsiveness and high integration characterizing
both multi-domestic and global companies. It aims at maximising responsiveness locally but
gain benefits from global integration as well considering the whole value chain. The
companies creating economies of scale are transnational often upstream in the value chain.
Moreover, are locally adaptive and flexible in downstream activities like sales and marketing
(Unilever, 2013). The design of the company is characterised by an interdependent and
integrated network of subsidiaries across the globe. Though, subsidiaries have strategic roles
and act as excellence centres with efficient knowledge and exchange of expertise to meet the
strategic objectives. International strategy works with low responsiveness and low integration
as the companies have the need of both global integration and local adaption.
Further, most of the value chain activities maintain themselves at the HQ also known as an
exporting strategy. In the company, products are produced in the home country and send to
customers across the globe. Thus, subsidiaries functions in more of like products local
channels by selling to the end-consumer. The foremost feature in transnational strategy
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followed by Unilever is that it is complex to achieve with the aims at maximising local
responsiveness. But, also benefiting gain from integration globally broadly sharing of
expertise includes staff and technology. According to Bartlett & Ghoshal, these strategies
indicate mentalities of companies operating with parties, depending on culture and strategic
position, and localization pressures. Though, Unilever being a MNC directed through all the
mentalities mostly (Nisen, 2013). For instance, Unilever retained 17 sub-countries in Europe
in their 80s as an autonomy getting out of control which took more than 4 years obliged to
establish a particular new detergent for the primary country. Thus, these strategies are mainly
followed by the European MNCs such as Unilever.
Unilever being a MNC expanded the transnational model of Bartlett and Ghoshal in the
business case of branded package products. The success of the company in strengthening and
defending its position in 1980s stated as global players. Unilever pushed itself in
internationalizing commercial reach and operations. It consists of forcing global integration,
innovation worldwide, and differentiation locally helps in developing a model allowing
achieving learning capabilities worldwide, global competitiveness, and multinational
flexibility simultaneously (Raj & Aithal, 2018). Moreover, the simultaneous strategies
competencies are built as an organizational challenge primarily force the company for
developing a transnational model to manage Unilever as multinational. Lastly, transition of
management to a transnational mode has exercise complexity that can be successful when
high level supports of management with effort and attention. Unilever working with this
model requires being flexible, self-adaptive, and competitive altogether. Thus, Unilever being
transnational shows “think global, act global” (Palacios, 2014).
In the evolution of the company, transnational is a natural outcome where the construction is
driven as forced by market forces such as structure. Other than this, it also consists of
information flows, technology developments, and R&D where it needs to make investment
and effort consciously enhancing decentralisation with the abilities of unit to innovate.
Thought, Unilever needs to avoid related to the knowledge-sharing network idea collapsing
as an outcome for driving autonomy. The balance need to be maintained in the company with
the sense of activity coordination, autonomous developments, and information sharing
showing difficulty in sustaining and implementing. Transnational is beyond strategic
approach of the company as proposed or can say a common design but a management
mentality (Pant & Ramachandran, 2017). MNC works to achieve competitive advantage
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globally, and managing revenues and costs simultaneously where innovation and efficiency,
both are important in Unilever as well.
Further, new ideas come to establish structure with the change is market conditions to adapt
explaining to compete effectively by developing global competitiveness, earning capability
worldwide, ad multinational flexibility. Also, from switching to international, multinational,
or global posture to the mode of transnational requires time. The management is the one
offering the same with achieving effort and attention dealing to top management greatly. It
requires high technology in the company for sustained competitiveness with the change in
global environments, managing broad variety of markets successfully through management
of Unilever’s core competencies portfolio (Ramamurti & Williamson, 2019). In this structure,
this approach is process and product driven where core competencies are non-replicable
fundamentally aligning with the model as time-consuming and complex for full execution
achievement. Thus, transnational strategy is also concluded as global strategy for Unilever
while doing multinational business.
Unilever’s core competencies are its unique features, working environment, sophisticated
technology, brand value, and skilled manpower for enhancing its success. The company also
made its own USLP (Unilever Sustainable Living Plan) for achieving the objectives through
making structure following the strategy with its global presence. Moreover, the company has
One Unilever structure with its regional supply management while sourcing activities from
procurement to distribution primarily worked by the management (Eyring, 2017). Unilever is
a sector of fast moving consumer goods across the globe attaining competitive advantage due
to its presence globally and also enhanced the value for the consumers with its great
performance growth. In the economy, developing countries have less compatible
infrastructure in relation to economic activities taking place effectively with international
standards based on individuals.
Unilever’s objective to restructure in its business is to make sure about focusing constantly as
company’s core categories such as personal care, food products and household items. It helps
management to remove the unnecessary complexity with improving the company’s
performance, also reduction in operating costs as well. In global economy, the company
interconnects between the countries and markets with multinationals linked together pieces
and bits globally as a whole. Moreover, transnational strategy attained by Unilever allowed
the company benefits with its overseas structures. The company’s structure is integrated with
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business structure also empowering to be innovative. Further, this approach used by
management brings operations, subsidiaries and HQ together while cooperate functions with
components. Unilever create its alliances with customers, suppliers and other stakeholders in
its business for relationships creation to balance the pressure and work well for global
integration and local responsiveness (Chakravarty, et al., 2017).
Unilever needs to balance demand with foreign management for local management. Local
responsiveness pressures or demands exist as tastes and preferences resulting differences
among the domestic market. Further, demands also include differences in distribution
channels in different countries with balancing the pressure for local responsiveness currently
and transferring core competencies simultaneously. The company make their products with
costs reduction for consumers’ affordability as compared to competitors. It is essential for
Unilever to make sure about the value added to the products produced for able to sell more
than competitors. In modern world, consumers focus more on quality while purchasing
products where the company is constantly attains absolute advantage theory to produce the
best. Unilever has an expertise experience in producing household goods having good
reputation as well (Mees-Buss, et al., 2019). Hence, Unilever follows transnational strategy
considering standardization and localization forming structure based on strategy for selling
products in existing markets and penetrating new markets for sales increment.
To conclude, structure follows strategy by supporting discussed through an example of the
company using one of the international strategies in Unilever that is transnational. In the
company, this strategy required is complex but balance technology global integration and
supply chains broadly with the need of adapting products and services to preferences of local
market. Moreover, this strategy according to Bartlett and Ghoshal is supported by a strong
central HQ make possible to move managers in sharing knowledge and gaining international
experience. It is required when the company has a pressure of meeting local needs and
benefiting through global integration. Unilever required network through subsidiaries having
responsibility of accurate capabilities. The company need to maintain the balance of
decentralisation and centralisation with a culture of sharing globally. Also, the workforce of
the company helps in building share knowledge and values. Hence every company requires
continuous innovation and improvement for staying strong.
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Appendices
Structure follows strategy
Source: (Kavale, 2012).
Source: (Clayton, 2017).
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