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Typology: Study notes
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An organization’s strategy is its plan for the whole business that sets out how the organization will use its major resources. In other words, an organization’s strategy is a plan of action aimed at reaching specific goals and staying in good stead with clients and vendors. On the other hands, an organization’s structure is the way the pieces of the organization fit together internally. For the organization to deliver its plans, the strategy and the structure must be woven together seamlessly. In other words, organizational structure is a term used to highlight the way a company thinks about hierarchy, assigns tasks to personnel and ensures its workforce works collaboratively to achieve a common goal. The goal is to avoid task overlap and workforce confusion, especially when it comes to laying a strong foundation for long-term productivity. Task overlap, a situation in which two or more employees perform the same task in different departments, costs a company money. This creates confusion, inefficiencies and lack of accountability -- because no employee ultimately has a clear responsibility over who does what, where and when. It is important to highlight that for too long, structure has been viewed as something separate from strategy. Revising structures are often seen as ways to improve efficiency, promote teamwork, create synergy, eliminate or create new department or reduce cost, including personnel. Yes, restructuring can do all that and more. What has been less obvious is that structure and strategy are dependent on each other. You can create the most efficient, team oriented, synergistic structure possible and still end up in the same place you are or worse if a good strategy is not adopted. Organizational structure and strategy are related because organizational strategy helps a company define and build its organizational structure. A company's organizational structure is based on the result of the analysis of organizational strategy. The company will use these results to determine its areas of concentration and how to position itself in order to succeed. One of the first steps a company takes in its initial stages is assessing its operational environment in order to determine the conditions in which it must operate. This involves checking out the competition, consumer trends, culture and other factors. The company will find out the strengths and weaknesses of its competition, the buying habits of the consumers, and its economic capabilities. The relationship between organizational structure and strategy becomes clearer when the company’s strategy is in place. With a clear focus of what it wants to achieve, the organization will proceed to align its structure in such a manner to best achieve this. It will allocate responsibilities for optimal results, create branches, and decide whether individual efforts or group participation is the best method for it to achieve its goals. The organizational structure and strategy will also help the company decide if the tone of the company should be strictly formal, semi-formal or informal. All of these decisions can be made after determining the organizational strategy of the company. Structure is not simply an organization chart. Structure is all the people, positions, procedures, processes, culture, technology and related elements that comprise the organization. It defines how all the pieces, parts and processes work together. This structure must be totally integrated with strategy for the organization to achieve its mission and goals. Structure supports strategy. If an organization changes its strategy, it must change its structure to support the new strategy. When it doesn’t, the structure acts like a bungee cord and pulls the organization back to its old strategy. Strategy follows structure. What the organization does defines the strategy. Changing
strategy means changing what everyone in the organization does. When an organization changes its structure and not its strategy, the strategy will change to fit the new structure. Strategy follows structure. Suddenly management realizes the organization’s strategy has shifted in an undesirable way. It appears to have done it on its own. In reality, an organization’s structure is a powerful force. You can’t direct it to do something for any length of time unless the structure is capable of supporting that strategy. The sum total of how an organization goes about its work is its strategy. Structure and strategy are married to each other. When a company makes major changes, it must carefully think out every aspect of the structure required to support the strategy. That is the only way to implement lasting improvements. Every part of an organization, every person working for that organization needs to be focused on supporting the vision and direction. How everything is done and everything operates needs to be integrated so all the effort and resources support the strategy. It takes the right structure for a strategy to succeed. Management that is solely focused on results can have a tendency to direct everyone on what they need to do without paying attention to the current way the organization works. While people may carry out these actions individually, it is only when their daily way of working is integrated to support strategy that the organization’s direction is sustainable over time. Top management can’t just send out a proclamation about a new strategy, direction and vision and expect everyone to follow it. To implement such a strategic shift requires a complete change within the organization itself. Strategy and structure are married to each other. A decision to change one requires an all-out effort to change the other. But that structural change must be well thought out and based on a thorough cause and effect analysis. You don’t just change a structure to change it. You have to make sure the changes will support that strategy. At the same time, you don’t just implement a better leadership and engagement approach in a company or alter the organizational chart without evaluating
1.2.1 What are the key Elements of Strategic
Management?
The following statements provide a definition of the concept of strategic management and the scope of business strategy. Hence you should act in accordance with the following principles: