Changes in strategy often require changes in the way an organization is structured, evaluate the role of organizational structure in executing effective strategy?

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Matching Structure with Strategy Changes in strategy often require changes in the way an organization is structured for two major reasons. First, structure largely dictates bow objectives and policies will be estab- lished. For example, objectives and policies established under a geographic organizational structure are couched in geographic terms. Objectives and policies are stated largely in 221 CHAPTER 7. IMPLEMENTING STRATEGIES: MANAGEMENT AND OPERATIONS ISSUES terms of products in an organization whose structure is based on product groups. The structural format for developing objectives and policies can significantly impact all other strategy-implementation activities The second major reason why changes in strategy often require changes in structure is that structure dictates how resources will be allocated. If an organization's structure is based on customer groups, then resources will be allocated in that manner. Similarly, if an organization's structure is set up along functional business lines, then resources are allocated by functional areas. Unless new or revised strategies place emphasis in the same areas as old strategies, structural reorientation commonly becomes a part of strategy implementation Changes in strategy lead to changes in organizational structure. Structure should be designed to facilitate the strategic pursuit of a firm and therefore, follow strategy. Without a strategy or reasons for being mission), companies find it difficult to design an effective structure. Chandler found a particular structure sequence to be repeated otten as organiza tions grow and change strategy over time this sequence is depicted in Figure 7-3. There is no one optimal organizational design or structure for a given strategy or type of organization. What is appropriate for one organization may not be appropriate for a sim itar fim, although successful firms in a given industry do tend to organize themselves in a similar way. For example, consumer goods companies tend to emulate the divisional struc- ture-by-product form of organization Small firms tend to be functionally structured (cen tralized Medium-sized firms tend to be divisionally structured (decentralized). Large firms tend to use a strategic business unit (SBU) or matrix structure. As organizations grow, their structures generally change from simple to complex as a result of concatena- tion, or the linking together of several basic strategies Numerous external and internal forces affect an organization, no firm could change its structure in response to every one of these forces, because to do so would lead to chaos However, when a firm changes its strategy, the existing organizational structure may become ineffective. As indicated in Table 7-6, symptoms of an ineffective organizational structure include too many levels of management, too many meetings attended by too many people, too much attention being directed toward solving interdepartmental con flicts, too large a spun of control and too many unachieved objectives. Changes in struc ture can facilitate strategy-implementation efforts, but changes in structure should not be expected to make a bad strategy good, to make bad managen good, ar to make bad prod. ucts sell Structure undeniably can and does influence strategy Strategies formulated must be workable, so if a certain new strategy required massive structural changes it would not be an attractive choice. In this way, structure can shape the choice of strategies. But a more impor- tant cotem is determining what types of structural changes are needed to implement new