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Strategy and Structure are Two Important Elements for Designing Effective

Start-Up Firms

Kabir Umar Sa’id


KBS/KADSTEP/2017/D131
Kaduna Business School
July 24th, 2017

Abstract
This paper discusses the importance and relationship between organizational structure and
business strategy. It examines if strategy comes before or after structure or they come together, as
individuals, partners or cooperate bodies start-up their firms or organization. I hypothesized that
strategy comes before structure but as a matter of importance they are complementary since one
cannot go without the other.

Keywords: Business strategy, Organizational structure, Relationship, Importance.

Introduction
Risk and uncertainties are major problems in the world of business where organizations
strive to get maximum profit and minimum loss simultaneously. In order to achieve that,
organizations implement strategies and build on structures which are guidelines towards achieving
such goals. This leads to the argument of which is more important structure or strategy.

According to (Wikibooks, 2014) Business strategy is the process of specifying the


organization's mission, vision and objectives, developing policies and plans, often in terms of
projects and programs, which are designed to achieve these objectives, and then allocating
resources to implement the policies and plans, projects and programs.
While (Investopedia, 2017) defines organizational structure as a system that consists of
explicit and implicit institutional rules and policies designed to outline how various work roles and
responsibilities are delegated, controlled and coordinated.

The Roles of Organizational Structure and Business Strategy


An organizational structure is created or formulated in order to implement and achieve a
business strategy. (Chandler, 1962) described corporate strategy as the determination of long-term
goals and objectives, the adoption of courses of action and associated allocation of resources
required to achieve goals; he defined structure as the design of the organization through which
strategy is administered. Changes in an organization's strategy led to new administrative problems
which, in turn, required a new or refashioned structure for the successful implementation of the
new strategy. This shows that strategy is the key factor in the start-up of a firm, it is the foundation
for a sound and functional organizational structure.

There are different views on the importance and roles of organizational structure and
business strategy, (Mintzberg, 1990) offered a balanced view, arguing that the relationship
between strategy and structure is reciprocal. "Structure follows strategy ... as the left foot follows
the right." In this view the relationship between structure and strategy is complementary, one
cannot go without the other. (Hall & Saias, 1980) Inverted Chandler's thesis, suggesting that
Strategy Follows Structure. For example, they point out that a multidivisional structure biases a
firm towards a conglomerate strategy.

Conclusion
Strategy and structure are important elements for designing effective start-up firms.
Strategy is “planning” and structure is “framework”, therefore Organizational structure follows
Business strategy logically, since there has to be a plan for a structure to come into reality, a
structure cannot come into existence without a strategy to set the structure up and put it in place.
After a structure is in place strategy is needed for it to be fully functional, this is where strategy
and structure complement each other.
References
Chandler, A. D. (1962). Strategy and Structure. Chapters in the History of the
American Industrial Enterprise.
Hall, D. J., & Saias, M. A. (1980). Strategy Follows Structure. Strategic
Management Journal, 149-163.
Investopedia. (2017, July 23). Organizational Structure. Retrieved from
Investopedia: http://www.investopedia.com/terms/o/organizational-
structure.asp
Mintzberg, H. (1990). The Design School. Reconsidering the Basic Premises of
Strategic Management Strategic Management Journal, Vol 11 No 3, 171-
195.
Wikibooks. (2014, December 11). Business Strategy. Retrieved from Wikibooks:
https://en.wikibooks.org/w/index.php?title=Business_Strategy&oldid=27467
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