Matching Structure with Strategy

Matching Structure with Strategy

Strategy gurus like Alfred Chandler and M. E. Porter
argue that structure follows strategy.
Porter states that corporations can adopt one of three
general (generic) strategies: cost leadership,
differentiation, and focus. And, for each alternative
strategy alternative organization design/structure exists.
Chandler, on the other hand, has emphasized that
organization structures follow the growth strategies
of the firms. Alternative structures exist for alternative
growth strategies , viz., volume expansion, geographic
expansion and product diversification.
Matching Structure with Strategy
Depending upon the strategic choice (along with
some other factors like size of the firm, technology
used, environmental complexities etc.), a firm may
pursue one of the following structures.
1. Simple/ Entrepreneurial Structure
2. Functional Structure
3. SBU Structure
4. Divisional Structure
5. Matrix Structure
6. Holding Company Structure
7. Network Structure
8. Other Structures
 Restructuring
Restructuring refers to the process of changing the various
aspects organizational structure & design for improving
efficiency and effectiveness.
It generally involves reducing the size of the organization
and the associated costs by downsizing, rightsizing or
delayering.
These methods involve, respectively, reducing the number of
employees, number of divisions, and number of hierarchical
levels in a firms organizational structure.
It may also involve the changes in degrees of
(de)centralization, formalization and structural differentiation.
 Reengineering (or BPR)
This concept is concerned with the radical redesign of
business processes to achieve improvements in the key
areas like cost, quality, speed delivery of services etc.
Reengineering is broader in scope than restructuring.
It attempts to restructure the jobs and processes from scratch
to boost up the efficiency and add value to organization.
It tries to promote the value added contents and processes
and minimize/discard those that do not add value.
It may include (but not limited to): radical redesign in the
structure, technology, job design, compensation and reward
system etc.
Sometimes, it may convert lackluster organizations into lively
ones but managers should always anticipate the resistance
to change before making such moves.