The connection between organizational structure and strategy has always been one of the most debatable questions in business. Some specialists consider that strategy follows structure since it is necessary to know on what system the process of planning should be based. Others are convinced that structure depends on strategy because it is not possible to outline any actions without knowing to the obtaining of what purpose they are dedicated. Although structure is a significant component of reaching the organization’s goals, strategy is more important since it defines the elements of the structure.
The purpose of the paper is to analyze the key features of strategy and structure and investigate their interdependence. Upon the performed analysis, the predominance of strategy’s importance over structure will be explained. The paper consists of an introduction, a body that explains the major issues, a conclusion with a summary of the main points, and the lessons learned and recommendations.
The Connection Between Structure and Strategy
Organizational strategy is the company’s plan for reaching its mission and goals (Jia, Orzes, Sartor, & Nassimbeni, 2017). Business structure is the formal arrangement of a firm’s hierarchy (Galbraith, 2014). While these two elements are different, they are both highly important in business, each of them performing some crucial functions. Strategy is generated at the highest levels and defines the responsibilities of middle- and lower-level employees in regards to structure. Strategy involves the goals and tactics that a company plans to implement in order to reach the goals (Hrebiniak, 2013). Meanwhile, structure is used to visualize the approached with the help of which strategy will be achieved. Structure includes two crucial features. The first one is the line of authority and interaction between separate administrative departments and officers. The second element is the data that circulates through the line of authority and interaction (Kavale, 2012). Usually, structure and strategy are generated at the initial stages of business. However, it is not uncommon to alter one of these elements in the process of work if the organization’s development necessitates changes in them.
The Impact of Strategy on Structure
Although the two elements are interdependent, the majority of scholars agrees that strategy has more power on structure than vice versa. While some components of structure can be altered in the process of work without causing any considerable problems, strategy’s integrity and stability are of utmost importance. Only in rare cases can strategy be changed in the middle of a project. This happens when in the process of work, a manager realizes that strategy does not correspond to the well-built structure. In the majority of cases, structure follows strategy (Hrebiniak, 2013). The preeminent reason why strategy impacts structure is that the former outlines the choice of the latter in a logical way (Hrebiniak, 2013). Structure manifests strategy and is coherent with it.
Due to the fact that structure follows strategy, the work process becomes enhanced, teamwork is promoted, costs are reduced, and synergy is developed (Kavale, 2012). Restructuring may be a good way of reaching all of these outcomes, but strategy is what guarantees the establishment of the most productive results. No matter what an effective and synergetic structure an organization has, it will most probably not reach the best results without a thoroughly developed strategy. Without strategy, it is impossible to complete a project successfully (Hrebiniak, 2013). Thus, formulating strategy is a crucial constituent of the initial phase of any project.
Therefore, while the two aspects are interdependent, strategy has impact on structure due to its ability to formulate the goals of the organization. Structure is used to help strategy fulfill the objectives. Strategy helps to outline the mission that is further accomplished with the help of structure.
The Influence of Structure on Strategy
While structure is consistent with strategy and is largely defined by it, it can also impact strategy in some ways. Structure is far from being merely a chart of an organization’s work. It incorporates all employees, positions, processes, operations, technology, and other components that make up a company. Structure determines how project coordination, distribution, and supervision should be addressed toward the attainment of an organization’s goals (Kavale, 2012). Another important function of structure is that it impacts the benefits to a company (Hrebiniak, 2013). The better the organization is structured, the more advantages its work will bring. However, although structure has some effect on strategy, the choice of structure depends on strategic solutions (Hrebiniak, 2013). Such factors as the need for productivity, the kind of strategy, and the relevance of the market play a major role in defining the structure.
The analysis supports the thesis statement that argues that although structure is important in the process of attaining the organizational goals, strategy is more significant since it determines the constituents of structure. There is a close connection between strategy and structure, and no organization can operate successfully without having both elements at its disposal. Strategy is established first and is rarely changed in the process of work. Structure is also outlined at the beginning of a project, but it may be altered if a manager notices that some structural aspects hinder the successful implementation of strategy. In some exceptional cases, strategy may be changed. While strategy plays a more important role, it is influenced by structure because the latter helps to achieve the objectives formulated in structure. Structure includes all the people working in a company, as well as technology, operations, and processes. With the help of structure, the work is coordinated and supervised at the most beneficial level.
Lessons Learned and Recommendations
The investigation of the relationship between strategy and structure helps to realize the following issues:
- it is crucial to thoroughly consider strategy and structure of an organization since they determine the success of all operations;
- a company’s mission cannot be accomplished without structure and strategy;
- the role of strategy is more significant than that of structure;
- the importance of structure, though secondary, should not be underestimated;
- sometimes, it is necessary to change structure (more frequently) or strategy (more rarely) in order to reach the project’s objectives in the most efficient way.
The following recommendation may be suggested:
- companies should pay equal attention to formulating strategy and structure;
- managers should control the two elements at every stage of work and make necessary adjustments if necessary;
- in order to reach the best outcomes, it is necessary to inform each employee about the strategy and encourage people to do their best to implement it;
- managers should view work as an integral process and pay attention to any inconsistencies with the initial strategy so as to prevent a failure.
Galbraith, J. R. (2014). Strategy, structure, and process at the business unit and enterprise levels (3rd ed.). San Francisco, CA: Jossey-Bass.
Hrebiniak, L. G. (2013). Making strategy work: Leading effective execution and change (2nd ed.). Upper Saddle River, NJ: Pearson Education.
Jia, F., Orzes, G., Sartor, M., & Nassimbeni, G. (2017). Global sourcing strategy and structure: Towards a conceptual framework. International Journal of Operations & Production Management, 37(7), 840-864.
Kavale, S. (2012). The connection between strategy and structure. International Journal of Business and Commerce, 1(6), 59-70.