Unit 3: Aligning Structure and Sanjay Singh Ph.D.

Strategy
What is
Strategy?
What is
Structure?
Chandler’s
Equation Strategy  Structure
The Enduring Logic of
Industrial Success • An enduring company is one that has growth.
(Alfred Chandler, 1990) • Growth is possible only by transforming an
entrepreneurial enterprise into a managerial
enterprise.

• A managerial enterprise is a large industrial

concern whose basic goal is growth by building
production, distribution, and management
structure. Decisions in a managerial enterprise are
taken by a hierarchy of managers who are
expert/specialist in their functional areas. People in
a managerial enterprise are typically governed by a
board.

• Three main tools of growth are economies of scale,

economies of scope and early mover advantage.
How to Create a Fit
between Strategy and
Structure: Activity System
Maps (Michael Porter ,
1996)
Activity
System Map
of Ikea
• In companies with clear strategic
position, a number of higher-order
strategic themes (in dark grey) can
be identified and implemented
through clusters of tightly linked
activities (in light grey) (Porter,
1996, p. 12)
Case Study:
Arla Foods – Matching
Structure with Strategy