STRUCTURAL

IMPLEMENTATION
Following are the main differences
between Strategy Formulation and
Strategy Implementation-
 Strategy Formulation
• Strategy Formulation includes planning
and decision-making involved in
developing organization’s strategic goals
and plans.
• In short, Strategy Formulation is placing
the Forces before the action.
• Strategy Formulation is an Entrepreneurial
Activity based on strategic decision-
making.
• Strategy Formulation emphasizes
on effectiveness.
• Strategy Formulation is a rational process.
• Strategy Formulation requires co-
ordination among few individuals.
• Strategy Formulation requires a great deal
of initiative and logical skills.
• traits.
Strategic Formulation precedes Strategy
Implementation.
Strategy Implementation
• Strategy Implementation involves all those
means related to executing the strategic
plans.
• In short, Strategy Implementation
is managing forces during the action.
• Strategic Implementation is mainly
an Administrative Task based on strategic
and operational decisions.
• Strategy Implementation emphasizes
on efficiency.
• Strategy Implementation is basically
an operational process.
• Strategy Implementation requires co-
ordination among many individuals.
• Strategy Implementation requires
specific motivational and leadership
• Strategy Implementation follows Strategy
Formulation.
 What is a structure?
• Thompson, (1967) defines organizational
structure as an INTERNAL PATTERN
OF RELATIONSHIPS, AUTHORITY
AND COMMUNICATION.
– INTERNAL
– RELATIONSHIP
– AUTHORITY
– COMMUNICATION
 What is a structure?
• Griffin (1992) and Bartol & Martin
(1994) explain organizational structure
as a
• BASIC FRAMEWORK OF GROUPS OF
POSITIONS
• REPORTING RELATIONSHIPS
• INTERACTION PATTERNS THAT AN
ORGANIZATIONAL ADOPTS TO
CARRY OUT ITS GOALS.
 What is a structure?
• (Mintzberg, 1987). Defined Structure as a
fundamental, tangible or intangible notion
referring to the recognition, observation,
nature, and permanence of patterns and
relationships of entities.
 What is a structure?
• Chandler (1962) view it as a formal
distribution of roles and the administrative
mechanisms which facilitate the control and
integration of the different activities
performed.
 What is a structure?
• It is also classified as the division of task
(horizontal differentiation), the distribution
of decision-making authority (vertical
differentiation) and the level of integration
used. Using these criteria, structure have been
classified as products, processes or a
combination of tall and flat types
 Basic goal of structure
• Structure, whether formally or
informally defined, has two aspects.

1. It includes, first, THE LINES OF

AUTHORITY AND COMMUNICATION
BETWEEN DIFFERENT
ADMINISTRATIVE OFFICES AND
OFFICERS .
2. The INFORMATION AND DATA THAT
FLOWS THROUGH THE LINES IF
COMMUNICATION AND AUTHORITY
 Characters of STRUCTURE
• An organizational structure allows
information to flow to different parts of
your business and becomes the
framework for your entire organization.
• Arrangement of tasks and sub tasks
required to implement a strategy.
• Diagrammatic representation could be
organizational chart but administrative
mechanism provides ‘Flesh and Blood’ to
an organization.
 STRUCTURE
• ORGANIZATIONAL STRATEGY HAS 3
KEY COMPONENTS
– 1. Identifies Formal Relationships,
including span of control, no of levels in
hierarchy.
– 2. It specifies grouping of individuals in
departments.
– 3. Design of system to ensure
effectiveness , coordination and
integration of efforts across Departments.
Types of organization structure
1. Hierarchical Structure
2. Matrix Structure
3. Horizontal/Flat Structure
4. Network Structure
5. Divisional Structure
6. Line Organizational Structure
7. Team-based Organizational
Structure
 Fit Between Structure and Strategy
•The strategy of a firm must align itself to the
remote and operating environment. Simply put,
environmental forces are so powerful for a single
firm, even a group of firms, to influence.
•Therefore, smart firms must adapt and adapt to
the environmental change, dynamism and
turbulence.
•Environmental forces constitute a big driver to
change in organizations. Once strategy has been
directed by the environmental forces, then
strategists identify a structure to match with the
strategy.
 Fit Between Structure and Strategy
Continues…
• This is referred to as the strategic alignment‘- aligning
the strategy and the structure to the environment.
• This is followed closely to the matching of the strategy
and structure to the capability of the firm, an exercise
called matching‘.
• Alignment and matching are very key processes that
firms must consider when embracing strategic
management.
• It is this fit between strategy, structure, the environment
and the firm capability that must be cultivated to break
the ice. This is strategic fit (Johnson et al, 2008).
 Structure, Strategy and the Organization

•Structure is the design of the organization through

which strategy is administered.
•Changes in an organization‘s strategy can lead to
new administrative problems which will require a
new structure for the successful implementation of
the new strategy.
•The structural design describes roles,
responsibilities and lines of reporting in
organizations and can deeply influence the sources
of organization‘s advantage. Thus, failure to adjust
structure can totally undermine implementation.
•Chandler (1962) showed how firms developed
over time by identifying four sequential stages:
 Structure, Strategy and the Organization
1. Acquisition of resources such as employees
and raw materials and the buildup of
marketing and distribution channels;
2. Establishment of functional structures to
increase efficiency;
3. Adoption of growth and diversification
strategy: diversification into new markets
and products to overcome limits of home
market;
4. The creation of the then revolutionary
diversionalized form to manage large
conglomerates.
 Structure Follows Strategy
• For too long, structure has been viewed as
something separate from strategy.
• Revising structure are often seen as ways to
improve efficiency, promote teamwork, create
synergy or reduce cost. Yes, restructuring can
do all that and more.
• What has been less obvious is that structure
and strategy are dependent on each other.
• You can create the most efficient, effective,
team oriented, synergistic structure possible
and still end up in the same place you are or
even worse (Johnson et al. 2008).
 The Connection Between Strategy and Structure
• Structure is not simply an organization chart.
• Structure is all the people, positions, procedures,
processes, culture, technology and related
elements that comprise the organization.
• It defines how all the pieces, parts and processes
work together (or don‘t in some cases).
• This structure must be totally integrated with
strategy for the organization to achieve its
mission and goals.
• Structure supports strategy. If an organization
changes its strategy, it must change its structure
to support the new strategy.
 The Connection Between Strategy and Structure
• When it doesn‘t, the structure acts like a bungee
cord and pulls the organization back to its old
strategy.
• What the organization does defines the strategy.
Changing strategy means changing what
everyone in the organization does (Ansoff, 1965).
• Chandler‘s (1962) statement Structure follows
strategy ‘implies that every organizational
structure is mainly developed based on the
strategy of the organization and therefore
successful implementation of an organization‘s
strategy will depend on the firm‘s primary
organizational structure.
 Matching Organizational Structure with Strategies

• Firms will in - most times - adopt a certain

type of structure depending on the
strategies of the organization. Based on this,
scholars have identified various types of
general strategies which will help in
achieving their firm’s visions. Further, there
are general structures based on the different
available strategies as discussed below.
General Grand Strategies
• Porter (1980) came up with the generic
strategies of product differentiation, cost
leadership and focus.
 Matching Organizational Structure With Strategies

• In his ground breaking competitive advantage

book, he showed that firms which are looking
for leverage should stick with one of the
three.
• Firms which applied a combination, according
to him, were stuck in the middle and lost
efficiency and effectiveness thus lost
competitive advantage.
• Several grand strategies have been postulated
and show a multiplicity of ready to use
strategies to gain competitive advantage.
 General Organizational Structure

• Functional Organizational Structure:

this is based on the primary activities
that have to be undertaken by an
organization such as production,
finance and accounting, marketing,
human resources and research
development. Such a structure divides
responsibilities according to the
organizations primary roles.
 General Organizational Structure

• Geographic Organization
Structure: is mainly adopted by firms
undertaking a geographic expansion
strategy. It involves the growth of
companies by expanding sale of their
products and services to new
geographic areas.
 General Organizational Structure
Continues…….
• A Divisional Organizational Structure/Multi-
Divisions is adopted by firms undertaking a product
diversification strategy or utilizes unrelated market
channels or begins to serve heterogeneous customer
groups.
• In this case, a functional structure becomes
inadequate and a divisional structure is used.
• The new structure is necessary to meet the increased
co-ordination and decision making requirements that
result from increased diversity and size.
• This allows decision-making in response to varied
competitive environments and enables corporate
management to concentrate on corporate-level
strategic decisions
 General Organizational Structure Continues…..

• Strategic Business Units Organizational

Structure: is an additional layer of
management due to the need to improve
strategy implementation, to promote
synergy and to gain greater control over the
firm‘s diverse business units. The adoption
of this type of structure by management is
as a result of firms encountering difficulty in
evaluating and controlling the operations of
their divisions as the diversity, size and
number of these units continues to increase.
 General Organizational Structure Continues…..
• Matrix Organizational Structure: is a
combination of structures which could take the
form of product and geographical divisions or
functional and divisional structures operating
together.
• Such structures are used in large companies
where there is increased diversity that leads to
numerous products and project efforts of major
strategic significance.
• The matrix structure will allow effective
knowledge management since separate areas of
skills and resources will be integrated across
organizational boundaries.
 General Organizational Structure Continues…..

• Virtual Organizational Structure:

connects different departments
through the net. This is a situation
where departments are located in
different geographical locations but
are networked and operate as though
they are in the same building. It
brings in advantages because
departments can be located where it
is most appropriate (Collins, 2007).
 KINDS OF STRUCTURE
A

B C
• Vertical Structure

• Horizontal Structure
 Vertical Structure
• Process of Differentiation
• Involves Division of Labor and Specialization.
Dominates:
– 1. SPECIALISED TASKS
– 2. HIERACHY OF AUTHORITY
– 3. RULES AND REGULATION
– 4. VERTICAL COMMUNICATION
– 5. CENTRALISED DECISION MAKING
– 6. EMPHASIS ON EFFICIENCY
 Vertical Structure
• Also called as Tall structure.
• Best suited for standardized products and
services in large volumes.
• Established technologies, wide market,
seeking customer on undifferentiated items.
 Horizontal Structure
• Process of Integration among members in an
organization, cross functional systems and
teamwork.
• Dominates:
– 1. SHARED TASKS.
– 2. FLEXIBLE RULES AND REGULATION.
– 3. HORIZONTIAL COMMUNICATION.
– 4. DECENTRAILISATION DECISION MAKING.
– 5. EMPHASIS ON LEARNING
 Horizontal Structure
• Its also called LEAN AND MEAN
ORGANIZATION OR FLAT STRUCTURE.
• Liberal exchange of information among
different layers and across departments.
• On Negative side, such structure has loss of
control and high cost in coordination.
 STAGES OF DEVELOPMENT OF
ORGANISATION
• STAGE I: Organization owned by Small scale
enterprise
• CHARACTESTICS:-
– 1. Single Owner
– 2. Simplicity In Objective, Operations and
Management.
– 3. Termed as Entrepreneurial
– 4. Strategy is generally Expansion type.
 STAGES OF DEVELOPMENT OF
ORGANISATION
• STAGE II: Organization bigger than Stage I
– CHARACTERSTICS:-
• 1. Functional Specialization or Process Oriented.
• 2. Strategy ranges from stability to expansion
 STAGES OF DEVELOPMENT OF
ORGANISATION
• STAGE III: Organization is Large and widely
scattered
• CHARACTERSTICS:-
– 1. Units or Plants at different places.
– 2. Each units is linked to its Headquarters but
functionally Independent.
– 3. Divisions on functional forms for particular needs.
– 4. Strategy is much the same stability or expansion.
 STAGES OF DEVELOPMENT OF
ORGANISATION
• STAGE IV: Organization are most complex.
• CHARACTERSTICS:
– 1. Generally Large, Multi-Plant, Multi-Product
organization.
– 2. Cooperate Headquarters provided strategic
directions and policies
– 3. Division formulate business level strategies.
 ORGANISATIONAL STRUCTURES
• ENTREPRENEURIAL
STRUCTURE: Owner- manager
– Elementary form of structure.
– Organization owned and
managed by one person.
– Typically organization serving Employees
single business, product, or
serve local markets.
– Owner looks after all decisions,
day to operations of strategic
nature
 ORGANISATIONAL STRUCTURES

• FUNCTIONAL
STRUCTURE:
– Functional structure
seeks to distribute
decision making and
operational authority
towards each
 ORGANISATIONAL STRUCTURES
• DIVISIONAL STRUCTRUE
– In divisional structure work is
divided on basis of product
lines, type of customers served
and geographical area covered.
– Each separate divisions or units
are created and placed under
divisional-level management
under which functional
structure may still operate.
 ORGANISATIONAL STRUCTURES

• SBU Structure
– Strategic Business Unit
– Defined as “any part of a business organization
which is treated separately for strategic
management purpose”.
– SBU created due to difficulty in top management
to exercise strategic control over a division.
 ORGANISATIONAL STRUCTURES
• MATRIX STRUCTURE
– In large organization, there will handling more than one
project.
– For each project or product will be strategically significant.
– Such kind of structure is created by assigning functional
specialists to special projects or new product or service.
– During the duration of project specialists from different
areas form group or team reporting to a team leader.
These specialists will be working under there project and
in their parent department simultaneously
 ORGANISATIONAL STRUCTURES
• PRODUCT BASED STRUCTURE
– Grouping of activities on basis of product or product lines.
– Such a need arises when the strategy adopted requires
exclusive attention to a group of products or product.
– Benefits includes optimum use of specialized skills and
equipment's, increase coordination and enables fixation of
responsibility for profit making and usages of resource
– Product based structure can only classified if sales of
product line is so large enough to create an optimum use of
resource and skills.
 ORGANISATIONAL STRUCTURES

• CUSTOMER BASED STRUCTURE

– Created on the basis of customer groups served;
separate and distinct customer groups
– Advantages
• includes employment of marketing orientation to serve
customers, better use of skills, especially in marketing
and quick response to changing customer needs.
• Its applicable only if volume of individual customer
group justifies separate divisions.
 ORGANISATIONAL STRUCTURES
• GEOGRAPHICAL STRUCTURE
– This type of structure evolves in expansion and
diversification.
– Multi plant or Multi unit organization dispersed
geographically in such type of structure
– Advantages includes:
• 1. Decentralization to a local level
• 2. Use of local available resource and raw materials.
• Such kind of organization applicable only if there is high
coordination among different units with corporate
department.
 ORGANISATIONAL STRUCTURES
• INTRAPRENEURIAL STRUCTURE
– Combination of 2 words internal and entrepreneur.
– In contrast to entrepreneur, here the inside the boundary of
an organization the employee is paid to involve new ideas,
products or services for evoking entrepreneurial capabilities.
– Resources are allotted for further developments of
innovation in developing new venture.
• Advantages includes motivating for highly qualified individuals, to
bring creativity and innovation
• Major disadvantage would be position to risk time and resource if
projects are not successful