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Structure Follows Strategy: Key Insights

The document discusses how organizational structure should match strategy. It states that theorists like Chandler and Porter argue that structure follows strategy, with Porter outlining three generic strategies of cost leadership, differentiation, and focus that each have their own matching structures. Chandler emphasized that structures follow firms' growth strategies of volume expansion, geographic expansion, and product diversification. Depending on strategic choices and other factors, firms can pursue simple, functional, SBU, divisional, matrix, holding company, or network structures. The document also defines restructuring as changing structure and design to improve efficiency by downsizing or delayering, and reengineering as the radical redesign of business processes to boost cost, quality, and speed.

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Beenay Maharjan
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7K views5 pages

Structure Follows Strategy: Key Insights

The document discusses how organizational structure should match strategy. It states that theorists like Chandler and Porter argue that structure follows strategy, with Porter outlining three generic strategies of cost leadership, differentiation, and focus that each have their own matching structures. Chandler emphasized that structures follow firms' growth strategies of volume expansion, geographic expansion, and product diversification. Depending on strategic choices and other factors, firms can pursue simple, functional, SBU, divisional, matrix, holding company, or network structures. The document also defines restructuring as changing structure and design to improve efficiency by downsizing or delayering, and reengineering as the radical redesign of business processes to boost cost, quality, and speed.

Uploaded by

Beenay Maharjan
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
  • Matching Structure with Strategy
  • Restructuring
  • Reengineering

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.

Matching Structure with Strategy
Matching Structure with Strategy Strategy gurus like Alfred Chandler and M. E. Porter argue that structure follows strategy
Matching Structure with Strategy Depending upon the strategic choice (along with some other factors like size of the firm,
Restructuring Restructuring refers to the process of changing the various aspects organizational structure & design for imp
Reengineering (or BPR) This concept is concerned with the radical redesign of business processes to achieve improvements in

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