MANAGEMENT

Strategy and Structure have a Reciprocal Relationship

Strategy and Structure have a Reciprocal Relationship

Introduction

During the last quarter of the previous century, many discussions have drawn attention towards the relationship between the organizational structure and organizational strategy. In management theory, there has been developed a thesis where it has been said that structure follows strategy in management. This was proposed by Alfred Chandler, who was a historian. This also means that to implement a corporate strategy, there needs to be developed a corporate structure which helps in taking the management, as well as, the company forward.

Discussion

Thesis

There were four case studies which were made the basis for the thesis of Chandler. The case studies were from the American Conglomerates which were dominant in America from the 1920 onwards. Chandler, in this thesis, described the way that the leading automobile manufacturers General Motors (Hanson, Pp. 125, 2010). The chemical Company Du Pont, Sears Roebuck which was the leading retailer, as well as, the Standard Oil of New Jersey managed their companies in a profitable manner. These companies made sure that they managed their diversification strategies, as well as, their growth through adopting a multi division form which was a revolutionary thing and strategy. This structure and strategy was given the name of M-Form. This was a corporate federation which was made up of semi independent products, as well as, the geographic groups. There was headquartering in each corporation which was responsible for the coordinate interdependencies, as well as, the corporate strategies (Hanson, Pp. 125, 2010).

Explanation

When the executives start developing strategies for their corporations, they always start by analyzing the environment of the company. These analyses include the environmental conditions of the company, as well as, the industry. The executives then start the assessing the strengths and weaknesses of the company, as well as, the competitors. Keeping in mind the strategic analysis of the company, internal and external, strategies are made. These strategies are made which set a distinctive strategic position of the company (Carton & Hofer, Pp. 165-170, 2006). The strategies also help the organization in making further strategies which can help them in maintaining their competitive advantage, as well as, maintain a healthy competition in the market. A company makes its strategy either to compete with the competitors through strategies like low cost leadership or premium price (www.hbr.org). The value chain of the company is then aligned with the strategies in a way that they help each other. The value chain then crates the marketing, manufacturing, human resource and other decisions (Davenport & Leibold, Pp. 225, 2006). The final strategies are then made making use of these strategies and the final shape to the process of strategic management is given. The financial targets are also set and the budget is allocated to different departments so that they can start pursuing their strategies.

The logic here is that the strategies of a company, as well as, the options available to the strategic managers are bound by the internal and external ...