Firms Strategy and Structure

Management and Strategy Essay Notes

INDUSTRIAL ORGANIZATION, CORPORATE STRATEGY AND STRUCTURE

 Top managers perceptions of the market structure and firms strengths and weaknesses determine their choice of corporate strategy and organisational structure
 Both corporate strategy and organisational structure influence the economic performance of the firm and the market in which it sells
 One of the main goals for strategy implementation is to achieve synergy between functions and business units (Hunger and Wheelen)

Organisational Structure

 Organisational Structure – arrangement whereby the firm motivates, co-ordinates, appraises, and rewards the inputs and sources that belong to its coalition
 It is a process of choosing arrangements that maximise the value of the firms chosen strategy

Other factors affecting organisational structure

• Market processes surrounding the unit
• Influence of competition
• Uncertainty – relate to Chandler – The external environment is uncertain therefore companies are forced to change their structure to comply with the changing environment

STRATEGY MAKING AND STRUCTURE: ANALYSIS AND IMPLICATIONS FOR PERFORMANCE (Danny Miller)

• Organisational structures and strategy making are highly interdependent and must be complementary in many ways to ensure good performance under challenging conditions
• Findings of the study illustrate that relationships between strategy making and structure were usually strongest among successful and innovative firms and seemed to contribute the most to performance in sizeable and innovative firms
• The structure of an organisation importantly influences the flow of information and the context and nature of human interactions
• Channels collaboration, specifies modes of co-ordination, allocates power and responsibility, and prescribes levels of formality and complexity – elements which would influence the making of strategy
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