odil assingnment asim

Organization Dilemmas

Table of Contents

1.0 INTRODUCTION.................................................................................................................................2

2.0 STRATEGY AND ORGANIZATION STRUCTURE........................................................................................3

3.0 STRUCTURE FOLLOWS STRATEGY...............................................................................................4

3.1 Alfred Chandler.................................................................................................................................4

3.2 Peter F. Drucker.................................................................................................................................5

3.3 Henry Mintzberg...............................................................................................................................6

3.4 Igor Ansoff............................................................................................................................................7

3.5 Examples of company which followed the views of authors discussed above are:............................7

4.0 Strategy follows Structure.....................................................................................................................8

5.0 Types of Strategies and Structures.........................................................................................................9

1. Functional Level:.............................................................................................................................9

2. Business Level.................................................................................................................................9

3. Corporate Level Strategy.................................................................................................................9

4. Global Strategy..............................................................................................................................10

6.0 Conclusion...........................................................................................................................................13

7.0 References...........................................................................................................................................14

8.0 APPENDIX.........................................................................................................................................15

1 | P a g eSYED MUHAMMAD ASIM TP018321 INDIVIDUAL ASSIGNMENT


1.0 INTRODUCTION

Organization is a group of people working together for achieving a common objective which is

already defined by the organization. To run organizations properly without any haphazardness

and wastage of resources a proper structure and hierarchy is to be properly defined in an

organization. Organizational structure is the way in which the different groups of people,

working in the organization, are constructed the objective of creating these groups are created to

ensure proper coordination, less wastage of resources and quick achievement of objectives.

These structures than take different forms like bureaucratic, functional structure, matrix

structure, and divisional structures etc each structure has its own advantages. The shape adopted

by a structure depends upon factors like the size of the organization, variety of operations being

performed by the organization, number of branches and their location, education level of

manpower, available resources. While working in an organization one of the most imperative

things is the role of the leader. To strengthen the role of the leader hierarchies are made.



2.0 STRATEGY AND ORGANIZATION STRUCTUREStructure follows Strategy simply means due to certain motives an organization is born, it has its

own missions and visions, to full fill objectives of the organization an strategy needs to be

developed, to support strategy a structure needs to be defined which will suit the strategy being

implied. Every strategy requires an organization to implement it. This is one of those hard

essential facts of business life from which there is no escape. A strategy on its own is no more

than a statement or plan of action. How successful that action is and what the outcome will be

depends on whether the organization has the structure, skills and capabilities to implement the

plan. The best, most carefully researched and meticulously planned strategy the world has ever

seen, will undoubtedly fail if the organization charged with carrying out is not competent to do

so. For the Companies to have a solid structure to support strategy is imperative.

Blue ocean strategy is a great example, where structure is shaped by strategy; here the strategy is

focused on creating value innovation. It serves to mass market and breaks the barrier of value-

cost trade by providing high value product at low cost. Companies which fall under such strategy

are Apple with i-pod, Ford with its Model-T, Nintendo and Southwest Airlines each offer

something unique off great value to its customer. (Deepak Agarwal, 2010)



3.0 STRUCTURE FOLLOWS STRATEGY

3.1 Alfred Chandler

http://www.nndb.com/people/747/000031654/

According to Chandler:

Strategy is “the determination of the long-term goals and objectives of an enterprise, and the

adoption of courses of action and the allocation of resources necessary for carrying out these

goals.”

The historian, Alfred Chandler, substantiated his 'Structure follows Strategy' thesis based on four

case studies of American conglomerates that dominated their industry from the 1920's onward.

Chandler described how the chemical companies Du Pont, the automobile manufacturer General

Motors, the energy company Standard Oil of New Jersey and the retailer Sears Roebuck

developed over time by identifying four sequential stages: (Proven Models, 2010)

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 diversionalised form to manage large conglomerates.


http://www.nndb.com/people/747/000031654/


3.2 Peter F. Drucker

http://800ceoread.com/book/blog/9780060833459-The_Effective_Executive

According to Peter Drucker, the procedure of setting objectives and monitoring your progress

towards them should permeate the entire organization, top to bottom. His famous idea is MBO or

“Management-By-Objectives”. After the organization developed its objectives, it then develops

the strategies for each of those objectives.

Drucker’s idea is “opposite or against” the idea of Alfred Chandler, specifically in terms of

implementing the strategies. Drucker said that work (implementing the strategies) would be

carried out in teams with the person most knowledgeable in the task at hand being the temporary

leader. Drucker’s idea is different from Chandler in a sense that in Chandler’s view, work must

follow the strictly defined structure of the organization (e.g. this department does this set of

activities and nothing else), whereas Drucker’s idea is about forming “work teams” with

qualified people or knowledge worker pricked out from any department doing every activity as a

team towards achieving the objectives. The leader of each work team is not necessarily the head

of department, as we would normally believe.


http://800ceoread.com/book/blog/9780060833459-The_Effective_Executive


3.3 Henry Mintzberg

http://ctr.concordia.ca/2000-01/May_10/08-Hon_Docs/index.shtml

According to renowned management theorist Henry Mintzberg, an organization's structure

emerges from the interplay of the organization's strategy, the environmental forces it

experiences, and the organizational structure itself. When these fit together well, they combine to

create organizations that can perform well. When they don't fit, then the organization is likely to

experience severe problems. Different structures arise from the different characteristics of these

organizations, and from the different forces that shape them (which Mintzberg calls the "basic

pulls" on an organization). By understanding the organizational types that Mintzberg defines,

you can think about whether your company's structure is well suited to its conditions. If it isn't,

you can start to think about what you need to do to change things.

Mintzberg's Organizational Types

The main successful organizational structures that he identifies are as follows:

The entrepreneurial organization.

The machine organization (bureaucracy).

The professional organization.

The divisional (diversified) organization.

The innovative organization ("adhocracy").


http://ctr.concordia.ca/2000-01/May_10/08-Hon_Docs/index.shtml


3.4 Igor Ansoff

http://www.easy-strategy.com/igor-ansoff.html

Igor Ansoff extended the work of Chandler and developed a strategy grid that compared market

penetration strategies, product development strategies, market development strategies and

horizontal and vertical integration and diversification strategies. He felt that management could

use these strategies to systematically prepare for future opportunities and challenges. He

developed the “ gap analysis” still used today in which manager must understand the gap

between where the organization is currently and where they would like it to be, then develop

what Ansoff called “ gap reducing actions”.

3.5 Examples of company which followed the views of authors discussed above are:Coca-cola is an example of an organization which practices “Structure follows Strategy” since

they follow strategic planning in year 2009 they had great success with such belief. Coca Cola

believes consumer demand derives everything; strategy to achieve the goal is on what Coca Cola

emphasize most on.

Worldwide volume increased by 4 percent with strong international growth of 5percent.

• Earnings per share grew by 82 percent.

• Return on common equity grew from 23 percent to 38 percent this year.

• Return on capital increased from 16 percent in 2000 to 27 percent 2009.




• The company has generated free cash flow of $3.1 billion, up from $2.8 billion. (Knowledge

Inn, 2010)

4.0 Strategy follows Structure

Until now we were discussing on structure follows strategy but each organization also has to

practice that strategy follows structure, there are many reasons supporting Strategy follows

structure starting off with the Organization Life cycle.

Once the organization has been constructed, it grows whereby at every stage a strategy

reinforcement is required for example when organization reaches its maturity and most probably

is about to fall into decline stage Manager can come up with extension strategies to prevent

organizations falling into decline stage.

Another reason is that the management and workforce is satisfied with the current organization

structure and are unwilling to change the structure, defining everything again is a great effort and

they are not willing to go for it.

Nature of the organization, for example in typical governmental organizations such as Military,

the robust organization structure can’t be changed in order to cope up with an strategy rather the

strategy is modified to suit the structure, the structure which is centralized remains centralized.

Businesses which only think of Structure follows strategy are mistaken that later on structure

requires Strategy to be modified in order for the existing structure to successfully run, due to

uncertainty in the external environment, it is cheap to modify strategy rather than changing the

whole structure, people are often unwillingly to accept the change in the organization structure it

often confuses them. In the end it’s a great risk for the businesses to change the structure for the

strategy and if later on Strategy fails the whole organization can be shutdown since lots of cost is

involved in changing the whole structure, whereas just changing the strategy often gives

organizations a change to stand up again on its feet, since not a lot of damage is incurred.

A great example of a company which follows Structure shapes strategy is Etisalat, which is a

UAE-based telecommunications services provider, currently operating in 18 countries across

Asia, the Middle East and Africa.



Etisalat follows management by objectives, due its structure complexity and rigidness it is

impossible to modify structure therefore they come up with implementing management by

objectives, whereby they have a strict atmosphere in the organization where by every action is a

demand of objective fulfillment. So there was no need of having to change the entire structure

rather altering strategies to cope up with structure.

5.0 Types of Strategies and StructuresStrategy is the specific patterns of decisions and actions that managers take to sue core

competency to achieve a competitive advantages. Among many other things that influence

design of the structure, strategy is one of them.

There are 4 types of strategies determining the structure of the organization.

1. Functional Level: plan of action to strengthen an organization’s functional and

resources, as well as its coordination abilities in order to create core competences.

The organization which will have more emphasis on manufacturing is bound to have a

tall hierarchy, centralized, mechanistic structure, whereas if the focus is diverted to

sales organization structure would be flat decentralized, mutual adjustment.

2. Business Level: plan to combine functional core competences in order to position the

organization so that it has a competitive advantage in its domain.

If the organization wants to promote differentiation, the structure would be matrix,

product team, a complex structure with decentralization would be best suited.

The company which follows such strategy is Apple, since they work on differentiation

and also have matrix structure to back it up.

3. Corporate Level Strategy: Corporate level Strategy fundamentally is concerned

with the selection of businesses in which the company should compete and with the

development and coordination of that portfolio of businesses.

The structure of Organization practicing Corporate Level Strategy would be:



http://www.slideshare.net/vikasiba/

organisation-structure-design

Where by the decision will be taken by the CEO and different Divisions will be created for

Organizations to operate in with different products best suited for each Division.

4. Global Strategy: plan involves choosing the best strategy to expand into overseas

markets to obtain scare resources and develop core competences. Global strategy can

play a crucial role in strengthening a company’s control over its environment.

Structure would be:

Global Geographic Structure: each region of a country or area of the world is

served by self-contained division. Managers locate different divisions in each of

the world regions where the organization operates. For example.

http://www.slideshare.net/vikasiba/organisation-structure-design

Global Matrix Structure: an organization structure that simultaneously groups

people and resources by function and product. The structure is very flexible and

can respond rapidly to the need for change. For example







Global Product Group Structure: each product division, not the country or

regional managers, takes responsibility for deciding where to manufacture its

products and how to market them in foreign countries. For example two types of

structure would fit under such attempt.


2nd would be Product team Structure where members are permanently assigned to a cross

functional team and report only to the product team manager or to one of his subordinates.





http://

www.slideshare.net/vikasiba/organisation-structure-design

It is highly recommended for each and every company to first determine its strategy and then to

select a structure to cope up with it for the successful running of the organization, having any

random structure for a developed strategy would fail to achieve objectives, a defined structure

should be the aim of every company to follow its strategy.





6.0 Conclusion

A strategy without an organization structure behind it is just a set of ideas. And an organization

structure without a strategy is inert: it has no guiding force, no way of knowing what to do or

where to go. The relationship is like that of a racing car and its driver. The latter cannot even

begin to compete unless he has a car; the former will never move out of garage unless there is a

driver behind the wheel.

The key to success for any organization is to ensure that the strategy and the organization

structure are fully aligned with each other. Rather than privileging one over the other, equal

attention had to be given to both. In practice this means that managers must both alter the

organization structure to make certain that the organization is able to carry out the strategy and at

the same time ensure the strategy is realistic and implementable sometimes the structure is to

rigid to modify. A steady incremental change in both strategy and structure, keeping both aligned

with each other in a kind of balancing act, adjusting the organization as the strategic

implementation process went on and requirements changed, altering the strategy if it became

clear that the organization lacked the competencies to carry out certain parts of it ensures a

successful running organization practice.



7.0 References1) Provenmodels.com, 2010, structure follows strategy, [Online], Available

at:http://www.provenmodels.com/7, [Accessed on 10th February 2010]

2) Morgen Witzel, 2009, Strategy and organization, [Online], Available at:

http://www.fsn.co.uk/channel_human_resources/strategy_and_organisation, [Accessed

on 12th February 2010]

3) Easy-Strategy.com, 2010, Igor Ansoff, [Online], Available at: http://www.easy-

strategy.com/igor-ansoff.html, [Accessed on 14th February 2010]

4) Vikasiba, 2009, Organization Structure & Design, [Online], Available at:

http://www.slideshare.net/vikasiba/organisation-structure-design, [ Accessed on 16th

February 2010]

5) QuickMBA, 2007, Strategic Management [Online], Available at:

http://www.quickmba.com/strategy/levels/, [Accessed on 18th February 2010]

6) Mandi J Luis, 2010, Mintzberg’s Organizational Configurations, [Online], Available at:

http://www.mindtools.com/pages/article/newSTR_54.htm, [Accessed on 19th february]

7) Deepak Agarwal, 2010, what businesses model your organization follows “Structure-

Shapes Strategy” or Strategy-Shapes-Structure?, [Online], Available at: appon 21st

February 2010]

8) Knowledge Inn, 2010, STRATEGIES OF Coca cola, [Online], Available at:

http://kninn.blogspot.com/2010/02/strategies-of-coca-cola.html, [Accessed on 22nd

February 2010]


http://kninn.blogspot.com/2010/02/strategies-of-coca-cola.html

http://www.mindtools.com/pages/article/newSTR_54.htm

http://www.quickmba.com/strategy/levels/




http://www.fsn.co.uk/channel_human_resources/strategy_and_organisation

http://www.provenmodels.com/7


8.0 APPENDIXThe comparison of Strategy follows Structure and Structure follows Strategy

Structure follows Strategy Strategy follows StructureThe application is widely practiced in

organizations which are profit motive and are

looking forward to make innovative products

and creating an extra value for customers

following Blue ocean strategy.

The cost incurred in change the whole structure

is relatively high, and is too risky a poor

strategy can lead to organization going into

insolvency/ bankrupt.

Many authors have supported this view, and

today many successful companies around the

globe also practice it, such as Coca cola,

Nokia, Sony, Apple, Ford, and Dell.

The application is widely practiced in

organizations which not profit motive and are

too huge in size and are mostly public limited

companies, for them getting things done matter

not how to get it done, they satisfied with the

current system and show resistance to any

change.

The cost incurred is not high as compared to

changing the whole structure and is more

feasible approach in terms of risk, effort and

workforce satisfaction.

Not many author had their view on this, and

also not many companies can be found

practicing it.


odil assingnment asim

Documents

planned strategy

global strategy

corporate level strategy

proper structure

functional structure

matrix structure

solid structure

organizational structure