Question

·        Why is it important for managers to carefully consider the type of organizational structure that they use to implement their strategies? Explain.

Answer 1

A manager must design his strategy implementation as per the organizational structure in which he is working. An organizational structure defines what type of action will be implementable. This is due to the following reasons:

1. Innate benefits: A manager’s strategy is often influenced by the position of the firm in the market. Most departments of the firm are always doing their best and become a star performer for the company. The strategy must take them into consideration as hampering their performance will hamper profits & the market share. The steps may be expanding the profitable parts of the business and shrinking the mediocre ones.

2. Consensus: While designing the strategy, the consensus of all the departments and company hierarchy is important so as to work together and create value for the organization. The structure will define how the power is aligned and who is to be approached for what approvals.

3. Centralized structure: A centralized organization makes the strategy designing and implementation more feasible for a manager. The process of change management is always challenging for the firm. Lesser the people involved in decision making, easier it is to gain the approvals.

4. Overcoming shortcomings: A firm who has been failing to create value on the sustainable and profitable basis, will need to change its organizational structure to change its focus. This requires a manager to be a great resource and is a traumatic experience for an organization.