Strategy And Structure in Organizations

Strategy And Structure in OrganizationsStrategy is an integrated and coordinated set of commitments actions endeavored to exploit core competencies sop up a adversaryy advantage.Organization organize shaping building specifies the self-coloreds figure outal reporting human relationships, procedures, say-sos and authority, stopping point making process.So organisation bodily structure includes three componentsadministrative structure This structure signifies function of labour in the giving medication. This includes dividing work into tasks or roles such as operations, logistics and transportation, and training, and recombining them into administrative units, e.g., branches, departments or divisions according to mission, function, and/or region. The structure portrayed in g everyplacenment activity charts, including t sufficients of memorial tablet and equipment is the administrative structure.Responsibility structure This includes division of responsibility auth ority to individuals indoors the organisation.Control structure This includes organisations system of measuring and evaluating cognitive operation on the basis of administrative structure responsibility structure. human relationship surrounded by Strategy and StructureThere be two main views on the relationship amidst strategy and structure. According to Alfred C authoriseler structure follows strategy.Recent research has questioned the view that structure always follows strategy, and argued instead that strategy often follows structure. This second view, that strategy follows structure, is frame on the idea that managers already working within a particular organisational structure result take the structure for granted and only consider strategies that will fit with the existing structure.Combining these two arguments we can say that Strategy structure catch a reciprocal relationship. Organization structure is a hypercritical component of effective strategy implementat ion process. Success of a loaded depends on how well a firms business strategy is matched to its organisational structure. Developing an organization structure that effectively supports the firms strategy is difficult. For successful implementation of organization strategy, an organisation structure should have following characteristics morphological stabilityThis provides the firm a competency to effectively manage its daily work routines.Structural flexibilityThis provides the firm an opportunity to explore competitive possibilities then eachocate resources to activities that will shape the competitive advantages the firm will need to be successful in future.However strategy has a much much important influence on structure than reverse. But at the end organisation structure should provide adequate stability flexibility that is necessary for successful implementation of strategy. Strategy that a firm decides to follow will govern the decision about the organisation structure that will be suitable for the firm but once in site organization structure influences the choice about future strategies because of organizational inertia derived from organization structure that inhibits efforts to change over.Evolutionary pattern of organizational structure strategyPre-bureaucratic structuresThis is the simplest form of structure is unremarkably found on traditional or charismatic dominance. Structure is totally centralised lacks standardisation of tasks. This is useful in managing simple tasks.bureaucratic structuresIt has certain degree of standardisation is useful in managing slightly much complex large scale organizations.Functional structuresStructure is more alike(p) centralised. Organisation is divided into separate functional divisions employees within a particular division perform specific functions. This berthful of structure is useful in firms that provide standardised goods go at low be in steep volume.Divisional structureThis is in like manner called as product structure. Organisation is divided into divisions each division has its own resources functions. Divisions can be based on geographies or products/services.Matrix structureThis structure combines the features of both functional divisional structure.Defining the strategy strategy implementation processStrategy facetionAs discussed earlier strategy has more important influence on structure than reverse. So whenever a firm starts a business it decides about what strategy it wants to follow. Broadly there are four different business strategies that firms followProspector- The primary challenge that these firms face is to account exploit new opportunities of industry their primary capability is innovation.Analyser- Analysers are fast followers. They closely monitor customer reactions competitor activities either improve upon successful competitor product offerings or offer comparable products at reduced cost.Low cost defenders- These firms usual ly target stable segments of market. Their main emphasis is on qualification through standardised practices providing low cost products rather than innovation.Differentiated defenders- These firms also target stable segments of market but their emphasis is on high tint differentiated products rather than low cost.Strategy implementationOrganization structure forms a critical implementation dimension. Three important features upon which organization structure is based are formalisation, centralisation, standardisation.Formalization- This is the degree to which decisions working relations are governed by formal rules. Formal rules lower the administrative cost amplify efficiency. Firms that have greater crook of formal rules regulations are called mechanistic firms with fewer formal rules are called organic.Centralization- This defines the degree to which decision making authority is held by top management. In centralised organizations lines of parley responsibility are cl ear defined. Decisions are usually made by top management implementation path is clearly defined. This type of structure is followed in relatively stable, non-complex environss.In decentralised organizations views ideas may originate from different groups. Decision making tycoon is dispersed in the organisation. This type of structure is effective in complex environments.Specialization- This defines degree to which tasks and activities are divided in the organization. Specialist firms direct their efforts to a well defined set of activities. Generalist firms on the other hand are more diverse in their activities.Firms following different business strategies usually differ on degree of formalization, centralization specialization of organizational structure.Relationship between Environment, Resources, Strategy and StructureStrategy and structure are dynamically related according to classical model. E= Environment, R=Resource(capabilities) S=Strategy St=Sttructure Ti= TimeThe nat ure of the environment (Et1) and the Resources (Rt1) of the organization influence the strategy (St1) chosen at time t1, and in this turn determines the organizational structure (St1). Then the evolution of the environment and/or of the organization brings about a new strategy and a new structure.The dotted lines indicate that in truth often firms try to bring the environmental and structural demands without realizing that they have implicitly adopted a new strategy. Strategy grows out of structure and in turn may lead to its modification. character referencehttp___www.emeraldinsight.com_Insight_ViewContentServlet_contentType=ArticleFilename=_published_emeraldfulltextarticle_pdf_0860100201Burns and Stalker (1961) view structure as a process in itself a means of holding together an organization so that it is able to determine its own destiny. Organizations that operate in dynamically changing and uncertain environments tend to need organic/flexible structures and processes while m ore stable environments work themselves to more familiar mechanistic bureaucratic structures. Eccles et al. (1997) list some of the main functions of organizational structure which providea formal allocation of work rulesimpart for collaborative workingboundaries of authority and lines of communicationa means of allocating power and responsibilityprescriptive takes of formality and complexity.Strategy and Structure allianceSource Emerald database Strategy-Structure coalescencyAn important management responsibility is to design and implement the strategic organizational form best suited to the demands of its marketplace, customers, and business model. Since your competitors essentially have access to the equal information and may have developed similar strategies, it is important to consider organizational design as one of your closely powerful strategic weapons.Strategy-Structure Alignment follows four phasesAssessment Data is gathered on strategy, organization and the busines s environment using interviews, archival research (of planning documents, performance studies, etc., and observations. Data is make into issue categories and fed back to management in a way that supports validation and learning. Management reaches an agreement on key issues and problems, causal factors and organizational requirements. be after The design process goes through a series of design steps including scale and leverage assessment, the design of vertical substitutenatives and lateral processes and structures, impact analysis, etc. all(prenominal) step is geared to execute strategy and address organization and cultural issues.Alternatives Choice Changes in organization are based on a survival of the fittest from among a set of alternatives. Because any organizational structure calls for trade-offs, the alternatives are worked through discussions that focus on the advantages and disadvantages of each, their fit with requirements, and the impact of implementation, etc. Fr equently the organizational design that is.The types of problems that can be addressed include Changes in strategy causing poor alignment with the original organization design Needing to restructure parts of organization due to competitive pressures, introduction ofnew technology, etc. organizational growth is causing a reexamination of the organization design Poor execution and organizational effectivenessThe primary objective in Strategy-Structure Alignment is for management to design and decide upon an organizational structure that best supports its strategy and to develop a forward transition plan for next steps.The concept of co-alignmentIf strategy is about realizing a plan, then in implementing it, a suitable means of structuring resources and activities must be found and maintained. Olsen (1993) uses the term co- alignment to describe the best fit relationship between strategy and organizational structure. He observes that without co-alignment between structure, strategy a nd the environment, organizations may experience impediment in achieving long-term success. The concept of co-alignment is depicted in Figure.Alignment is a systematic methodology for designing these capabilities in a fully rational and certain way. Strategy-Structure Alignment is strategy-driven and performance-oriented. It begins with a reaffirmation (and sometimes recalibration) of business strategy, explores the implications of that strategy for organizational structure, considers changing conditions in the environment, and through diagnosis identifies organizational problems and performance gaps. A consequent design process generates alternatives for organization design. A preliminary transition plan of a preferred alternative and its alignment then follow.Relationship between Organizational Control, Structure and StrategyThere is a close relationship between organizational control, structure and strategy. The organizational control is one of the prime drivers for the organi zational change whenever the organization changes its structure. As explained earlier as organization grows the control of the organization captures more complex and hence the structure of the organization is changed to cope with the changed environment. Organization structure itself is used as a control mechanism in implementing strategy.For e.g.large diversified firms using cost leadership strategy emphasize financial controls and usually will have some concentrate financial reporting mechanism or financial department to exert more control over the costSingle business companies and business units using a differentiation strategy will be emphasizing on strategic control and the mechanisms will be developed accordinglyCorporate Level Strategy and StructureDepending on the type of bodied level strategy the organization is following the link between structure and strategy can be compiled as following.StrategyStructureMajor featuresRelated strained StrategyCo operative structure ( M-form)Structural integration, centralized strategic planning, human resource and marketing,RD etc.Cultural emphasis on corporate sharing.Rewards are subjective , tend to follow overall corporate performance and divisional performanceRelated Linked StrategyStrategic Business Unit (M-form)Structural integration, centralized strategic planning, human resource and marketing, RD etc.Cultural emphasis on corporate sharing.Rewards are subjective , tend to follow overall corporate performance and divisional performanceUnrelated variegationCompetitive form (M-form)Small corporate head quarters with Finance and auditing as the most prominent functions. headquarters to manage cash flow and find the accuracy of performance data coming from divisionsThe legal affairs function becomes important when the firm acquires or divests assetsDivisions are independent and separate for financial rating purposesDivisions retain strategic control, but cash is managed by the corporate officeDivisions compe te for corporate resourcesLatest Empirical StudiesStrategy and Structure in linguistic context Universalism versus Institutional EffectsJose I. Galan and Maria J. Sanchez-BuenoTried to study the Chandlers proposition that large organization evolve in to multi divisional forms as they grow in font of Spain. Spain being a newly developing market and with slowly integrating with EU and founding market was studied to test whether the cultural factors has impact on the effect of structure as organizations globalise and evolve. Their studies corroborated that as organizations evolve its complexity rather than culture that drives the emergence of the structure. Spanish organizations too followed the global trend of emergence of multi divisional structure. The same has been corroborated in case of other countries byResearcherCountryDyas ThanheiserFranceWhittington MayerU.KWhittington MayerGermanyInstitutional Forms and Organizational Structures Homology, Trust and Reputational Capital in Professional religious service FirmsGerard HanlonExplores how professional service organizations has used a set of clan and bureaucratic controls to manage the organizational changes both set of controls being present throughout the purport health span of an organizations but with varying levels of importance. Previous studies by Ouchi et. al says about the clan structure of professional services ,legal practices and accounting where there is high centrality of decision making and you belonging to that particular group or profession bringing you some privileges. Socialization aspect of clan structure was central to the success of organizations in that particular setup. Clan structure induces homology and trust based partner autonomy. Reputational capital is essential in making large and complex deals .But as the services expanded the need for institutional forms also emerged and institutional controls started taking place. This need for formal interactions and following of norms undermined the clan nature of the services. There is a constant power struggle between the bureaucratic controls and clan /social and informal norms of control in professional organizations.Exploring Strategy and Board Structure in Non-profit OrganizationsWilliam A brownish Joel O InversonApplying Miles and Snow typology of strategy Brown and Inverson tries to understand the structure of the organizations of the various non-profit organizations in U.S. Their key findings areProspectors have broader inclusive structureDefenders have tighter more focused structureEnvironmental Turbulence, Organizational Stability, and Public Service PerformanceGeorge A Boyne Kenneth J MeierA turbulent external environment is astray believed to have damaging effects on public service performance. Much less consensus has been reached on whether the best response to turbulence is to retain or alter existing organizational structures.They analysed these issues by testing the links between turbulen ce, structural stability, and performance in a large sample of public organizations. Results show that turbulence has a negative effect on performance, and that this is compounded by internal organizational change. Thus public managers can mitigate the harmful effects of unpredictability in the externalenvironment by maintaining structural stability.Emerging trends in organisation structureBy the end of 20th centaury trend of large organizations was over. The environment in which firms were operating changed to great extent. The factors that are responsible in todays environment are entirely different from traditional factors.Due to change in factors responsible for success of organizations, organizations are changing their structure.Major factors that have contributed to this change areGlobalisationDue to changes in technology changes in global trade laws, more more companies are competing in more more number of markets. This has increased both the opportunities threats pres ent in external environment.Change in applied scienceTechnology is evolving at a very fast rate organizations have to constantly adapt to this change. Technological change has the biggest impact on organizations among all the factors.Internet as a technology has provided a new distribution marketing channel which has led to a change in the way organizations compete.Information technology has also changed the internal working process of organizations. Technologies like ERP, SAP Oracle have facilitated the information flow in the organizations which in turn has changed the way organizations work.Einsteins famous formula has been modified in modern days of technological advancement.E = MC2M is the Mastery of each individual (human capital).C are the Connections that join individuals into a political party (social capital).C is the Communication that flows through those Connections.E is the resulting Effectiveness of the team or organizationAccording to a paper Do Org Charts Still Matter? by Thornton A May organizations are a combination of responsibilities, accountabilities, knowledge, process, interactions future. Organization charts depict only first element of organization i.e. responsibilities accountabilities. All other elements of organization are missing from the organization charts. Informal organizations that are existing because of web based interactions are not shown in these charts.Constant changeAs competition is increase day by day so organisations cant depend on what they do today to be successful tomorrow. Environment in which industries are competing is also very uncertain dynamic. This uncertainty demands structural flexibility. Technological change is one of the factors that are leading to environment change. As no company is confined to geographic boundaries so this has increased exposure to different emerging markets side by side it has also increased the competition from different players entering into the market. So companies have to adapt themselves to ever changing demands of consumer markets.Mergers acquisitionsIn recent years many mergers acquisitions happened in global economy. When two organisations combine it is mandatory that organisation structure provided by the management should be conducive to culture of both the organizations. Most of the failures in case of mergers acquisitions are due to cultural clash.Diversity in the workforce mess from diverse backgrounds in terms of geographies cultures are working in organizations. So organization structure should be such that it increases the productivity, improve morale, heighten creativity and nurture decision-making power among the employees.Emerging organisation structure trendsBecause of above mentioned factors the structure of many companies has become flatter, less hierarchical, more fluid and even virtual. Increasing use of IT enabled received organization structures to transform into more fluid form. Few of the emerging trends in organisat ion structure areTeamsThis is the new trend of organization structure. Entire organization may work as a team or it may be a combination of few teams which coordinate with each other.Xerox, Motorola are among the few companies that follow team organization structure.NetworkNetwork structure is also an emerging trend in organization structure. The main reason for using this type of organization structure is that firms outsource the tasks activities to other firms that can perform those tasks in a better cost effective way. Success of this type of structure depends upon the coordination control of external relations. Structural flexibility is one of the major success criteria for this type of organization structure.Partnership alliancesAs competition is increasing in the economy so firms realise that it is very difficult to survive in this highly competitive environment alone. So firms go for partnership alliances with other firms to diversify the risk.Virtual organizationsThis is the most radical form of organization structure. It is also called as boundary-less organization. This means while the core of the organization can be small but still the company can operate globally be a market leader in its niche. Because of the unlimited shelf space of the Web, the cost of reaching niche goods is dropping dramatically. The success of this type of structure depends on information technology.Self organised communitiesThe structure followed by latest web 2.0 technologies is self organised communities. In this case the job of top management is just to maintain the motivation level of employees to participate in the community.The TATA GroupIntroduction Activities of the OrganizationThe Tata Group is a international company with its head-quarter located in Mumbai, India. The Tata Group is one of the largest private employers in India employing more than 350000 employees. Tata companies operate in seven business sectors communications and information technology, eng ineering, materials, services, energy, consumer products and chemicals. both Tata company or enterprise operates independently. Each of these companies has its own board of directors and shareholders, to whom it is answerable. There are 28 publicly listed Tata enterprises and they have a combined market capitalization of some $60 billion, and a shareholder base of 3.5 million. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels and Tata communication theory.Tata Steel became the sixth largest steel maker in the world after it acquired Corus. Tata Motors is among the top five commercial vehicle manufacturers in the world and has recently acquired Jaguar and Land Rover. TCS is a leading global software company, with pitch shot centers in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Tea is the second largest branded tea company in the world, through its UK-based subsidiary Tetley. Tata Chemicals is the worlds second largest manufacturer of soda ash and Tata Communications is one of the worlds largest wholesale voice carriers.Rationale for selectionTata, with its long write up, is synonymous with the Indian economy. Its growth has been a prime index to be watched for gauging Indias growth. With a history of over 100 years, Tata has grown leaps and bounds by diversifying into different businesses. These businesses are so diversified and different that it presents us an opportunity to draw contrast between the different kinds of structures adopted in these businesses. Tatas solid presence in major industries like Automobiles (Tata Motors), Steel Industry (Tata Steel), IT Industry (TCS), Hospitality Industry (Taj Hotels) and many others is apparent(a) of their successful strategy formulation and implementation. All these businesses are driven by a single level corporate level strategy.Also with the increasing globalization there is an increased pressure on the Tata group companies to expand their operations beyond the nations boundaries. There has been the realization for the same and the Tatas have been proactive in spotting and capturing the internationalization opportunities. The widely cognize Corus acquisition by Tata Steel, the TCS foray into international markets, Tata Teas acquisition of U.K based Tetley tea have helped Tata to establish the brand Tata in the international arena. This has not been an independent event. In fact these steps have had serious implications to the structure of the organization.The study of Tata aims at obtaining insights into the impact of strategy change (diversification, internationalization) on the structure of the organization as a whole (reconstructionist approach). Also the impact of structural change on the firms strategy (structuralist approach) could effectively be studied with respect to Tata give its long history. So the Tata group presented an exciting opportunity to draw the rela tionship between strategy and structure of an organization.TAJ Hotels Resorts and PalacesThe Indian Hotels Company (IHCL) and its subsidiaries are collectively known as Taj Hotels Resorts and Palaces, which is recognized as one of Asias largest and finest hotel companies. Incorporated by the founder of the Tata group, Jamsetji Tata, the company opened its first property, the Taj Mahal Palace hotel, Bombay in 1903. Taj Hotels Resorts and Palaces comprises 64 hotels in 45 locations across India with an additional 15 international hotels.Areas of BusinessLuxuryPremiumMid-MarketValueVivantaGingerGatewayTajIHCL operates in the luxury, premium, mid-market and value segments of the marketIn addition, IHCL has Taj Exotica (resort and spa brand found in the most exotic and relaxing locales of the world ) and Taj Safari (wildlife lodges that allow travelers to experience the unparalleled beauty of the Indian jungle amidst gilded surroundings) which provide services to different segments of t he market.With its diversification strategy revolving both around products and markets, the Taj Group of Hotels follow Cooperative Form of Multidivisional Structure to implement its Related Constrained Strategy of diversification.In this Cooperative Form of Multidivisional Structure, IHCL uses Structural Integration devices to create tight links among all divisions. The Corporate Office located in Mumbai emphasizes centralized strategic planning, human resources, and marketing to foster cooperation between divisions. IHCL has a well laid out procedures for working and conduct of business. These governance mechanisms are clear and unambiguous. Everyone in the company is expected to follow the procedures followed in the company and anyone found violating them is questioned for the breach and suitable action is taken.The TATA Code of Conduct governs all the policies, procedures and behaviors desired from its associates across all its Hotels. There is more of formalization as most of th ese policies and norms are written down. The customer also feels at home when he is familiar with the brand and its level of commitment and service, making it the customers first choice at any location where its available. It also helps the company control the costs as there is a high degree of standardization of products and services. The transaction costs are also lower since most of the duties are well defined and less reason for conflict within organization.The culture of the IHCL emphasizes cooperative sharing. All the divisions and subsidiaries of IHCL share the corporate strengths of IHCL. The TATA/Taj Brand provides the trust from its customers to all its subsidiary units. Also, sharing divisional competencies facilitates the IHCLs effort to develop economies of scope which is very well achieved by its multidivisional structure. Sometimes temporary teams or task forces are formed around certain projects/events which is facilitated by sharing competencies that are embedded wi thin several divisions.So, to align its structure with its Related Linked Strategy of Diversification, the IHCL has developed a matrix kind of organization from the multidivisional structure. Here, as can be seen in the figure below there is a dual structure combining both functional specialization and business product specialization.So, measuring the organizational structure of IHCL on the dimensions of Formalization, Centralization, and Specialization we haveTata SteelThe Tata Steel division is the oldest business unit under the Tata group. Established in 1907, Tata Steel has evolved over the years to become an extremely competitive steel manufacturer.Evolution of the Strategy and StructureDuring the pre liberalization period (before 1991), Tata Steel faced a low levels of competition. SAIL was the only major competitor. The period was also reflective of the following quantitative restrictions (license raj) on the levels of production, the control over the price and the selection of customers. The tight regulatory nature of the government bodies over the manufacturing units had implications over the strategy of the firm. The main aim of the unit was to meet the levels of production as set by the government and there was no motive to increase productivity/efficiency or reduce the cost. Thus the firm had a centralized structure. The various functions