Relationship between Structure and Strategy in Organizations

The textbook indicates that Structure and Strategy have a reciprocal relationship. How so? Pick one company and identify the corporate structure from their Web Page – how does how they are organized represent their Corporate Strategy? (Minimum 2 Paragraphs) Be sure to cite your sources and include the textbook content to support your position. Once you have submitted your initial post, engage in a discussion with a minimum of two of your classmates by thoroughly reviewing their post, providing comments and/or questions, to understand or contradict their position.

Relationship between Structure and Strategy in Organizations

Organizational structure refers to how activities are ordered and organized in an organization to achieve a set of goals. It defines how all the pieces, parts and processes work together.

On the other hand, organizational strategy refers to the plan of actions that an organization takes to achieve organizational objectives.

Structure and strategy are interconnected in many ways.

  • Structure is used to implement strategy – how activities are pieced together helps to achieve a specific strategic goal. For example, an open and flat organizational is used to foster communication and innovation in order to achieve a differentiation or growth strategy.
  • Strategy also follows structure: When an organization changes its structure and not its strategy, the strategy will change to fit the new structure. For example, a formerly bureaucratic and hierarchical structure can be changed into a less hierarchical structure – leading to a change in strategy as the company scales down on its operations. It may result in closure of some departments and shift to divesture or retirement of some businesses.

It takes the right structure for a strategy to succeed. Management that is solely focused on results can have a tendency to direct everyone on what they need to do without paying attention to the current way the organization works.

Walmart Example

A good example is Walmart which has a hierarchical and functional structure. This structure ensures that the firm has set standards and procedures to be followed across the firm, leading to improved efficiency, less risks, and reduced costs.

Thus, the structure supports the low-cost strategy used by the firm. Walmart competes based on prices by offering low prices to consumers compared to other competitors. This is achieved by having a highly structured system that ensures low operational costs. The cost saving benefits are then transferred to consumers through low prices.

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