1. STRUCTURAL
ALIGNMENT OF
ORGANIZATION
Corporate strategies cannot be implemented in a vacuum.
Organizational structure provides the framework within which
strategies are used and provide the necessary mechanism for
its effective implementation and control.
Effective strategic leadership presupposes the ability to select
the most appropriate strategies and match it with the
appropriate organizational structure that would deliver the firm
to its target objectives. Critical to this matching process is the
strong relationship of strategies and the organizational
structure as it defines the duties and responsibilities of the
people in the organization and the implementation of effective
control system.
2. The firms' effective performance in
implementing its strategies is greatly
dependent on the organizational structure.
Organizational structure specifies the firm's
formal reporting relationships, procedures,
control, and the authority and decision making
processes. The cause and effect in the global
economy makes the crafting and designing the
organizational structure difficult as uncertainty
in the world markets affects the structure
system.
3. A firm structure specifies specific work to be done and
the procedures to do it given the desired strategies. It
influences how managers work and implements
decisions. The decision framework must be able to
match with the strategies to be implemented in order to
get the desired results. Organizational task is completed
primarily with strategies that fit in the results. Structure
supports these processes and completes the
organizational task by implementing the planned
strategies.
4. Effective structures provide the stability the firm needs to
successfully implement its strategies and maintain its
current competitive advantage. Structural stability is the
capacity of the firm to consistently and predictably
manage its ongoing activities and its daily routine
without effect to its direction of profitable operation.
Structural flexibility on the other hand is the capacity of
the firm to explore opportunities in the future, and shape
the strategy for competitive advantage that will generate
successful operation
5. As the firm expands its operation due to new
opportunities and with its competitive advantage, the
firm must modify the structure to fit the changes with
new strategies, It is not fitting for the firm to remain in
the structural status quo when changes occur in the
business environment as it will be counter-productive
to the changes in the strategies. Top management
must act proactively in changing the structure and its
corresponding strategies before the stockholders get
its foot into the problem. Changes in structure and
strategies must be made before the firm experience
performance decline as dictated by market forces.
7. Organizational controls are important aspects of structure. It
guides the use of strategy and indicates performance standards. It
compares actual results from the projected outcome. When there
is variance between results and expected outcome the results is
unacceptable. The effectiveness of control is therefore measured
on the bases of the result against performance indicators.
8. Strategic controls are subjective criteria. It is intended to verify
that the firm is using appropriate strategies to achieve its
corporate goals and objective against its competitive advantage
in both the external and internal environment.
Effective strategic controls help the firm understand what it
takes to be successful. It demands rich communication
system between operating managers and administrative
staff who have the prime responsibility of implementing the
strategic actions.
9. Characteristics of
Strategic Controls
1. It helps firm understand
what it intends to do.
2. They are subjective
criteria
3. It examine what fits to
be done
4. It demands effective
communication
5. It verifies the sharing of
appropriate strategies
10. Characteristics of Effective
Financial Controls
1. Financial controls are
effective indicators of
performance
2. They are objective
criteria that measure
performance
3. It evaluates present
performance against
previous record
11. 4. It is the indicators in
safeguarding the corporate
assets
5. It ensures that
transactions are properly
authorized
6. It provides reliable
information in the use of
financial resources.
12. Both strategic and financial controls are important aspects of each
organizational structure. The structural effectiveness is determined how
strategic and financial controls interplay in the achievement of the
desired profit objectives. Firms vary in the use of strategic and financial
controls. Diversified corporate organizations e of financial control due to
the huge scope of financial data coming from different more Sources.
14. There exists a reciprocal relationship between strategy and
structure. Strategic formulation is the plan of actions while
strategic implementation is the extent by which the firm
operates based on plans and goals.
15. PATTERNS OF RELATIONSHIPS BETWEEN STRATEGY AND
STRUCTURE
Most firms started in simple structure as operation starts small especially when it
starts as sole proprietorship. As the business operation expands so is the
organizational structure and in turn develops new strategies to cope with the
expanding business activities. Firms tended to grow in predictable manner. The
following growth patterns
16. 1. Increase in Sales Volume
As the firms increase its sales volume, they need new people to
handle marketing and distribution of its products then later on develop
its own advertising agency to handle its promotional activities. New
departments and units are created and each department or units
develop strategies to justify ther respective role in the organization.
Their strategies develop new competitive advantage.
17. 2. Geographical Distribution
Geographic distribution of products and services needs
new breed of and executives who will handle the
provincial and regional activities to cope with the
increasing demand of the market. Its regional managers
develop strategies consistent with their target goals and
objectives.
18. 3. Vertical and Horizontal Integration
This growth factor develops higher caliber of executives who are
trusted by the management in their strategies for corporate growth. As
new assignments are bestowed by managements and its board of
directors, managers and executives will be required to develop
consistent strategies relative to their positions in the organizational
structure. New departments are created and new strategies are
developed consistent with the goals of the new structure.
19. 4. Product Diversification
The manufacturing of new product or the integration of new
technology in the production of goods needs new structure and at
the same time developed new strategies to make the product
survive in market competitiveness. Product diversification needs
people with new talents and develop strategies consistent with the
diversified products that may be exported to another country.
Research and development strategies may be needed in the
structural system of the organization.
20. 5. Business Diversification
The development of new business organization that is consistent
with the corporate expansion program to other business venture
needs a more elaborate structure that will deliver the desire profit
and return on investments. The new business venture must
consistently develop a diversified strategy that could be entirely
different from the mother corporation. This diversified organization
develop define structure and strategies that will analyze the internal
and external environment and develop new opportunities for its
sustained operation and growth.
21. Based on the above growth patterns three major organizational structures were used
to implement strategies.
1. SIMPLE STRUCTURE
In this simple structure the owner-manager makes all major decisions and supervises
all operations from production to marketing of products or services. The employees
serve as extension of the manager-owner who exercises direct supervision of the
daily activities. There exist informal relationships with few rules to follow and
strategies are done on daily bases as market demand dictates. Frequent coordination
of functions is done and employees make it easy to follow simple instructions from the
owner/manager.
22. 2. FUNCTIONAL STRUCTURE
Corporate growth and expansion is investable as the company
expands in wider operation in market growth and product
differentiation strategy or at times expansion in other business
operations. It consists of operating officers in each unit with the
board of directors as the policy making body while corporate
strategies are determined by the chief executive officer with the
concurrence of the board.
