Strategic fit refers to aligning an organization's resources and capabilities with external opportunities. Functional fit means aligning functional policies and strategies with overall organizational strategy. This includes manufacturing, marketing, engineering, and finance functions. Poor functional fit can result in costly rework, customer complaints, missed targets, and penalties from making products before receiving orders and having long delivery cycles that do not match customer needs or the new strategy. Administrative fit is ensuring major internal systems like organization structure, information systems, incentive systems, and processes support the strategic plan through leadership, culture and management practices.

1. FUNCTIONAL FIT
Strategic fit express the degree to which an organization is matching its resources and
capabilities with the opportunities in the external environment.
 Adoption & Execution of
Functional Policies Manufacturing
consistent with Strategic
Objectives
 Broad & Detailed policies
aligned to Organizational
Strategy
Marketing Functions Engineering
Finance

2. CASE-Functional Fits
Core Strength – Unique Order as per
Customer Specifications
New Strategy to make products before
orders & Reduce Delivery Cycle
Results: Costly Rework,Customer
Complaints,Missed Targets,Costly Penalities
Bonus Allusions
Loss in
Sales= to “King
Sales
Order Size Customer”

3. Administrative Fits
Major Systems to be aligned with Strategy
Organization Information Incentive
Structure Systems Systems
Strategic
Organization Control
Planning
Processes Systems
Systems
Management
Corporate Leadership
Selection &
Culture Style
Development