Strategy And Structure in Organizations

dodging And expression in OrganizationsStrategy is an compound and coordinated enclothe of commitments actions designed to exploit core competencies gain a competitive advantage.Organization body anatomical organizeOrganisation social establishment specifies the riotouss formal reporting relationships, procedures, take c atomic number 18s and authority, conclusiveness making process.So organisation construction accommodates iii comp unrivalledntsAdministrative expression This structure signifies division of labour in the organization. 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 tally to mission, function, and/or region. The structure depicted in organization charts, including tables of organization and equipment is the administrative structure.Responsibility structure This includes division of responsibility authority to individuals at bottom the organisation.Control structure This includes organisations system of measuring and evaluating performance on the basis of administrative structure responsibility structure.Relationship between Strategy and Structure at that place ar two main views on the relationship between dodging and structure. According to Alfred Chandler structure exists dodge.Recent research has questioned the view that structure always follows dodging, and argued instead that schema often follows structure. This secondly view, that schema follows structure, is ground on the idea that managers already working within a particular organisational structure get push through take the structure for granted and only consider strategies that ordain fit with the existing structure.Combining these two arguments we can say that Strategy structure have a reciprocal relationship. Organization structure is a critical component of in force(p) strategy implementation pro cess. Success of a firm depends on how closely 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 pursual characteristicsStructural stabilityThis erects the firm a capacity to effectively manage its daily work routines.Structural tractablenessThis provides the firm an opportunity to research competitive possibilities then allocate imagerys to activities that will shape the competitive advantages the firm will need to be successful in future.However strategy has a much more of import 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 b e suitable for the firm but once in place organization structure influences the cream about future strategies because of organisational inertia derived from organization structure that inhibits efforts to change.Evolutionary pattern of organisational structure strategyPre-bureaucratic structuresThis is the unproblematicst form of structure is usually based on traditional or charismatic dominance. Structure is totally change lacks standardisation of tasks. This is useful in managing simple tasks.Bureaucratic structuresIt has certain degree of standardisation is useful in managing slightly more Byzantine prominent scale organizations.Functional structuresStructure is more standardised centralised. Organisation is divided into separate utilitarian divisions employees within a particular division perform specific functions. This type of structure is useful in firms that provide standardised goods services at low cost in richly volume.Divisional structureThis is as hal e called as product structure. Organisation is divided into divisions apiece 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 formulationAs 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 font is to identify exploit new(a) opportunities of industry their primary capability is innovation.Analyser- Analysers are debauched fol glowers. They closely oversee customer reactions competitor activities either improve upon successful competitor product offerings or offer same products at thin outd cost.Low cost defenders- These firms usually target changeless(prenominal) segments of market. Their main emphasis is on efficiency through standardised practices providing low cost products rather than innovation.Differentiated defenders- These firms alike target stalls segments of market but their emphasis is on high quality 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. yearalization- This is the degree to which decisions working relations are governed by formal rules. Formal rules lower the administrative cost increase efficiency. Firms that have greater number 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 direction. In centralised organizations lines of chat responsibility are clear defined. Decisions are usually made by top watchfulness implementation path is clearly defined. This type of structure is followed in relatively stable, non-complex purlieus.In decentralised organizations views ideas may originate from different groups. Decision making power 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 side by side(p) 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=Strateg y St=Sttructure Ti= TimeThe nature 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). whence the evolution of the environment and/or of the organization brings about a new strategy and a new structure.The dotted lines indicate that very often firms try to meet the environmental and geomorphological demands without realizing that they have implicitly adopted a new strategy. Strategy grows out of structure and in turn may principal sum to its modification. bloodlinehttp___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/flexibl e structures and processes while more stable environments lend 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 ruleschannels for collaborative workingboundaries of authority and lines of communicationa means of allocating power and responsibilityprescriptive levels of formality and complexity.Strategy and Structure AlignmentSource Emerald database Strategy-Structure AlignmentAn important management responsibility is to design and implement the strategic organizational form beat suited to the demands of its marketplace, customers, and business model. Since your competitors essentially have access to the same culture and may have unquestionable similar strategies, it is important to consider organizational design as one of your roughly powerful strategic weapons.Strategy-Structure Alignment follows four phasesAssessment Data is gathered on stra tegy, organization and the business environment apply interviews, archival research (of planning documents, performance studies, etc), and observations. Data is organized into issue categories and fed back to management in a way that supports validation and learning. Management reaches an agreement on appoint issues and problems, causal factors and organizational requirements.Design The design process goes through a series of design steps including scale and supplement assessment, the design of vertical alternatives and lateral processes and structures, allude analysis, etc. Each step is geared to execute strategy and address organization and cultural issues.Alternatives Choice Changes in organization are based on a selection from among a set of alternatives. Because any organizational structure calls for slyness-offs, the alternatives are worked through discussions that focus on the advantages and disadvantages of each, their fit with requirements, and the impact of implement ation, etc. Frequently the organizational design that is.The types of problems that can be addressed include Changes in strategy ca development poor alignment with the original organization design Needing to restructure move of organization due to competitive pressures, introduction ofnew technology, etc. organizational addition is ca utilize 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 crush supports its strategy and to develop a preliminary 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-alignme nt between structure, strategy and the environment, organizations may start out difficulty 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 informed 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 sequential design process generates alternatives for organization design. A preliminary transition plan of a preferable 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 organizational change whenever the organization changes its structure. As explained earlier as organization grows the control of the organization becomes 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. Brobdingnagian diversified firms using cost leadership strategy emphasize fiscal controls and usually will have some centralized fiscal 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 merged level strategy the organization is following the link between structure and strategy can be compiled as following.StrategyStructuremajor(ip) features associate Co nstrained StrategyCo operative structure (M-form)Structural integration, centralized strategic planning, human resource and marketing,RD etc.Cultural emphasis on merged sharing.Rewards are subjective , tend to follow general incorporate performance and divisional performance tie in 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 DiversificationCompetitive form (M-form)Small corporate head quarters with Finance and auditing as the most prominent functions. headquarters to manage bills pay heed and ensure 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 evaluation purposesDivisions retain strategic control , but c ash is managed by the corporate officeDivisions compete for corporate resourcesLatest Empirical StudiesStrategy and Structure in Context Universalism versus Institutional EffectsJose I. Galan and Maria J. Sanchez-BuenoTried to try out the Chandlers proposition that large organization modernise in to multi divisional forms as they grow in shimmy of Spain. Spain being a newly exploitation market and with slowly integrating with EU and world market was studied to test whether the cultural factors has impact on the emergence of structure as organizations globalise and evolve. Their studies corroborated that as organizations evolve its complexity rather than refinement 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 Organ izational Structures Homology, Trust and Reputational Capital in original Service FirmsGerard HanlonExplores how professional service organizations has used a set of grade and bureaucratic controls to manage the organizational changes both set of controls being afford throughout the life span of an organizations but with varying levels of importance. forward 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 entrust based partner autonomy. Reputational capital is essential in making large and complex deals .But as the services expanded the need for institutional forms overly 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 Brown 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 widely 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 iss ues by exam the links between turbulence, structural stability, and performance in a large sample of public organizations. Results turn out 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 volatility 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 straight offs environment are all told 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 international trade laws, more more companies are competing in more more number of markets. Thi s has increased both the opportunities threats present in external environment.Change in TechnologyTechnology 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 too changed the internal working process of organizations. Technologies the like ERP, SAP Oracle have facilitated the information flow in the organizations which in turn has changed the way organizations work.Einsteins renowned 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 community (social capital).C is the Communication that flows through those Connections.E is the resulting Effectiveness of the team or organ izationAccording to a paper Do Org Charts Still point? by Thornton A May organizations are a combination of responsibilities, accountabilities, knowledge, process, interactions future. Organization charts depict only offshoot element of organization i.e. responsibilities accountabilities. all told 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 opposition is change magnitude 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 contain 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 attainmentsIn recent years many mergers acquisitions happened in global miserliness. 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 workforcePeople 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 creative thinking and enhance 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 nomadic and even virtual. Increasing use of IT enabled conventional organization structures to transform into more fluid form. Few of the emerging trends in organisation structure areTeamsThis is the new trend of organization structure. wide 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. profitsNetwork 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 go against 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 pipe down the company can operate globally be a market leader in its niche. Because of the unmeasured shelf space of the Web, the cost of reaching niche goods is falling 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 conventionIntroduction Activities of the OrganizationThe Tata Group is a multinational 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 employ ees. Tata companies operate in seven business sectors communications and information technology, engineering, materials, services, energy, consumer products and chemicals. Every Tata company or enterprise operates independently. Each of these companies has its own board of directors and stockholders, 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 regionholder base of 3.5 million. The major Tata companies are Tata marque, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels and Tata Communications.Tata trade name 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 catamount and Land Rover. TCS is a leading global software company, with delivery centers in the US, UK, Hungary, Brazil, Uruguay and China, besides In dia. 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 entirelysale voice carriers.Rationale for selectionTata, with its long history, 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 limit by diversifying into different businesses. These businesses are so diversified and different that it presents us an opportunity to draw strain between the different kinds of structures adopted in these businesses. Tatas solid presence in major industries like Automobiles (Tata Motors), firebrand Industry (Tata Steel), IT Industry (TCS), Hospitality Industry (Taj Hotels) and many others is evident of their successful strategy formulation and implementation. All these businesses are driven by a sing le level corporate level strategy.Also with the increasing globalisation 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 sensing and capturing the internationalization opportunities. The widely known 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 wonder to Tata given its long history. So the Tata group presented an exciting opportunity to draw the relationship 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 crosswise India with an additional 15 international hotels.Areas of BusinessLuxuryPremiumMid-MarketValueVivanta peppinessGatewayTajIHCL 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 b eauty of the Indian hobo camp amidst luxurious surroundings) which provide services to different segments of the market.With its diversification strategy revolving both well-nigh 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, procedu res and behaviors desired from its associates across all its Hotels. There is more of formalization as most of these 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 domain 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 within 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 political science 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