Strategy vs Structure in Strategic Management

outline vs loving system in strategical counselingStrategic analysis dodge versus Structure for International Competitiveness worldThe scheme organize blood, that was previously considered reciprocal, is now recognized as beingness considerably more than Gordian, and there is some agreement that social organization bottom and does keep a profound impact on strategy done its direct effect on the strategical conclusion qualification plow (Bourgeois Astley, 1979 Burgelman, 1983 Fredrickson, 1986). In ensureing the role of strategy and structure in planetary backup, one must understand that what has essentially changed is the context within which commerce operations take place. The soundly begined and complex associations among structure and strategy in classical studies of firms ar also central to interrogation in world-wide business sector, precisely the nature of business has changed, and so gain the relationships. As such, field of orbits have aris en over the lift out(p) way for multinational firms, direct in global marketplaces, to best align their strategy and structure to take cargon legion(predicate) distinct markets, whilst maintaining a global identity. This paper looks at the study of business strategy and structure over time, highlighting how the relationships have changed, the implications for organisational demeanor, and how firms tolerate alter their demeanor to best gain competitive vantage in international markets.International Strategies blood strategy refers to how firms compete in an diligence or market (Varadarajan and Clark 1994 pram and Ruekert 1987). The two historically dominant frame bets of business strategy be the Miles and Snow (1978) computer simulation, which cautiones on in executeed rate of product-market change, and the usher (1980) model, which focuses on guests and competitors. Miles and Snow (1978) developed a comprehensive framework that addresses the substitute ways that o rganisations define and betterment their product-market domains and construct structures and processes to achieve competitive prefer in those domains. Miles and Snow identify four archetypes of how firms address these issues prospectors continuously get to locate and exploit new product and market opportunities, defenders attempt to cast off a portion of the total market to bring out a stable square off of products and clients, analyzers occupy an in bournediate position by conservatively fol turn aways prospectors into new product-market domains while protecting a stable set of products and customers, and reactors do non have a consistent response to the entrepreneurial problem.In contrast, Porter (1980) proposes that business strategy should be look ated as a product of how the firm creates customer value compared with its competitors, and how it defines its scope of market coverage. pusher and Ruekert (1987) observed that though each of these strategy typologies has in herent strengths, i.e., Porters external focus and Miles and Snows internal focus, each is also limited. To address this, Walker and Ruekert proposed a crown of thorns model that synthesizes the two foci in a typology that consists of prospectors, low- price defenders, and differentiated defenders. However, although Walker and Ruekerts article has been frequently cited in the marketing and management literature, the distinctions among low-cost defenders and differentiated defenders have only recently been geted in trial-and-error analysis (Slater and Olson, 2001).Following on from these initial developments, over the cultivation few years enquiryers have quite successfully addressed and explicated the respective(a) forms of international strategy, and these forms are generally well accepted in the literature. there is now considerable agreement among international business scholars that most firms embarking upon or undertaking international business operations are cognizant o f the counterpart pressures of global integration and local responsiveness. To this end, the integration-responsiveness framework suggested by Prahalad and Doz (1987) has provided a invaluable theoretical tool to better understand international strategic behaviours of firms. more than recently, we have seen many successful applications of globally integrated strategies (Parente, 2003 Parente Kotabe, 2003). According to yap (2003), global companies have developed more sophisticated and flexible versions of international strategies and organisational processes, which successfully embraced globalization.Organisational StructuresOrganisational structure refers to an organisations internal pattern of relationships (Finley, 2000). Structure has been characterized by a number of dimensions and illustrated by using a commixture of types, like functional or divisional (Fredrickson 1986), however, there are ternary dimensions of structure centralization, formalization, and complexity , which have received more attention than any others ( chela, 1982 Fry Slocum, 1984). Each of these dimensions appears to have great implications for strategy and strategic conclusion making, and are dominant characteristics of the well known geomorphological types (Fredrickson, 1986). Centralization refers to the degree to which the proficient to make decisions and evaluate activities is concentrated (Fry Slocum, 1984 Hall, 1977). A high train of centralization is the most obvious way to hold and coordinate organisation decision making, but places significant cognitive demands on those managers who retain authority (Fredrickson, 1986). Mintzberg (1979) has discussed this issue by suggesting that an individual does not have the cognitive capacity or knowledge that is needed to understand all the decisions that face a complex organisation.The degree of formalization specifies the extent to which an organisation uses rules and procedures to prescribe behaviour (Hage Aiken, 19 69 Hall, 1977). Therefore, formalization has significant consequences for organisational members because it specifies how, where, and by whom tasks are to be performed (Fredrickson, 1986). A high level of formalization has the benefit of eliminating role ambiguity, but it also limits members decision making discretion. Complexity refers to the condition of being composed of many, usually, though not necessarily, interrelated parts. Hall (1977) suggests that there are three sources of complexity crosswise and unsloped differentiation, and spatial dispersion. Therefore, an organisation that simultaneously has numerous levels, broad spans of control, and multiple geographical locations would be considered as highly complex (Fredrickson, 1986).The Interaction Between scheme and StructureWhilst strategy and structure have been studied in closing off for a great many years, and are now comparatively well understood, what is less understood is the international role of organisational structure and its relationship with international strategy (Finley, 2000). International strategies are the forms and types of actions firms follow to fulfil their long term business objectives. Organisations involved in international business activities usually have two major forces impinging on them. One is the need to standardize products on a global basis, and the other is to respond to local province or local market demands. International strategies may be characterized in different ways, and the integration-responsiveness framework developed by Prahalad and Doz (1987) has extended the conceptualization of diligence pressures to incorporate generic strategic responses. The framework suggests that organisations develop their strategies and structures based on the emphasis they place on either one or both forces.At the most basic level, organisational structures are established to coordinate work that has been divided into smaller tasks. Mintzberg (1981, p. 104) noted, How tha t coordination is achievedby whom and with whatdictates what the organisation entrust look like. Walker and Ruekert (1987) bring forward hypothesized that firms that follow different generic business strategies adopt different structural designs. Vorhies and Morgan (2003) studied the relationships among marketing organisation structure, business strategy, and performance in the truckage industry. Both of these studies demonstrated that different marketing organisation characteristics are more or less appropriate for different business strategies. The forms of structures typically delimit by formalization, centralization, and specialization, which as Walker and Ruekert (1987 p. 27) noted seem particularly heavy in shaping an organisations or departments performance, are also applicable in different ways to different strategies and geographic factors.For example, in studying the development of Americas dominant industrial organisations, Chandler (1962) observed that major increas es in unit volume, geographic dispersion, and vertical and horizontal integration were eventually followed by changes in structural form. Several studies following Chandlers work confirmed an association between these two variables, in that structure generally followed strategy (Fouraker Stopford, 1968 Rumelt, 1974). In spite of the wide fiesta acceptance of the structure follows strategy relationship, there is a significant proboscis of literature that suggests that structure has a significant and major effect on strategy (Fredrickson, 1986). arbour, for example, characterized structure broadly as the context within which decisions are made, and observed that structure may motivate or impede strategic activity (1970, p. 67). This view is also supported by other researchers who question that structure constrains, or in another set of circumstances, enables, strategic prime(prenominal) (Bobbitt Ford, 1980 Duncan, 1979 Hedberg, Nystrom Starbuck, 1976).To understand why it is l ogical for strategic action to be affected by structure, one must understand the relationship between decision making and structure (Fredrickson, 1986). bump into and Simon (1958) addressed this critical aspect of the relationship by suggesting that an organisations structure imposes boundaries of rationality that accommodate members cognitive limitations. By delimiting responsibilities and communication channels, structure allows organisations to achieve organisationally rational outcomes despite their cognitive limitations (Simon, 1976). Structure also allows management to control the decision making environs and facilitate the processing of information (Fredrickson, 1986). The structure-strategy relationship is well explained by Bower when he states that when management chooses a particular organisational form, it is providing not only a framework for current operations but also the channels along which strategic information will flow (1970, p. 287). As a result, the relations hips between business strategy and organisational structure become massively complex when considered in the international context, and thus require organisations to strategically examine their fundamental behaviours in order to best align their strategy and structure, without becoming lost in the complexity.Strategic Organisational BehaviourOrganisational behaviour refers to organisational members work-related activities (Ouchi 1977 Robbins 2002) and, according to Snell (1992), management attempts to influence organisational behaviour with the use of control systems. manage is any process that helps align employees actions with the firms interests (Snell 1992 Tannenbaum 1968). Control theory (Snell 1992) identifies three major categories of control mechanisms behavioral control (e.g., establishing and monitoring of sets of actions), output control (e.g., goal im boot outment measures), and input control (e.g., training). When applied within an organisational context, control the ory posits that management attempts to direct employee behaviour to enhance the probability of desired outcomes. As Snell notes (p. 292), Advocates of the behavioural perspective posit that different strategies require different behaviours. Snell also notes that this view of the link between strategy and behaviour is useful because it provides a advance explanation of why behaviour should be linked to strategy and because it posits a testable set of behaviours.As a result, strategic behaviours have the potential difference to create superior performance through enhancing the execution of business strategy and identifying the relevant organisational structure (Slater and Narver 1995). There are four behaviours which are all claimed to passport potential competitive benefit to firms. These are customer- orient behaviours (Deshpand, Farley, and Webster 1993), competitor-oriented behaviours (Armstrong and Collopy 1996), regeneration-oriented behaviours (Hurley and Hult 1998), and i nternal/cost-oriented behaviours (Porter 1980). It is important to understand that these strategic behaviours are not mutually exclusive and that it is common for firms to control in multiple sets of behaviours simultaneously (Slater and Narver 1995). Furthermore, different combinations of emphases will likely prove more or less beneficial for firms that adopt different business strategies.Customer-Oriented BehavioursFirms with a strong customer orientation course pursue competitive prefer by placing the highest priority on the creation and maintenance of customer value. As such, these firms engage in the organisation wide development of and responsiveness to information about the expressed and unexpressed needs of both current and potential customers (Deshpand, Farley, and Webster 1993). Because of the constantly refined market-sensing and customer-relating capabilities of the customer-oriented firm, it should develop strategies and a structure to anticipate customer need explo itation and to respond through the development of new customer value-focused capabilities and the addition of valuable products and go (Day 1994).Competitor-Oriented BehavioursA different perspective on competitive advantage is simply to beat the competition (Day 1994). This orientation places a priority on the in-depth assessment of a set of targeted competitors, focusing on targeted competitors goals, strategies, offerings, resources, and capabilities (Porter 1980) and on the organisation wide dissemination of the information generated from this assessment. The result is that managers develop competitor-oriented objectives rather than economic or customer-oriented objectives (Armstrong and Collopy 1996). The behavioural goal of the firm is to match, if not exceed, competitors strengths, both in strategy and structure.Innovation-Oriented BehavioursAnother perspective is that firms build and reincarnate competitive advantage through radical or discontinuous innovations. An innovat ion orientation indicates that the firm not only is open to new ideas but also proactively pursues these ideas (Hurley and Hult 1998) in both its technical and administrative domains An innovation orientation encourages risk taking and enhances the likelihood of developing radically new products. March (1991) argues that firms must be aware of the possibility that an innovation orientation may not allow for the follow-through that is necessary to reap the benefits of earlier innovations fully, unless their strategy and structure are aligned with both the generation and utilisation of innovation. knowledgeable/Cost-Oriented BehavioursPorter (1980) argues that there are two basic sources of competitive advantage. The get-go is the differentiation advantage that a firm derives from the customer-, competitor-, or innovation-oriented behaviours. The second is the cost advantage that a firm derives from internal orientation and structure, with internally oriented firms pursuing efficienc y in all parts of their value string (Porter 1985). They attempt to reduce costs in primary activities, such as logistics, operations, and sales and marketing, and also attempt to reduce costs in support activities, such as procurement, research and development, and administrative functions. These firms pursue operational excellence, through their strategy and structure, that they can translate into higher sales through lower prices or higher margins. Whereas experimentation is the trademark of firms with an innovation orientation, exploitation is the hallmark of internally oriented firms (March 1991).ConclusionInternational business has produced some fantastically competitive and complicated markets, with numerous potential problems for organisations, but also numerous opportunities for firms that can best adapt to their marketplace. However, such is the level of complexity in these markets, that firms who try to engineer specific, rigid strategies and structures will likely find themselves left(p) behind by the latest shift in the market or technology. As a result, firms competing in international markets would be best rede to focus on the organisational behaviour, or behaviours, that best match their capabilities, and let these behaviours commence their strategy and structure to provide the most sustainable competitive advantage possible. Unfortunately, there is currently a paucity of available academic yard on the most relevant behaviours for firms to best secure competitive advantage under the myriad market conditions, and this should be a find orbit for future research, as it may soon become a strategic issue of significant importance.Equally, organisational behaviour as a field of study is vastly complex, with ongoing debates between theorists around organistic versus mechanical structures, the role of teams, and the best styles of leadership needed in an organisation. In particular, organisational behaviour tends to suggest that organistic stru ctures will be required in uncertain, rapidly changing markets, however mechanistic structures will be required in markets where the pace of technological developments is gradual (Burns and Stalker, 1961). Thus, more research is needed into the consequences of an organisation in a relatively fast moving market making strategic organisational behaviour choices which would be better facilitated by a more hierarchical, mechanistic structure.Similar research would be recommended into the roles of leaders, and teams within organisations, in implementing and driving these behaviours forward. However, regardless of the need for go on research, it is clear that firms can no longer merely define a strategy, focus strongly on it, and expect their strategic focus to procure success. Likewise, in the international business world, firms should no longer focus on having a well defined structure, regardless of whether it is organistic or mechanistic. Instead, a key recommendation of the strateg ic organisational behaviour approach is that firms should concentrate on best aligning themselves to the most appropriate behaviour for their industry. In manufacturing, this is likely to be more internal, or cost oriented, in technology it will tend to be primarily innovation oriented and in professional services a strong customer, or client, orientation would be best. However, it is vital that firms do not neglect the other behaviours those that are not their primary focus, as these remain important, and can help maintain a balance approach to strategy and structure, offering sustained competitive advantage in international markets.ReferencesArmstrong, J. S. and Collopy, F. 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