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Chapter Five: Analysis of research finding
2-5-1. Strategy structure and processes
A relatively neglected area in competitive strategy is the link between
product/market strategy and the structure of the firm. I believe that imaginative
approaches to organizational structure can help a firm both gain and sustain advantage.
In this chapter, therefore, we shall address the relationships between strategy, structure
and organizational processes.
We shall approach this difficult area by starting with some very basic concepts:
specialization and coordination, and then go on to consider the most typical
organizational structure, the functional organization. The rest of the chapter is taken up
with the development of a "contingency" approach to the strategy-structure relationship.
This approach argues that there is no 'one best way' to structure an organization; it all
depends on the situation facing the firm. Is it large or small? Is it facing a rapidly
changing environment or a stable one? Does it have a huge range of products selling
into many different markets, or is it basically a one· product firm? In order to determine
the appropriate organizational structure to suit a particular strategy we need to identify
the key variables that influence structure and the range of structural options available
that fit particular combinations of these key contingency variables.
2-5-2. Organizational structure: some basic concepts
The approach to structure summarized in this section is based on the work of
Henry Mintzberg. Because, generally, managers appear to have
a rather undeveloped understanding of organization structure, we think that a sound
grasp of some basic issues and themes will help to lift the level of debate. So, no
apologies for taking a rather theoretical stance on structure. Stay with it, since mastering
these concepts should really advance understanding of structure.
The strategy-structure relationship addresses the following two issues:
a. Once the strategy has been decided, how should we carve up the overall tasks
facing the firm into discrete activities, and how should we allocate them to
individuals and groups - in essence, how should we specialize?
b. Having divided the task into manageable areas of activity, how do we make sure
that it all gets done, so that the strategy is achieved – that is, how do we
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