Structure and Strategy Debate

I/ Organisational structures in management

"Structures give people formally defined roles, responsibilities and lines of reporting with regards to strategy" (JOHNSON, WHITTINGTON, SCHOLES, Ninth Edition). The structure is able to show the levels and role in an organisation, which is responsible for what, how communication flows and knowledge are exchanged in different parts of the organisation and which kinds of functions demands highest skills and depends on the organisation success. A chart that maps out criteria explained above often represents organisational structures.

Indeed, structure is the formal means for organising people to execute the strategy, which shows the link between strategy and structure.

Five basic structural types exist in management and we will review each type to clarify their usefulness.

The functional structure "divides responsibilities according to the organisation's primary specialist roles such as production, research and sales" (JOHNSON, WHITTINGTON, SCHOLES, Ninth Edition). This kind of structure is actually relevant to a small or start-up organisations, or larger organisations producing high-volume low-cost, standardised goods and services. There are advantages in that it gives a simple and clear definition of responsibilities, roles and tasks and allows greater operational control from the top by the Chief executive. It also provides a concentration of high expertise by fostering knowledge development in each specialism functions.

However, there are disadvantages. The strategic changes could be slow due to the strong functional centralisation and could encourage rivalry between functions. Moreover, the coordination difficulty between functions is a disadvantage, thus the organisation strategy could be fail if the functional organisation remain inflexible and poor at adapting change.

The last disadvantage of this structure appears when start-up organisations become larger or more diversify consequently the functional structure intends to don't suit.

The multidivisional structure is "built up of separate divisions on the basis of products, services or geographical areas" (JOHNSON, WHITTINGTON, SCHOLES, Ninth Edition).

This structure is "self-sufficient" due to his primary functions and resources: geographic and product or service. The multidivisional structure is particularly relevant for a multinational company strategy. According to Johnson & Scholes, the divisionalisation often comes about as an attempt to overcome the problems that functional structure come up against diversity and coordination problems.

There are several advantages by choosing a multidivisional structure. Indeed, it provides flexibility because it could respond to the environment changes by deciding to add, close or merge divisions if circumstances appear. In addition, the structure makes it possible to control division's performance as self-standing business units and develop ownership for their own division. The last advantage of this structure is the manager's training, which permit to keep good managers into the firm by answering to their expectations such as go up within the organisation.

However, multidivisional structures have also disadvantages, especially that one is the cost of the duplication of central and divisional functions due to self-sufficient of them that split the company in independent businesses. Moreover, the pursuit of divisional performance has tended to fragment each division and provides poor incentives to collaborate with other divisions. Finally, this "non-cooperation" between divisions could have an effect of loss of central control due to divisions' pursuit of their own strategies almost regardless to the head office strategy.

The matrix structure "combines different structural dimensions simultaneously, for example product divisions and geographical territories or product divisions and functional specialisms" (JOHNSON, WHITTINGTON, SCHOLES, Ninth Edition).

The main advantage of this structure is the flexibility that it engenders by allowing different dimensions of the organisation to be mixed together, especially for global companies, and direct discussion instead of bureaucracy. Moreover it promotes "knowledge-sharing" by allowing separate areas of knowledge to be integrated across organisational boundaries. This is particularly relevant for consulting firms and schools.

However, the matrix structure has some disadvantage due to his multiple cross-matrix relationships, which replaces single lines of authority. We can pick up that it causes length of time to take decisions, unclear job, task, cost and profit responsibilities what it could bring about high degrees of conflict.

The transnational structure "combines local responsiveness with high global coordination" (JOHNSON, WHITTINGTON, SCHOLES, Ninth Edition). In practice, a transnational structure operates independently by country units but also supply ideas and capabilities for the corporation. Thus, with his national units specialisation it able to achieve greater scale economies on behalf of the whole organisation. The working structure is relevant thanks to his network management, which has the role of managing this global network of specialism and knowledge by defining the role of the country units and supplying the systems and culture.

The project-based culture "is one where teams are created, undertake the work (e.g. internal or external contracts) and are then dissolved"(JOHNSON, WHITTINGTON, SCHOLES, Ninth Edition). In that reason, it is highly flexible. It has the advantage to have clear task to achieve within a defined period in group and can also draw on members internationally. This kind of structure is relevant for organisations, which deliver large and expensive goods or services and for organisations, which deliver time-limited events. It also uses to complement the main structure. However, the project-based structure could provide overarching strategic control.

II/ Structures relevance in hypercompetitive environment

In this competitive market, competitors can appears unexpectedly from anywhere driven by four areas: innovation, internationalisation, demanding customers and deregulation. In that order, industries come up against their own boundaries and should building up new sources of competitive advantage while slowing down the erosion of current advantage. Indeed, firms often try to sustain their competitive advantages instead of try to evolve in this dynamic environment. The point is that competitive advantages are