BUMGT370 Organisations Sturctune and Controls-Relationship between Strategy and

Organisational structure and controls

 

Define organisational structure and controls, and discuss the difference between strategic and financial controls Examine the relationship between strategy and structure Examine structures used to implement strategies at various levels Structure and Controls Organisational structure and controls provide the framework within which strategies (business, corporate, international and cooperative) are used.

The choice of structure and controls should support the strategic goals of the firm.

 

Structure will change as the strategy of the organisation changes.

Effective strategic leadership means selecting the appropriate structure.

 

 

Specifies the work to be done and how to do it, given the firm’s strategy or strategies

 

A firm’s strategy is supported when its structure is properly aligned to its strategy. 

 

Has two considerations:

 

Structural Stability—the capacity required to consistently and predictably manage its daily work routines 

 

Structural Flexibility—the opportunity to explore competitive advantages needed for a successful future

 

Is the pivotal component of effective strategy implementation.

 

 

Controls guide the use of strategy, indicate how to compare actual results with expected results and suggest corrective actions to take when the difference is unacceptable.

Strategic controls—subjective criteria to verify appropriate use of strategies, e.g., what the firm might do (opportunities) and what it can do (competitive advantages)

Financial controls—objective criteria to measure firm’s performance, Structures and Business-Level Strategy

Firms use different forms of the functional organisational structure to support business level strategy.

Business-level strategies include:

Cost leadership (broad or focused)

Differentiation (broad or focused)

Integrated cost leadership/differentiation.

The choice of structure is influenced by structural characteristics needed to compete:

 

Specialisation: the type and number of jobs required to complete the work of the firm

Centralisation: the degree to which decision-making authority is retained at higher managerial levels

Formalisation: the degree to which formal rules and procedures govern work.