STRUCTURAL IMPLEMENTATION

CONCEPT OF STRUCTURE

An organisationaly structure is the outline of authority and responsibility relationship among

different job positions. It is a formal arrangement of tasks and sub – tasks which are needed to
implement strategies. An organisation structure has two broad dimensions; namely–

1. Vertical Dimensions: The vertical structure is planned to facilitate superiors to implement

control over the work of subordinates. Vertical structures are known as tall structures. Such
structures are suitable for companies which produce standardized products / services on a large
scale with the help of mass production systems and well established technologies. The vertical
dimension is characterized by

i. Specialization of tasks

ii. Chain of command

iii. Formal reporting relationships

iv. Grouping of individuals into departments

v. Upward and downward communication

2. Horizontal Dimensions: The horizontal dimension is designed to make certain cooperation

and coordination among employees working at the same level of authority. Horizontal structures
are also known as flat structures. Such structures are more vital for companies making
differentiated products. Medium sized manufacturing and service enterprises and nonprofit
organization which present specific social services are examples of these organizations. The
main characteristics of horizontal dimensions are

i. Sharing of tasks

ii. Sharing of information

iii. Decentralized decision making

iv. Focus on learning

TYPES OF ORGANIZATION STRUCTURE

The main types of orgainsational structures are given below:

1. Entrepreneurial Structure: The entrepreneurial structure is the most basic and the simplest
type of organisational structure. This structure is suitable for an organisation that is owned
 and managed by one person. Such an organisation is typically a single product firm that
serves a local market.

OWNER- MANAGER

EMPLOYEE

. It is very simple Owner – manager is overburdened 2. Little

2. Quick Decision making scope for growth of business 3. Employees feel
3. It ensures centralized control over the entire insecure 4. Overlooking strategic issue
business
4. It is Flexible

Functional Structure:

The expansion into the same line of business necessitates specialization of tasks and delegation
of authority to heads of different functional areas. Functional structure is suitable for medium
sized firms having limited number of products. Grouping of activities on the basis of functions
performed for strategic implementation creates functional structures. For example, production,
marketing, finance and personnel are the basic functions in a manufacturing organization. The
process of functional differentiation may continue through successive level in the hierarchy
The main advantages of Functional Structures are as follows:

i. Specialization on the basis of functions results in efficient distribution of work and

maximum utilization of functional skills
ii. Delegation of operational matters enables the chief executive officers to concentrate on
strategic issues.
iii. Structure can be linked to strategy by designing key activities as functional
departments..
iv. It permits centralized control of strategic results. v. There is minimum duplication of
facilities.

The main disadvantages of functional structure are as follows:

i. There is difficulty in maintaining cooperation and coordination among different

functional departments
ii. Narrow specialization may lead to neglect of overall goals of the organisation. .
iii. Conflicts may arise among functional and advisory staff
iv. Decisions that require involvement of two or more functional areas may get delayed.
v. There is lack of quick response to environmental change.

Divisional Structure: The functional structure proves to be unsuitable, when the company
expands into new products or geographical areas. Under the divisional organisation structure is
divided into several divisions on the basis of geographical areas, types of customers and product
line. Each division is self contained in terms of manufacturing and marketing facilities. Each
division is self contained and headed by a divisional manager who is responsible for efficient and
profitable working of the division.

Advantages –

There is specific autonomy to each division for efficient management.

a. Each division can respond quickly to environmental changes.

b. Top management can focus on strategic matters.
c. There is a scope of expansion and growth of business.
d. Each division can be held responsible for performance.
Disadvantages

 Operating costs increase due to duplication of facilities.

 Cooperation and coordination among various divisions become difficult. There may be
unhealthy competition among divisions.
 Policies pursued by different divisions may be inconsistent. Inconsistency may also arise
from sharing of authority between corporate and divisional levels.
 Problems may arise in the allocation of resources among divisions. Inter-division
conflicts may arise on sharing of resources, allocation of common overheads, etc.

Divisional structure is appropriate for multibusiness firms operating in a dynamic situation.

SBU Structure:

Strategic Business Unit (SBU) implies an independently managed division of a large company,
having its own vision, mission and objectives, whose planning is done separately from other
businesses of the company. The vision, mission and objectives of the division are both distinct
from the parent enterprise and elemental to the long-term performance of the enterprise. Simply
put, an SBU is a cluster of associated businesses which are responsible for its combined planning
treatment, i.e. the company engaged in a diversified range of businesses, categorises its multitude
of businesses into a few separate divisions, in a scientific way. The task may include analysis and
bifurcation of a variety of businesse.

The main advantages of SBU structure are as follows

 Each SBU head can be held accountable for ultimate results and operates as a stand-alone
profit centre. Coordination between all divisions within an SBU becomes easier. There is
greater decentralisation of authority.
 SBU structure facilitates strategic control over a large and diverse organisation.
  There is considerable scope for growth and expansion of business. v. Individual SB Us
can react quickly to changes in environment

Some of the disadvantages of SBU structure are given below:

 It is quite difficult to clearly define the autonomy and responsibility of various SBU
heads and to achieve synergies across SBUs.
 The hierarchy increases due to addition of one more level between corporate management
and divisional management.
 In a large and diversified company, effective handling of several SBUs may not be easy.
 It may lead to costly duplication of staff and facilities.
 There may be rivalry among SBUs for corporate resources.
 Top level managers may lose touch with business level situations.

Matrix Structure:
A matrix organizational structure is one of the most complicated reporting structures a company
can implement. A matrix organizational structure is a company structure in which the reporting
relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. In other
words, employees have dual reporting relationships - generally to both a functional manager and
a product manager.In the 1970s, Philips, a Dutch multinational electronics company, set up
matrix management with its managers reporting to both a geographical manager and a product
division manager. Many other large corporations, including Caterpillar Tractor, Hughes Aircraft,
and Texas Instruments, also set up reporting along both functional and project lines around that
time.
In a matrix organization, instead of choosing between lining up staff along functional,
geographic or product lines, management has both. Staffers report to a functional manager who
can help with skills and help prioritize and review work, and to a product line manager who sets
direction on product offerings by the company. This structure has some advantages, which are
discussed as follows—

Advantages :

 Objectives will not only be clear but will also be balanced with the objectives of the
functional aspects of the organization.
 Importantly, there is an actual mechanism for integration of across functional lines.
 Efficiency in Resource Management for eg.time saving deployment of company
resources.
 Efficiency in Staff Management since staff can be used and shared between projects.
 Efficiency in Facility Management as all of the hardware (computers, desks, rooms, etc.)
are shared between or among projects.
 Horizontal flow for eg. Information that flows from functional unit to functional unit.
 Vertical flow for eg. Information that flows from project to project, and to other points of
management. . Groups of functional specialists and experts are preserved even though
projects come and go.
 Morale difficulties happen with less frequency because the employees in the matrix get
the experience of regularly working on successful projects.

Disadvantages

The main drawback is that the employees on the project are working for two chiefs.

 The superimposition of a functional organization on a project organization is the creation

of a matrix organization. This adds all the complexity of both organizations and adds
even more.
 Multiple managers and employees involved and increased numbers of people that must
be kept abreast of changes and progress.
 This is an issue because of the quantity of employees and organizational units involved.
 All managers must ensure that they have touched base with each other for any important
decisions in their areas of responsibility.
 Project managers don’t have singular authority, and so considerable negotiation is
necessary.
Network Structure:
A networking organisation is one that is created around a central organisation (called the hub
organisation) that has relationship and arrangement with some other organisations, to perform
functions like designing, manufacturing, marketing etc. for the central organisation, on a
contractual basis. A networking organisation is called a boundary-less organization; as the
central organisation has relationships and arrangements with many business partners beyond its
own boundary lines. In an extreme case of a networking organisation, the hub organisation has
arrangements with so large a number of business partners that it, on its own, does only the co-
ordination work.A networking organisation is also called a virtual organisation, in that it is
nearly a complete organisation; and any slight difference in the structure of organisation is not
important.

The main advantages of network structures are as follows:

 There is high degree of adaptability to change its environment. .

 The firm can concentrate on important competencies.
 To meet the changing business needs the structure can be modified.
 Synergy can be achieved by combining complementary skills of different groups in the
network.
The main disadvantages of network structure are as follows:

 There are many conflicts among several semi – autonomous groups.

 Due to many partners control and coordination becomes difficult.
 As most tasks are performed by others, there are risks of overspecialization.
 Duplication of facilitates and resources may result in high costs

STAGES OF DEVELOPMENT OF ORGANISATIONS

Cannon’s Model consist of the five stages of development, which are discussed as follows—

Stage I: Entrepreneurial Stage: This stage represents the small business, generally operated by
the owner – manager. The market of the firm is limited to a specific geographical area.

Stage II: Functional Development: When the company grows in its size, the owner manager
cannot perform increased volume of managerial functions. A functional form of organization
structure will be adopted. But the problem of functional structure will come to the surface with
the further increase in the company’s operations. These problems include; delay in getting
approval for new products and other innovations. This problem may push the company to the
next stage.

Stage III: Decentralization: Organization will be restructured either based on product or

geographic or customers. Control may become difficult when each division develops its own
view of product quality, pricing etc.

Stage IV: Staff Proliferation: To regain control of the organization, management may employ
additional human resources to assist top management.

Stage V: Recentralization: This stage involves increasing involvement of top management in

strategic decision making. This move to recentralization may be a part of a cutback and
turnaround strategy
Behavioural implementation

Behavioural implementation is concerned with those features of strategy implementation that is

concerned with the behaviour of individuals in organisations.
Organisations which exist in relatively stable and predictable industries have a tendency of
building up tall structures. Such structures are characterized by many hierarchy levels and
narrow spans of control. On the other hand companies which exist in dynamic and volatile
industries tend to adopt a very flat structure and managers have very wide span of control. a
functional structure organisations are aligned on functional lines such as finance, manufacturing,
personnel, R&D etc. Employees in functional organisations perform set tasks. As these
organisations grow, they adopt a 'product divisional structure. This allows the organisation
flexibility in terms on product focus, co-ordination, development of general managers, bottom
line responsibilities etc.

When organisations are multi-product and multi plant, they adopt a "geographic divisional
structure". This helps them in meeting the needs of customers belonging to different
geographical areas. With the addition of new product lines, the multi-divisional structure is
favored by companies as it gives more independence and flexibility to divisional managers.

Aspects of Behavioral Implementation

The human resources of an organisation become absolutely critical in the implementation of a
strategy. Their activities and their behaviour can lead to the failure or success of a strategy. The
various aspects or elements of behavioural implementation are as follows:

1) Leadership : 
Leadership plays an important role in implementation of strategy in an organisation. The
leadership plays a critical role in the execution and leader through his personal traits acts as a
catalyst within the structure of the organisation. The transformation of strategy from a good
concept to actual implementation is made possible only by the leadership of the organisation. 

2) Corporate Culture : 
The culture of the organisation is the environment which prevails through the interactions of the
various employees. It is defined by the experiences, education, mind-set, attitudes, beliefs,
strengths and weaknesses of the employees of the organisation. The leaders contribute to the
leadership aspect of the organisation whereas the employees create the culture of the
organisation.

3) Power and Politics : 

The power denotes the ability of a person to influence the behaviour of another person. A person
who has the power can influence the behaviour and actions of other people in the organisation. In
a sense it denotes a sense of control. The supervisory aspect in a manager bestows on him the
power his subordinates and get influence him to do what he wants. Politics on the other hand is
the manner in which a person gains power over another. It is thus the process of acquiring power
in an organisation to attain some desired objective.

4) Values : 
A value system is a framework or a set of ideals which govern the person's behaviour. In a sense
they are similar to attitudes but are more permanent in nature and not easy to change. A value
may be defined as "a concept of a desirable, an internalized criterion or standard of evaluation a
person possesses. Such concepts and standards are relatively few and determine or guide an
individual's evaluations of the many. objects encountered in everyday life".

5) Ethics : 
Ethics in management refers to "the study of how personal moral norms apply to activities and
goals of a commercial enterprise. It is not a separate moral standard, but the study of how the
business context poses its own unique problems for the moral person who acts as the are the
agent of this system". It thus relates the goals and objectives value of the organisation to the
personal systems of the individual. To incorporate ethics in business strategy managers have to
ask three questions - What do we stand for? What is the objective? What kind of values do we
have?

6) Social Responsibilities : 
Social responsibility is a concept which states that every entity individual or organisation has a
responsibility to the society that it exists in and its actions should benefit the society. The entity
needs to see that all its actions maintain a balance between the economy and the ecosystem.
Social responsibility means that the organisation needs to balance between its economic
development and the benefits /costs to the society and environment. The organisation can be
passive in its role whereby it refrains from indulging in destructive acts to the society or it can
play an active role in the betterment of society at large.

Sometimes growth is responsible for accepting the SBU structure by an organisation, particularly
when the organisation is big and diversified, where different divisions with related products,
technologies, market, or mission statement, can be shared to form a strategic business unit.
Behavioural implementation is concerned with those features of strategy implementation that is
concerned with the behaviour of individuals in organisations.

Issues in Behavioural Implementation

1) Influence Tactics : 
The leaders and the top management of the organisation have to implement the strategies and
objectives. The leaders therefore needs to influence the behaviour of managers, employees and
peers. They need to communicate effectively the vision of the organisation and motivate the
employees to give their best performance.
2) Power : 
Power is the potential ability of influencing the behaviour of others in an organisation Leaders
effectively use their power to influence their subordinates to act in a particular manner. The
leaders have a formal authority which is derived from the position that they occupy in the
organisation.

3) Empowerment : 
Leaders cannot implement everything themselves. They need to delegate and empower their
subordinates. The leader can empower the employees in many ways. Some of the common
techniques used are training, self managed work groups (which redefine organisational reporting
relationships), and the extensive use of automation.

4) Political Implications of Power : 

The organisations are also subject to politics. Organisational politics is the set of actions which
people follow to acquire and increase power to achieve their preferred or vested interests. The
leaders need to manage the organisational politics so that it does not become an obstacle in the
implementation of the strategy.

5) Managing Resistance to Change : 

Rapid change in an organisation is often met by resistance from workers as they have to discard
their existing ways of working. Top management can prepare the workers in advance for the
change and show the positive impacts that are likely to take place. This often reduces the
resistance to change.

6) Managing Conflict : 
Conflict occurs when one individual or business unit in an organisation deliberately obstructs
another individual or business unit from achieving its objective. The leaders have to manage
these conflicts in order to achieve their goals.

7) Linking Performance and Pay to Strategies : 

The organisation also has to plan the performance of its strategies if it needs to achieve its
objectives. To do this, efficient co ordination of promotions, salary increases, bonuses, etc., is
required.