The first aspect of Relating structure strategy fit relates to the type of functions that the organisation Relating structure should facilitate to perform. There are tests which any good organisation structure should satisfy. First -implement the strategy properly, certain functions must be performed. Therefore, the Relating structure should ensure that all the necessary activities are performed and there is no duplication in the performance of the -activities. Second, an activity’s contribution to strategy should determine its rank and placement in the organisational hierarchy. Thus key activities should never be subordinated to non-key activities. Revenue earning or result-producing activities should never subordinate to support activities. By making success causing for -the major building blocks for the structure, the chances are greatly improved that strategy will be effectively implemented.
The second aspect of structure strategy fit relates to the adaptive -character of the environmental pressure on the organisation. Organisation has to interact continuously with its environment and this interaction some sort of changes are brought continuously in the organisation. If the change is a minor one and comes within the purview of established programmes of action, the change will be absorbed within the system; major or rapid changes throw the organisation out of equilibrium seriously affecting its functioning. The new equilibrium is reached by taking new programmes. Therefore, the organisation structure should be able -absorb these changes.
In relating structure to strategy, following strategic principles organising may be helpful. These principles are not strictly in accordance -with traditional principles of organising. These principles are considered be especially pertinent for a firm with multiple products and multiple industry market opportunities.
These should also suit the smaller but growing firms in a dynamic volatile environment.
1. To the extent duplication and expense can be avoided. it is highly desirable to relate – significant areas of authority and responsibility to results desired with given markets, industries, or sets of customers. Organisation by the market can produce the highest degree of strategic awareness.
2. It is better to delegate authority and decentralise strategic planning and operations for businesses which are relatively mature, predictable, and stable. This frees top management for strategic planning in the relatively unknown areas of opportunities.
3. Strategic planning for the unknown areas should be centralised as this requires close supervision of top management. The critical early choices in unknown fields can pose major unpredictable risks on resource allocations and technological commitments which are among the most important decision areas for the management.
4. In centralization-decentralization continuum, there should be centralised measurements. This implies after-the-fact measurement and not the control which is affected by the divisional heads.
5. Emphasis should be on result-centered rather than profit centred decentralisation. It is not necessary to effect total profit and loss dimensionalisation in order to delegate decision-making authority’ to lower echelon managers.
Decentralisation can be confined to those key operating and support areas that have within their make-up trade-off issues which a subordinate manager can resolve to affect timely and market knowledgeable strategic decisions. In other words, neither centralization nor decentralisation is cut and dried propositions. Many graduations are available to resourceful management, and entrepreneurial type of responsibilities can be assigned with significant leverage for achieving results without handing over complete profit responsibility.
Various forms of organisation structure and their suitability to strategies suggest that no one form is suitable for all situations. Therefore, many companies opt for a combination of more than one form. Exhibit the organisation structure (partial at the top level only) of Hindustan Lever Limited which is essentially a combination of functional and divisional structures. The company has constituted certain standing committees. Besides, ad hoc committees and groups are constituted whenever the need arises.