Strategy Structure: What is Basic of Strategy Structure? | by IBusinessMotivation

Strategy Structure What is Basic of Strategy Structure by IBusinessMotivation

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Introduction-structure ‘structure’ is the allocation and control of work functions.

  • It refers to power relations based on the acceptance of managerial power by subordinates and society – this use of power is called the ‘legitimacy’ of management – which Max Weber called his ‘authority’.
  • All organizations have some structure, which is based on ‘established paradigms of relationships between individuals, groups, and departments’.
  • There are two structures – a vertical framework of authority and responsibility where clear boundaries of financial authority exist, and a horizontal structure of a set of activities designed to use resources towards goal-attainment.
  • The horizontal structure can be changed from time to time to suit the environment (see later sections on internal and external environments).
  • The basic vertical structure of an organization is a relatively stable framework within which processes such as communication, leadership, and decision making take place.
  • In most organizations, the structure will be depicted as a chart.

What is Functional structure?

This is the most common form of composition. It divides the organization into its main activities or functions (production, sales, accounting, and so on) in which all the same specialist activities are put together in interdependent departments. A manager is placed under the overall control of the owner or senior manager of each function.

  • Special resources are used efficiently.
  • Quality is enhanced by other specialists from the same functional area.
  • Opportunities exist for a wider division of labor.
  • A career structure enables people to move forward within their functional specificity.
  • It is easy for experts to manage whether they are grouped together, especially when the manager has a similar experience.
  • It promotes communication between experts and enhances the development of skills and knowledge.
  • It does not mimic expert resources throughout the organization and promotes economies of scale.
  • It is suited to situations that emphasize functional expertise, where the environment is stable, and when technology is routine, the little dependency between departments is required.
  • Communication, coordination overloads the vertical hierarchy.
  • Communication, coordination overloads the vertical hierarchy.
  • Interdepartmental conflict.
  • Little creativity and innovation.
  • Difficulties in identifying profitable and unprofitable products

These problems are likely to occur with professionalism and a role culture where job demarcation is considered important. When the organization reaches a certain size, they are likely to end, especially if it has developed a wide range of products or services.

Burns and Stalker 1961 coined the term ‘mechanism’ for firms, where negotiations are strong because they are unsuitable for changing environments and non-routine technologies.

The adoption of a holding company or a divisional structure requires a more flexible and responsive form of rigid functional in which profit centers are created based on particular products or geography.

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