Organization’s Strategy and Structure

In modern life the need to develop, formulate the mission and strategy development of organization is a universally recognized fact. Time of experiments has passed. The “reacting” organizational culture is replaces by strategic management ”“ the targeted move forward. Any active living organization at a certain stage of its development confronts the necessity of strategic self-determination: the need to understand the most promising ways of further development, improve efficiency, enhance corporate spirit, to find answers to actual questions.

Organization strategy is a kind of long-term development plan for commercial or industrial organization. Organization strategy is formed based on the perspectives of cooperation of organization with the external environment in the future. According to the accepted notions organization strategy is an important characteristic of the internal environment of the organization, which determines the ways of its work and organizational structure, the type of social organization (Whittington 2001).

Once the company identified a strategy, it can formulate the basic principles of interaction, to analyze the resources, strengths and weaknesses, values and norms. It becomes clear what the structure of the organization should be: which units should be basic and which subsidiary; what people have to work on key positions, and so on. Clearly defined strategies and goals is the first and most important step towards corporate planning. Plans are developed in accordance with the mission and key strategic objectives; they must comply with them at all levels. A clear common goal helps to create in organization an effective business culture, as it expresses the philosophy, principles, and valuestaken by both managers and employees. Employees better understand their place in the company, faster and more clearly define their roles (Mintzberg 2003).

The next stage of organizational development is the formation of the organizational structure. The organizational structure is not just a logically created structure of relations of the performing and managing elements of business with regard to their legal and economic relations, forms of division and cooperation of work. It is designed and well thought-out system, which provides the maximum effectiveness for the company, enables an optimal way to achieve goals of the company, which are initially put by its top management (Mills 2011).

Organizational structure is a set of ways in which the labor process is divided into individual work tasks, and then reaches the coordination of action to address problems. In essence, the organizational structure determines the distribution of responsibility and authority within the organization. As a rule, it is displayed in the form of organigram – graphical charts, elements of which are hierarchically ordered organizational units (departments, job positions) (Kim 2009).

For a long time these two concepts are viewed separately, but it is not right. Strategy and organization structure are related, they do depend on each other. Considering the structure, it is clear that this is a way to improve productivity, reduce interaction costs. All this can be done more effectively, considering the company’s strategy. The structure of the company is not just the chart, but people, culture, procedures, attitudes, technologies, processes and other elements of the company. It defines how all the pieces, parts should work together. The structure should be fully connected with the strategy if the company wants to achieve its goals. Structure supports the strategy (Brickley 2002). If the company changes its strategy, it should change the structure in order to support the new strategy. If not to do this, then the structure acts as a bungee cord, and the company returns to the old strategy. In this case, the strategy follows structure. The company’s actions determine the strategy. Changing the strategy entail a change in what everyone does. In this case, if a company changes its structure rather than strategy, the strategy is changed to conform to the structure. So, the strategy follows the structure. Structure and strategy are connected, and often strategy is supposed to dictate structure (Strategy Follows Structure 2011).