Testing for Strategy-Structure Fit and Its Importance for Performance by Aleksic, A. & Jelavic, R. S. (2017)
The main ideas presented in the article is the effect of strategy structure fit on organizational performance. The authors utilizes Miles and Snow typology to represent and ascertain the sequence of connections between structure, strategy and strategy implementation methods and their impact on organizational performance. The authors of the paper use a field research on 113 organizations to achieve a better comprehension of strategy structure fit and its link to organizational performance. The authors investigate the relationship between the elements by conducting a study on CEOs of medium and large sized organizations in Croatia (Aleksic & Jelavic, 2017 p. 85) The subjects answered questionnaires which consisted of questions and statements where respondents were asked to give their perception on their organization, strategy implementation, strategy type, formalization and specialization as basic elements of organizational structure. The results reveal that half of the organizations from the sample have recognized the importance of fit in that, during the research their organizational structure is in accordance with defined strategic direction
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The Performance Implications of Fit among Business Strategy, Marketing Organization Structure, and Strategic Behavior by Olson, E. M., Slater, F. S. & Hult, M. T. (2005).
The authors of the article embrace a contingency view as they present and experiment a fit-as-moderation design which postulates that general organizational performance is affected by how efficient the marketing organization’s structural attributes and strategic behavioral focus enhances different business strategies. The authors make the conclusions based on results from 228 senior marketing managers who reinforce the ideas of the model and show that each strategy category needs divergent incorporation of marketing organization strategies behaviors and structures for high performance. The performance of a firm is ascertained by how constructive the firm’s business strategy is executed. The authors of the article seek to understand strategic execution in three aspects; first they utilize an extensive business strategy substructure as the basis for research on strategy execution. Secondly, they build on previous research that evaluate the influence of marketing organization structure and business strategy on organizational performance in a specific industry. Third, they evaluate if the descriptive power of the model is improved by the incorporation of four categories of strategic behavior.
Strategy/Structure Fit and Firm Performance by Geiger, W. S., Ritchie, J. W & Marlin, D. (2006).
The article focuses on a study which indicates that fit between a firm’s strategy and structure is more crucial with regards to performance for organizations in high concentration industries. The authors acknowledge that Chandler’s work is pioneering in proposing the connection between strategy, structure and organizational performance. The authors seek to understand and explain the relationship between fit (match between organizational structure and strategy), environment (industry concentration) and firm performance. The diversification of firms required effective coordination between functions therefore concluding that is hard to achieve efficiency. Strategy and structure fit suggests that a relations exists such that when an organization changes their strategy and structure they can achieve superior performance. The authors use a study of 105 fortune 500 manufacturing companies for the years 1982, 1987 and 1992 to investigate how industry concentration, strategy/structure fit affects organizational performance. The authors of this article fill a gap in literature in the examination of the controlled effect of industry concentration on the connection between strategy/structure fit and organizational performance.
Discussions of Articles
Strategy and structure are dependent on each other, structure supports strategy. Structure includes the people, processes, procedures, culture and technology that work together to form an organization. If an organization alters strategy it must alter the structure to support new strategy as supported by Olson et al. in their article (Olson et al. 2005 p. 49). Strategic and structure fit is crucial for organizational performance as evidenced by the three articles analyzed above. The cohesion between strategy and structure in an organization is crucial for an organization’s performance and development. The fit between two concepts is defined as the level to which the needs and goals of one element are in cohesion with the requirements or goals of another element (Aleksic & Jelavic 2005 p. 85). In an organizational context the authors differentiate between internal fit which is perceived as the organized configuration of activities inside an organization and external fit which is described as an appropriateness of the configuration given the environmental conditions faced by the firm. The internal fit among elements in an organization can be reflected by the level to which strategy, structure and systems work together. The elements reinforce each other consequently resulting to a cycle of mutual cause and effect that enhances the relationship between them. The main concept in strategic management and organizational theory is fit which is seen as crucial for organization’s strategic development. Fit between two elements is explained as the level to which the needs, requirements, objectives and structure of another element.
The concept of fit focus the significance of harmonization between complex organizational structures to cause reinforcement. The authors of the second article show that the conncection between marketing organization structure and strategic behavior and firm performance is controlled by the business strategy an organization embraces. Strategic fit among activities in an organization is crucial to competitive advantage and the sustainability of the advantage. The contingency approach used by the authors is founded in open and general systems (Olson et al. 2005 p. 49). The perspectives view the organization as a social system comprised of interconnected subsystems. The authors of the third article investigate how the concentration of an industry controls the effects of strategy/structure fit on firm performance. The authors ultimately reveal that industry concentration and strategy and structure fit affect an organization’s performance. Therefore the connection between strategy/structure fit and performance is controlled by industry factors (Geiger et al. 2006).
Coca-Cola Strategy/Structure Fit
An example of accompany with strategy/structure fit is Coca-Cola company a global leading provider of beverages. Coca-Cola has achieved strategy/structure fit for excellent organization performance by establishing strategic priorities that are woven into every aspect of the business. The company has done this by growing system profitability and capacity in collaboration with the bottlers. Secondly, the company has broadened the range of products whenever possible. Thirdly the company has been able to drive efficiency and cost efficiency by utilizing technology and large scale production to control costs and enable people to attain results. Finally the company has invested intelligently in market growth. Being a global company, the company has a tall organizational structure with defender type of strategies. The organizational structure is based on vertical hierarchy where members of upper management are involved in decision making while daily decisions are made by line managers in middle management. The structure works well with defender strategies since they highlight on exploitation of resources and current situations. The members of upper management are focused on maintaining the organization’s position in the market therefore they are tasked with the main decision-making authority. The companies’ strategies are mainly focused on maintaining the company’s profitability and market share. The company has a stable environment and an efficient strategy/strategic fit; the main elements that cause high organizational performance. Olson et al. (2005) indicate that a firm’s performance is evaluated by how effective and efficiently the organization’s strategy is implemented.
References
Aleksić, A., & Rašić Jelavić, S. (2017). Testing for strategy-structure fit and its importance for performance. Management: journal of contemporary management issues , 22 (1), 85-102.
Geiger, S. W., Ritchie, W. J., & Marlin, D. (2006). Strategy/Structure Fit and Firm Performance. Organization Development Journal , 24 (2).
Olson, E. M., Slater, S. F., & Hult, G. T. M. (2005). The performance implications of fit among business strategy, marketing organization structure, and strategic behavior. Journal of marketing , 69 (3), 49-65.
