Alignment between structure and strategy

Strategic changes almost always require changes in the structure of an organization because
two basic reasons: initially, the structure dictates, to a large extent, the way of
establish goals and policies. For example, the format of the goals and policies
established with a geographical structure refers to geographical terms. In an organization
whose structure is based on product groups, the objectives and policies are defined, to a large extent
part, in terms of products. The structural format for developing objectives and policies
can significantly affect all the other activities required for
implement the strategies.

The second reason that explains why strategy changes almost always require changes in
the structure is due to the fact that the structure dictates how resources will be allocated. If an organization
It is structured based on groups of clients, so resources will be assigned accordingly.
way.
According to Alfred Chandler, "the structure must be designed in such a way that it facilitates the endeavor".
strategic of a company and, therefore, it follows the strategy. Without a strategy or reason for being
(mission) the structure lacks importance.

Strategic planning has the function of guiding the company towards economic opportunities.
attractive to her (and to society), that is, adapted to her resources and her know-how, and that
they offer an attractive potential for growth and profitability... (For which it must) specify the
mission of the company, define its objectives, develop its development strategies and ensure
maintain a rational structure in their product/market portfolio, that is, all products
and services that it sells to its clients or specific segments of them in the market.

The first thing that must be made clear is that a company faces a series of threats that
affect their decisions. Anticipating and understanding such threats is part of designing a strategy
competitive, and in it the study of the market and industrial analysis are of special importance
The threats they face can be summarized as follows.

1. Competitive companies that produce the same product.

2. Rival companies that produce substitute goods.
3. Companies that produce complementary goods
4. Companies that produce the inputs required for the manufacture of the product.
5. The buyers of the product
6. The legal regulations governing the sector.

Staying 'up-to-date' regarding competitiveness requires constant concern for

part of the management. The rule that the company must follow is simple: not to believe at any moment
that the market "is won." In the least expected moment, a rival company can take over.
of their market. Historically, it has been observed that companies that believed they had
A captive market has often fallen into the error of feeling so secure as to lose.
subsequently conquered.

One way to carry out the competitive strategy is by monitoring the situation of the
market day by day. It is advisable to periodically carry out an analysis according to the pattern described above and
comply with the annotated checklist, in addition to conducting periodic follow-up studies
our business performance.

The traditional approach considered the organization as the basis of the business organization.
It was usually associated with a great resistance to change, an 'organizational chart culture', a
strong focus on function and a tool for the search for power. That's what the books say,
but in reality many of those things are still absolutely relevant.

Introduction.
The theory of the relationship between structure and strategy is the great contribution of specialists in
subject of business organization to the model of estimating market orientation of it
work. This relationship is expressed, in particular, under the maxim that 'the structure must adapt
to the strategy.
The importance of this statement is such that it serves as the basic theoretical foundation that supports
the development of the estimation model that will be presented here. It is true that the structure
follows or adapts to the strategy, in some way it will be a true organizational reflection of
the same. Therefore, if one is able to develop a measure that identifies various forms
organizational and at the same time associate a degree of market orientation to them, there will be
developed an estimation model based on organizational structures.

This relationship was discovered and developed by authors who are specialists in business organization.
like Alfred Chandler, and Lawrence-Lorsch, and corroborated by most who have delved into the
topic. Its acceptance today is so widespread that it could be said to be a 'principle' in
business organization.

Chandler246 discovered that strategy determines structure (that is, that the latter has
to adapt to the first) and what changes in the company's environment result in new
strategic opportunities that in turn require changes in the organizational structure for their
correct and successful implementation. Its study on the organizational evolution of 70 of the large
American companies also revealed that while the structure tended to follow the strategy, this
It did not happen until serious internal mismatches arose between the new strategy and the old one.
structure, they provoked it. Hence, Chandler specified his thesis with the well-known phrase of
the company's strategy over time determined its structure, that is, the structure of the company
it adjusts to its strategy once it has been given the due time. The experience of adaptation
observed in the companies studied by this author followed the following sequence: 1st creation of
a new strategy, 2nd resurgence of administrative problems, 3rd reduction of the
productivity and benefits, 4th change to a new structure, and 5th recovery of the
profitability and improvement in the execution of the strategy.
In a similar vein, Lawrence and Lorsch study the influences of the environment on structure.
through the need to implement new strategies that adapt to the new scenario
competitive that, in turn, will require structural changes.

Another series of authors who maintain this relationship or base their studies on it
proposals are Galbraith, Allio, Ansoff and McDonnell, Thompson and Strickland, and Rowe et al. whose
theories are presented below.

Galbraith in his book Designing Complex Organizations analyzes how structures

organizational structures have evolved to adapt in order to respond to the difficulty of processing, increasingly
greater amounts of information coming from their environment.

Allio250, for its part, goes further and places great importance on the organizational structure.
attributing it the character of essential in strategic implementation. This author points out that success
the strategic implementation consists of the fluid and proper functioning of the systems
management of the company, among which the appropriate design of the
organizational structure of the company.

Well-known authors of organizational strategy such as Ansoff and McDonnell also analyze the
evolution of the different business structures, but without focusing on the issue of the relationship
between structure and strategy. They take it for granted, highlighting the importance of adaptation in the
organizational structure to operational needs and responding to both external changes
as interns of the company.

Now, while the principle that structure must follow strategy is simple to
Formulating it in an easy-to-understand way is not at all so when it comes to developing the structure.
appropriate organizational. In this regard, the authors Thompson and Strickland point out that there are
few rules that serve for a quick and solid development of the new organizational structure. The
The generic rule is to design the organizational structure based on the Key Success Factors (KSF).
and essential activities on which the strategy is supposed to be based. That is to say, to adjust the
structure to the strategy needs to be generated based on the key strategies and around the
organizational units, the main structural blocks of the company.

Finally, in this same line of structural adaptation to the strategy, there are other authors such as
Rowe et al.254 point out that different strategies are needed, and therefore also
structures to adapt to the strategic changes that take place throughout the 'life cycle'
organizational structure of the company.” Moreover, these authors highlight that it is the “hierarchical design
"organizational" (in the organizational chart) who occupies the first place as support for the strategy, following
here, the theory of authors Galbraith and Nathanson255 and that of Allio256 regarding this.

Limitations.
The relationship between structure and strategy has two limitations to consider: one relates to
the delay character or time required for its adaptation and the other is related to the
real capabilities of the company for its implementation. As a logical result of any of
these two limitations include the fact that - at a given moment - the structure
business does not reflect the actual degree of market orientation real257. Regarding the delay,
some authors like Rowe et al258, are somewhat critical of the fact that the structure,
expressed through the organizational chart, reflect its strategy. They point out that despite
identify titles, positions, responsibilities, and formal authority and despite their strong influence in
the determination and execution of the strategies are deficient due to the static nature of the
organizational charts. Since these do not reflect the continuous strategic changes due to variability
of the environment.

On the other hand, regarding the implementation capacity, the opposite case can even arise.
on the relationship between structure and strategy, that is: that the structure influences the strategy
when the new strategy proves impossible to adapt due to being far from the capabilities of
the company. Then the strategy turns out to be unfeasible.

The necessity
The need for the organizational structure of the company to serve not only as support but also
the facilitator of the implementation of market orientation is the natural conclusion of the
reasoning presented in previous points but extending it here to the case of the structure of
marketing and market orientation strategy.

In this particular case, the need must translate into the existence of an organizational structure.
Marketing adjusts, allows, and facilitates market orientation within the company. The group of
Authors who advocate for this adaptation are logically specialists in organizational marketing.
These are the following:

Spillard and Moriarty260 contribute to alleviating the need to adapt by providing models of
market orientation estimation in the form of marketing audits. These are based on
studies that, in their time, were started by Payne, Wrenn, Day, Kohli and Jaworski; Naver and Slater, and
Piercy261, to those who provide structural organizational focus based on the idea of adaptation
from structure to strategy. Likewise, Spillard and Moriarty point out that the success of
marketing is largely determined by the viability of its organizational structure to carry out
the marketing function. Furthermore, in this regard, they propose as the main task of senior management
direction to design a type of organizational structure that eliminates barriers to orientation to
existing markets. Instead, to implement a structure that positively fosters success
in the transition towards the implementation of the market orientation concept. Need for
adaptation that seems to be present, to a greater or lesser extent, in all the previous authors in
his studies.

In a line similar to the previous ones, the authors Piercy and Cravens263 establish that the
marketing structures should be seen as determinants of the marketing strategy. Given
that the structure conditions the strategic choices of the company (i.e. a structure
organizational without a department of international marketing, or market research, or
customer service clearly limits competitiveness in these aspects of the company.

Against this line of thought, there are also authors who believe that the configuration
of the marketing organizational structure of the company, while it may be a clear sign, it is not a
a fully conclusive indicator of the level or degree of market orientation of a company.
Conclusive or not, most authors emphasize the vital importance of designing a
appropriate marketing organizational structure that supports the implementation of the philosophy of
marketing and, therefore, market orientation in the company.