Organization structure is the pattern in which the various parts of the organization are interrelated or interconnected. It prescribes relationships among various positions and activities. For implementing strategy, the organization structure should be designed according to the needs of the strategy. The relationship between strategy and structure can be thought of in terms of utilizing structure for strategy implementation because structure is a means to an end, that is, to provide facilities for implementing strategy. Therefore, both should be integrated. In the absence of such integration, outcome may be confusion, misdirection and splintered effort within the organization.
There can be various ways of designing an organization structure. However, the major issues involved in designing the structure to fit the strategy involve the answers of following questions:
- What should be the different units of the organization?
- What components should join together and what components should be kept apart?
- What is the appropriate placement and relationship of different units?