Structure follows strategy

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The historian, Alfred Chandler, substantiated his 'Structure follows Strategy' thesis based on four case studies of American conglomerates that dominated their industry from the 1920's onward. Chandler described how the chemical company Du Pont, the automobile manufacturer General Motors, the energy company Standard Oil of New Jersey and the retailer Sears Roebuck managed a growth and diversification strategy by adopting the revolutionary multi-division form. The M-Form is a corporate federation of semi-independent product or geographic groups plus a headquarters that oversees the corporate strategy and coordinates interdependencies.

Although the organisational M-form was implemented differently by each of the organisations, Chandler showed that the need to restructure arose from a strategic shift driven by new technologies and market changes. The M-form emerged and co-evolved with the development of the transportation and communication industries thereby creating the opportunity to manage across time and space.

He described corporate strategy as the determination of long-term goals and objectives, the adoption of courses of action and associated allocation of resources required to achieve goals; he defined structure as the design of the organisation through which strategy is administered. Changes in an organisation's strategy led to new administrative problems which, in turn, required a new or refashioned structure for the successful implementation of the new strategy.

Chandler's thesis argued that new organisational forms are no more than a derivative of strategy as he defined it.

References

The introduction of Strategy and structure By: Jennifer Nwachukwu