An organization’s strategy is its plan for the whole business that sets out how the organization will use its major resources. In other words, an organization’s strategy is a plan of action aimed at reaching specific goals and staying in good stead with clients and vendors.

On the other hands, an organization’s structure is the way the pieces of the organization fit together internally. For the organization to deliver its plans, the strategy and the structure must be woven together seamlessly. In other words, organizational structure is a term used to highlight the way a company thinks about hierarchy, assigns tasks to personnel and ensures its workforce works collaboratively to achieve a common goal. The goal is to avoid task overlap and workforce confusion, especially when it comes to laying a strong foundation for long-term productivity. Task overlap, a situation in which two or more employees perform the same task in different departments, costs a company money. This creates confusion, inefficiencies and lack of accountability -- because no employee ultimately has a clear responsibility over who does what, where and when.

It is important to highlight that for too long, structure has been viewed as something separate from strategy. Revising structures are often seen as ways to improve efficiency, promote teamwork, create synergy, eliminate or create new department or reduce cost, including personnel. Yes, restructuring can do all that and more. What has been less obvious is that structure and strategy are dependent on each other. You can create the most efficient, team oriented, synergistic structure possible and still end up in the same place you are or worse if a good strategy is not adopted.

Organizational structure and strategy are related because organizational strategy helps a company define and build its organizational structure. A company's organizational structure is based on the result of the analysis of organizational strategy. The company will use these results to determine its areas of concentration and how to position itself in order to succeed.

One of the first steps a company takes in its initial stages is assessing its operational environment in order to determine the conditions in which it must operate. This involves checking out the competition, consumer trends, culture and other factors. The company will find out the strengths and weaknesses of its competition, the buying habits of the consumers, and its economic capabilities.

The relationship between organizational structure and strategy becomes clearer when the company’s strategy is in place. With a clear focus of what it wants to achieve, the organization will proceed to align its structure in such a manner to best achieve this. It will allocate responsibilities for optimal results, create branches, and decide whether individual efforts or group participation is the best method for it to achieve its goals. The organizational structure and strategy will also help the company decide if the tone of the company should be strictly formal, semi-formal or informal. All of these decisions can be made after determining the organizational strategy of the company.

Structure is not simply an organization chart. Structure is all the people, positions, procedures, processes, culture, technology and related elements that comprise the organization. It defines how all the pieces, parts and processes work together. This structure must be totally integrated with strategy for the organization to achieve its mission and goals. Structure supports strategy. If an organization changes its strategy, it must change its structure to support the new strategy. When it doesn’t, the structure acts like a bungee cord and pulls the organization back to its old strategy.

Strategy follows structure. What the organization does defines the strategy. Changing strategy means changing what everyone in the organization does. When an organization changes its structure and not its strategy, the strategy will change to fit the new structure. Strategy follows structure. Suddenly management realizes the organization’s strategy has shifted in an undesirable way. It appears to have done it on its own. In reality, an organization’s structure is a powerful force. You can’t direct it to do something for any length of time unless the structure is capable of supporting that strategy.

The sum total of how an organization goes about its work is its strategy. Structure and strategy are married to each other. When a company makes major changes, it must carefully think out every aspect of the structure required to support the strategy. That is the only way to implement lasting improvements. Every part of an organization, every person working for that organization needs to be focused on supporting the vision and direction. How everything is done and everything operates needs to be integrated so all the effort and resources support the strategy.

It takes the right structure for a strategy to succeed. Management that is solely focused on results can have a tendency to direct everyone on what they need to do without paying attention to the current way the organization works. While people may carry out these actions individually, it is only when their daily way of working is integrated to support strategy that the organization’s direction is sustainable over time.

Top management can’t just send out a proclamation about a new strategy, direction and vision and expect everyone to follow it. To implement such a strategic shift requires a complete change within the organization itself. Strategy and structure are married to each other. A decision to change one requires an all-out effort to change the other. But that structural change must be well thought out and based on a thorough cause and effect analysis. You don’t just change a structure to change it. You have to make sure the changes will support that strategy. At the same time, you don’t just implement a better leadership and engagement approach in a company or alter the organizational chart without evaluating how that is going to effect the firm’s ability to carry out its current strategies.

Dear Hasan,

You may look into these recent papers on the subject:

Zheng, Wei, Baiyin Yang, and Gary N. McLean.(2010) "Linking organizational culture, structure, strategy, and organizational effectiveness: Mediating role of knowledge management." Journal of Business Research 63.7: 763-771.

Jiménez-Jiménez, Daniel, and Raquel Sanz-Valle. (2011) "Innovation, organizational learning, and performance." Journal of Business Research 64.4: 408-417.

My Dear

strategy follows structure and the structure follows strategy dynamically

Organizational structure of a company is related to the strategic analysis of the contractor or developer. According to his vision and maro environment or micro enterprise's strategic decision devont allow better structuring of activities entrepise. You can read strategies and corporate structures is a book published in 1962 Alfred Chandler

The dominant view has always been that structure follows strategy but in reality, the relationship is not linear and one directional. The direction of influence between strategy and structure can be complex and flow in both directions. Think of an organisation with a deep bureaucratic structure where decision making is centralised at the top, that is trying to be innovative and agile in its market responses. The structure is likely to affect this strategy negatively.

Assume an organization with 'emergent' strategy: here the (in)formal structure determines who is involved in decisionmaking on (in fact strategic) issues. So, strategy is 'caused by' structure here.

In an integral approach to org structure design, one of the first questions is: 'What strategic goals must the structure help to reach?' So here strategy shapes structure.

When a new strategy is formulated, it is not uncommon that top mnagement 'forgets' about adapting the structure. According to J Galbraith structure design is often put away in the box 'too difficult' and structure (redesign) is a kind of 'neglected lever to improve overall performance.

The debate about strategy and structure has been an issue of discourse among practitioners and academics alike. It is however clear that strategy proclaims a targeted customer base, and asserts the matters by which the company will seek to differentiate itself. Therefore the structure must support the strategy for competitiveness to be realized. My assertion is that Structure follows Strategy.

My own paradigm starts under the premise that business process' design follow strategy, and structure follows business processes, dynamically. I have found very few publications about the relation between Strategy-Structure, that even mention the word BUSINESS PROCESS.

The way businesses implement their strategies, is through their busines procesess, because they remain in the organization for a long while, not like organizational structures, that change permanently. Walking to the limit, an organization may execute certain core or strategic processes, without having its own organizational structure.

Organizational Structure in a broader sense, refers to the way in which an organization is built or organized. It deals mostly with the line of authority in an organization.  The structure enables the decision-maker to adopt corporate strategy which will best fit the organization under the prevailing circumstances and given available resources. On the other hand, Corporate strategy is simply the overall scope and direction of a corporation and the way in which its various business operations work together to achieve their peculiar goals. That is, corporate strategies explain the channels by which the firm carries out its said goals and objectives. 

For your information see the following:

Article Manufacturing strategies and financial performance—The effec...

Chapter Business Strategy, Structure and IT Alignment

Article A DSS model that aligns business strategy and business struc...

Chapter Strategic Information Systems the Concept of Alignment

Conference Paper Structural Design Fit in Garment Production: A Neural Network Approach

The strategy and structure is positioned similar to which came first egg or hen? I am a firm believer that strategy comes first.

Structure follows. When ever you create an organization, there is some Memorandum/Charter/Article of Association etc. Thus, the aims and objectives are well defined. How the stated aims and objectives will be attained is the strategy. To some extent even broad strategy is stated while creating an organization. Thereafter, one starts recruiting and building the organization, thus, an organizational structure gets created. No doubt, the structure created revisits the broad strategy, refines or modifies and formulates functional or operational strategies. The structure thus creates new strategy based on which the structure may be changed. Change is the only constant. Therefore the cycle of strategy and structure goes on.

As a CEO, I have done it time and again and have experienced the same. Your perception will depend on the time at which you entered the organization.

Structure should definitely respond to strategy. It is only after you know your path to value creation that you can make decesions about which organizational design would be best suited. Because both strategy and structure are not static, a dynamic perspective to achieving fit between the two is a more useful approach.

Any company, whether new or existing, continuously scans the external environment and looks for opportunities. Scanning the environment and identifying the opportunity is part of strategy.  The company, in order to encash the opportunity provided by the environment, creates appropriate structure with which to operate. This involves checking out the competition, consumer trends, culture and other factors to formulate strategy.

Organizational structure and strategy are dynamically related. A company's organizational structure should be based on the result of the analysis of organizational strategy.

I would rather say organizational structure is influenced by the organization's strategic plan, and implementation. it is only prudent to say as the organization continue to scan and analyses its business environment, alternations/ change of its current structure may be imminent and necessary to meet current demand. bearing in mind that , in today;s volatile, unpredictable dynamic and ambiguous environment, nothing is static. Structure is influenced by the organization's strategy , how it intends to fulfill its goals. Therefore structure follows strategy.

Strategic intent needs to be followed by structure to mobilize the resource to execute the strategy and achieve the organizational goal. The organization structure must structure all the efforts, processes, and resource utilization to ensure all the activities are toward goal achievement.