The impact of business strategy on organizational structure

Abstract

This paper explores the impact of business strategy on defining and selecting the appropriate organizational structure. The paper will present the basic structural configurations: low cost structure, the structure of creating local customer value, the structure of global standards of excellence and commitment to service structures. Structural organizational solutions should be defined in a way that the needs of the key customer segments and defined strategies are met. The implementation of business strategy involves selecting an appropriate organizational direction. One of the decisions that need to be made while defining a new business strategy is a choice of the target markets and target segments of the organization. It is also important to decide how organization will compete on the selected market. Key questions to be answered in this regard are: how will the organization create customer value on a defined market and what will make this value different than its competitors. In order to implement a strategy it is also very important to define an appropriate organizational structure. It should be defined in an effective and efficient way so that the defined goals could be easily achieved. The most important decision in defining or designing new organizational structure is defining the key customer segments of and defining their needs. This decision will have its impact on laying the foundations of the organization and defining the organizational structure. Selection of the appropriate structural configuration and structure of organizational units and assigned responsibility are the basic steps of organization design that will meet the defined strategy.