Structural Implementation

This presentation explores the critical stage of strategy implementation,

focusing on structural implementation. We'll delve into the intricacies of
organizational structure, aligning it with your strategic goals for optimal
performance.
Relationship between Structure and Strategy
The relationship between structure and strategy is that strategy defines the overall direction a company wants to go,
while structure is the organizational framework that enables the company to execute that strategy.

Example:

Strategy: A company decides to expand into new international markets with a focus on customization for local needs.

Structure: To support this strategy, they might create separate regional divisions with dedicated teams and localized
marketing capabilities.
Structural Implementation
What is Structural Why is it Important?
Implementation?
A well-designed structure
Structural implementation provides clarity, fosters
involves modifying the collaboration, and ensures
organization's structure to align efficient resource allocation. It's
with the strategic direction. This essential for driving strategic
encompasses restructuring alignment and maximizing
departments, roles, performance.
responsibilities, and reporting
lines to facilitate effective
execution of the strategy.
Identifying the Right Structure:
1 Assess the Current Structure: Analyze the existing 2 Define the Strategic Requirements: Clearly define
structure, identifying its strengths, weaknesses, and the strategic objectives and the organizational
areas of potential conflict with the strategic goals. capabilities needed to achieve them. These
requirements will guide the structural design.

3 Consider Organizational Factors: Factor in the size, 4 Explore Structural Alternatives: Explore different
culture, and industry dynamics of the organization. structural options, such as functional, divisional,
The chosen structure should be suitable and matrix, or network structures, and evaluate their
adaptable to these factors. suitability for your organization and strategy.
Restructuring for Success: A
Strategic Process
Clear Roles
Clearly define roles, who is responsible for what, and who reports to
whom. This makes sure everyone knows what to do and avoids
confusion.

Empower Employees
Give employees the power to make decisions and own their jobs.
This builds responsibility and encourages new ideas.

Communicate Clearly
Make sure there are good ways to share information and work
together. This makes things open and helps everyone collaborate.
Why is structural implementation needed?
Implementation Phase
Strategies are put into action across all
New Strategic Plan
departments, with new projects and initiatives
Company adopts new strategies, setting launched to drive the strategic objectives
ambitious goals and objectives to achieve market 2 forward.
leadership and sustainable growth.
1
Mismatches Detected
Managers notice issues and inefficiencies in the
3 current structure, which are hindering the
effective execution of the new strategies.
Structural Changes 5

Adjustments are made to the organizational Performance Declines

structure to improve performance, including 4
Overall effectiveness reduces as the
redefining roles, responsibilities, and reporting
organizational structure fails to support the new
lines to align with the new strategies.
strategic direction, leading to missed targets and
decreased profitability.

This cyclical process continues with each new strategic implementation, ensuring the organization remains agile and responsive to changing market
conditions.
Key Steps for Structural Implementation
Define Goals and Choose the Right Design Roles and Establish
Align Strategy Structure Responsibilities Communication
Channels
Ensure the structure Select a structure based Clearly define roles,
supports the on size, industry, and tasks, and authority Ensure effective
organization's mission culture. levels for each position. communication flows
and strategic goals. vertically and
horizontally using
appropriate tools.
Key Steps for Structural Implementation

Allocate Resources Implement Change Monitor and Evaluate Address Potential

Management Challenges
Assign personnel based on Establish KPIs, gather
skills, provide budgets, and Engage stakeholders, train feedback, and adjust as Identify likely issues, plan
offer tools and workspace. employees, and needed to improve solutions, and offer
communicate the benefits effectiveness. assistance.
and outcomes.
Organisation design for business strategies
STRUCTURES FOR BUSINESS
STRATEGIES
1 Functional Structure 2 Divisional Structure
Organizes activities around specific Organizes activities around different
functions such as marketing, finance, markets, products, or geographical
and operations. areas.

3 Matrix Structure
Combines functional and divisional structures to leverage the benefits of both.

A cost leadership strategy works best with a functional structure.

A differentiation strategy benefits from a matrix or team-based structure.

A global expansion strategy requires a geographic or divisional structure.

STRUCTURES ALIGNED WITH CORPORATE
STRATEGIES
Diversification Strategy Vertical Integration International Expansion
Requires a divisional structure to A functional structure is suitable as Global expansion benefits from a
manage various business units, it centralizes control over the value geographic structure, enabling
fostering autonomy and chain within a single entity. adaptation to local market
accountability. conditions and regulatory
Example: A company such as Ford,
environments.
Example: Reliance Industries, with which at one point controlled
its presence in energy, rubber plantations, steel mills and Example: McDonald's uses a
petrochemicals, textiles, retail, and car manufacturing, would use a geographic structure, adapting its
telecommunications, exemplifies a functional structure. menu and marketing to suit local
conglomerate using a divisional tastes in different countries.
structure.
Network Structure: A
Decentralized Model
Emphasizes collaboration and outsourcing, relying on a
network of external partners and contractors for specific
tasks or functions.

Offers flexibility, agility, and cost-effectiveness, especially

for organizations in rapidly evolving industries or with
dynamic project needs.

Example: A tech startup using freelance developers,

designers, and marketers, all coordinated through digital
platforms.
Monitoring and Adapting: A
Continuous Journey
1 Regular Performance Reviews: Conduct periodic reviews to
assess the effectiveness of the implemented structure. This allows
for course correction and adaptation to changing circumstances.

2 Performance Measurement: Track key performance indicators

(KPIs) aligned with the strategy. This provides valuable insights into
the effectiveness of structural changes.

3 Continuous Improvement: Embrace a culture of continuous

improvement, actively seeking feedback and making necessary
adjustments to the structure to enhance performance.
Case Study : Bajaj Allianz
In 2003, Bajaj Allianz, a major insurance company in India, faced challenges due to its centralized, multi-layered structure. Decision-
making was slow, customer service was poor, and the company had a limited product portfolio, restricting growth.

Key Issues: Strategic Change (Post-2004):

1. Centralized Authority: Branch managers To address these issues, Bajaj Allianz implemented a decentralized structure and
had limited power, and decisions had to go a rapid expansion strategy:
through the head office, causing delays.
1. Decentralized Authority: Branch managers were given autonomy to make
2. Narrow Product Portfolio: The company
decisions, speeding up processes and improving customer service.
focused only on small individual policies,
2. Expanded Product Portfolio: The company introduced new products and
limiting revenue growth.
services to attract a wider customer base.
3. Customer Dissatisfaction: Slow decision-
3. Focus on High Net Worth Individuals: Branch managers were tasked with
making and limited services led to unhappy
targeting high-value clients to boost revenue.
customers.
4. Expanded Distribution Network: The company increased its reach to serve
more customers.
Challenges:
• Some top managers resisted the changes and left the company.
• Bajaj Allianz had to hire experienced managers from competitors to
fill the gaps.

Results:

The structural changes allowed the company to operate more efficiently,

improve customer satisfaction, and achieve strong financial
performance.

Key Takeaway:

This example shows how strategy and structure interact. Bajaj Allianz
shifted from a centralized to a decentralized structure to support its
growth strategy, demonstrating that the right structure is crucial for
achieving strategic goals.
Key Takeaways and Next Steps
Structural implementation is a crucial aspect of successful strategy
execution. By understanding the organizational factors and exploring
different structural options, organizations can design a structure that
aligns with their strategic goals and facilitates effective execution.