Question

ORGANISATIONAL DESIGN AND MANAGEMENT

a. Define the concept of competitive strategy. List the types of strategies theorised by the Porter model and describe their main characteristics. (15 marks)
b. Discuss how the choice of strategies affect the organisational design.

Answer 1

Answer a:- Competitive Strategy is defined as the long term plan of a particular company in order to gain a competitive advantage over its competitors in the industry. It is aimed at creating a defensive position in an industry and generating a superior ROI (Return on Investment). Such type of strategies plays a very important role when the industry is very competitive and consumers are provided with almost similar products.

An organization responds to the structure of its industry by choosing a competitive strategy. Porter followed his five forces model with the model of four competitive strategies. According to Porter, a firm can engage in one of these four fundamental competitive strategies. An organization can focus on being the cost leader, or it can focus on differentiating its products from those of the competition. Further, the organization can employ the cost or differentiation strategy across an industry or it can focus its strategy on a particular industry segment. According to Porter, to be effective the organization's goals, objectives, culture, and activities must be consistent with the organization's strategy

Answer b:-

The organization’s strategy is of the contingency variables that influence organizational design. Alfred Chandler originated the strategy-structure relationship. His finding that structure follows strategy indicates that as organizations change their strategies, they must change their structure to support that strategy.b. Most current strategy-structure frameworks focus on three strategy dimensions:

1)Innovation needs the flexibility and free flow of information present in the organic organization.

2)Cost minimization needs the efficiency, stability, and tight controls of the mechanistic organization.

3)Imitation uses some of the characteristics of both mechanistic and organic organizations