Using international business operation knowledeg to Explain

Using international business operation knowledeg to Explain how a firm’s organisational structure can be linked with its strategy. How does a centralised or decentralised structure reflect a firm’s strategy?

Solution

A firm’s organisational structure depicts authority and reporting relationships according to different levels of hierarchy. Organisational structure is closely linked to strategy. A good organisation structure helps the employees to achieve the organisation’s goals by using suitable strategies. It empowers the employees to effectively discharge their duties and perform necessary strategy formulation and implementation.

A good organisational structure should help in effective strategy execution by ensuring flexibility in coming out with appropriate decisions and idea sharing on one hand and ensuring proper control from the top or from the headquarters on the other hand.

A centralised organisational structure indicates that most of the strategies are formed at the top level of the organization or in the headquarters. Most of the strategic ideas occur at the senior-most level or in the company’s headquarters.

A decentralised organisational structure indicates that most of the strategies are formed at the lower levels of the organization and in the departments/divisions or strategic business units. Most of the strategic ideas come from the lower levels of the organization or departments/divisions or the branch offices or strategic business units which are endorsed by the top level or the company’s headquarters.