The importance of creating a strategic fit between organizational structure, objectives and the environment

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  • Strategy, Organizational Structure, Objectives and the Environment

A strategy is an action plan that outlines how organizations use their human and material resources to deliver competitive product or services. It includes internal and external activities performed to achieve specific objectives such as stakeholder value, employee/customer satisfaction, industry collaborations and so on (Kurniawan et al, 2014; Chatzoglou et al, 2018).

The structure of organizations means the synergy between various departments (e.g. Finance, IT, Operations, HR, Sales/Marketing etc) (Polonsky, 1995). It reflects the efficiency of top-down communication channels and relationships within the system. For any organization to successfully implement strategies and achieve set objectives, the internal management structure has to blend perfectly. Thus, an organizational structure features hierarchy, chain of command, and delegation of authority to sustain collaboration among the workforce. Establishment of structure therefore helps to avoid task overlap, inefficiency and waste of resources, especially when activities should gear towards building a solid foundation for long-term productivity (Silva and Grützmann, 2022; Jangre et al, 2022).

Notably, the term “structure” has been long misconstrued as something different from strategy. Structure does not just mean an organogram; it encompasses all employees, departments, positions, procedures, workflows, technology, corporate culture and other relevant elements that sustain organizations (Soylu et al, 2022). Companies mostly review structures as a way of creating synergy, improving efficiency or promoting teamwork; and the activity often involves laying off personnel, creating new departments or scrapping some existing positions that support attainment of objectives. But notwithstanding the objectives and robustness of a structure, strategies must be realistic, team-oriented, effective and adjustable to achieve success in any environment (Vătămănescu et al, 2016).

Furthermore, environments might differ based on factors such as the strength of competitors, barrier of entry, reliability of suppliers, consumer trends, local culture and more (Tan et al, 2011). So, when a company changes its business strategy, it should also change the structure to support the new strategy because organizational structure and strategy determine whether a company succeeds or fails to achieve its objectives—no matter the volatility, uncertainty, complexity and ambiguity of the business environment (Laorden et al, 2022).

Evidence-based studies suggest that top management executives should not change policies, vision and core values or implement new strategies without gaining the support of employees. This is more so because change management often breeds acrimony and resistance from employees—especially the innovation team. It is also important to consider the needs and aspirations of customers and stakeholders, not only shareholders. Thus, MNCs rely on strategic alliance (both internally and externally) to achieve their globalization objectives. In this regard, Smith (2003) suggested that structural change and objectives must be well thought out to reduce limitations on core internal competences while maximizing opportunities in the external business environment.


  • BMW

BMW—an acronym for the German words “Bayerische Motoren Werke AG”—is a global manufacturer of luxury vehicles and motorcycles. The international brand founded in 1916 is headquartered in Bavaria, Germany currently markets its vehicles via three brands namely BMW, MINI and Rolls Royce while its motorbikes are sold under BMW Motorrad. BMW has production plants spread across the United States, Germany, China, Brazil and other countries with a total of 118,909 as at 2021. United Kingdom is the only global location integrating manufacturing operations for all three BMW brands namely: BMW, MINI and Rolls-Royce Motors. BMW’s current financials indicate significant growth in total assets, total equity, net income, operating income and revenue.

  • Volkswagen

Volkswagen (VW) AG is a Germany-based automaker established in Wolfsburg under the Nazi dictatorship of Adolf Hitler in 1930s when he requested production of a car designed by Ferdinand Porsche. Officially founded in 1937, Volkswagen has survived periods of economic crisis and currently boasts of huge accomplishments in the global automotive industry. The company is focused on mass-producing affordable, safe and well-equipped cars with high-performance systems. Just like BMW, Volkswagen has production plants in different continents/ The automaker owns several brands including Porsche and Audi (Germany), Bentley (UK), Škoda (Czech Republic), Bugatti (France), Lamborghini (Italy) and Sociedad Española de Automóviles de Turismo (SEAT) in Spain.

  • Toyota

Toyota Motor Corporation headquartered in Toyota City, Nagoya, Japan has been the world’s largest manufacturer of automobiles, automobile parts as well as commercial and industrial vehicles since 2008, when it outperformed General Motors (GM). As at 2022, Toyota has a total of 70,710 employees globally. The company produces over 10 million vehicles per year under five brands—Toyota, Daihatsu, Hino, Lexus and Ranz—with huge stakes in Suzuki (4.6%), Isuzu (4.6%), Mazda (5.1%), Subaru (20%) etc. Key persons at Toyota are:

Takeshi Uchiyamada–Chairman of the Board of Directors (Representative Director)

Shigeru Hayakawa–Vice Chairman, Member of the Board of Directors (Representative Director)

Akio Toyoda (President)