Professional management is essential to increase the chance of successful strategy implementation efforts. By , decisions regarding structural reorganization began to be effected: General Motors Historical Context: The divisional central office which is fairly self-contained in its resources, covering a product-line or geographical region, and administers a number of departments c. Fenton and Andrew M. The Frazer committee was commissioned which suggested a two- pronged hierarchical structure of functional and territorial units reporting into the President see Chart 8, p. Help Center Find new research papers in:

Especially in a large firm, this is a specialized task performed by a dedicated team that does not involve in functional details 2. Help Center Find new research papers in: Mintzberg argued that the current organisational form can also be regarded as constraining strategic change. Changes in an organisation’s strategy led to new administrative problems which, in turn, required a new or refashioned structure for the successful implementation of the new strategy. The thesis was not based on broad empirical study.

Bydecisions regarding structural reorganization began to be effected: The New Jersey amendment facilitated joint incorporation, paving the way for one company to hold stocks in another, thus, enabling legally stategy consolidation.

Sears started as a mail-order catalogue targeting Rural America, especially the farmers who would desire high-priced merchandise that would not be stocked in the rural-front shructure. Chandler observed that the transition from one structure to another was often both delayed and painful.

This system failed due to its essential weaknesses: By Robert Hoskisson and Hicheon Kim. A manufacturer might naturally move into warehousing and wholesaling. The Singer sewing machine story gives an excellent example of marketing integration see p. He concluded that organizations do not readily change structure because their entrepreneurial founders excel at strategy but are generally neither interested in nor knowledgeable about organizational structure.


ProvenModels – structure follows strategy – Alfred D. Chandler

Meanwhile, GM was transformed from a holding company to an operating company which, legally chandlerrs a multidivisional structure but, in reality, had units that were loosely coupled.

Expansion encouraged vertical integration and the company often bought stake in the factories that supplied their goods.

The thesis was not based on broad empirical study. However, some issues began to plague the company around this time: There is usually a single location, a single product, and strjcture single entrepreneurial decision maker.

structure follows strategy

This has happened frequently in recent years dtrategy rapidly growing, technology-oriented firms like Apple Computer. Strategy follows structure -Discuss. The administration of the integrated enterprise was rendered inefficient due to lack of a robust structure: Purchasing, sales promotion and distribution were centralized at Chicago. The Frazer committee was commissioned which suggested a two- pronged hierarchical structure of functional and territorial units reporting into the President see Chart 8, p.

chandlers strategy structure thesis

Semi-autonomous product divisions take responsibility for short-term operating decisions, with the central office remaining responsible for strategic decisions with a longer time horizon. Changes in the market structure have implications for a firm’s strategy and structure.

He observed a common wtructure in their development. Administrator ought to handle to types of tasks: The story of National Biscuit p. See charts in p. Rapid growth of urban market, coupled with enhanced connectivity, demanded higher industrial outputs and, hence, strategies of geographical dispersion and vertical thesiz took hold p.


chandlers strategy structure thesis

The new strategy created an experience mismatch within the organization, which led to confusions at the central office in matters of goal determination, resource allocation and appraisaland also led to inefficient planning due to unavailability of statistical data on the new products. By Vikas N Prabhu. Administration is an identifiable activity that channdlers specifically defined tasks which are stratety from functional work. Railroads were the precedent for the growth of the great industrial enterprise see p.

chandlers strategy structure thesis

Chandler’s key addition to management literature was to connect strategy and structure — since a restructuring effort is a result of a change in strategy, a company must first review its strategy, then pursue a different structure.

The flow of authority is top-down: The changing environment of WWII gave impetus upon businesses to adapt and diversify and that, in turn, emphasized the need for multidivisional structure.

Chandler’s Thesis

This phenomenon poses a significant new challenge: This phase, by consolidating loose alliances into tightly bound entities, greatly enabled economies of scale and focused technological innovation. There was no auxiliary or staff functions at the head office.

The staff could not order, only advise, however they enjoyed auditory powers.

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