Does Structure Follow Strategy or Does Strategy Follow Structure? Why

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The Answer is Although Chandler and others have made convincing arguments that a change in strategy tends to be followed by a change in structure, a good argument can be made for strategy following structure as well. To the extent that the formulators of strategy seriously consider implementation issues in choosing a strategic alternative, they will have to assess the compatibility of a desired strategy with the present corporate structure. If the desired strategy cannot be implemented given the present structure, how much time, money, and effort will be needed to change the structure? Such a cost-benefit analysis may find the desired strategy to be too costly to implement.
Research does support the contention that structure follows strategy. As shown earlier in Chapter 5, the reverse also appears to be true. Logic suggests that responsible strategy makers will consider the current corporate structure as a serious consideration in the choice of a strategic alternative. This fits with the resource-based approach. Chandler himself implies that one of the problems of strategy formulation in the past has been a lack of serious consideration of structural issues. This is suggested in the chapter when Chandler proposes that the creation of new strategy is followed by the appearance of new administrative problems, which contribute to a decline in economic performance. One is left wondering why the strategy makers in the corporations Chandler studied failed to foresee the need for structural changes at the time they created their strategy. Perhaps if they had been able to foresee all the needed implementation problems, the chosen strategy might have been quite different and more in line with their present structure. All this is merely conjecture, of course. Hindsight is always clearer than foresight.

Does Structure Follow Strategy or Does Strategy Follow Structure? Why

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