Formulation of Strategy and Its Effects on Organizational Structure Essay

Formulation of Strategy and Its Effects on Organizational Structure - Essay Example If the strategy is effective, it would result in an efficient organizational structure and the organization would be able to achieve its goals successfully. Therefore, the following discussion takes into account the fact that the formulation of strategy takes precedence over the determination of structure of the organization. FORMULATION OF STRATEGY Formulation of strategy is highly important for the success of an organization. If an organization puts the right effort in the process of formulation of strategy, it would be able to design an effective strategy and thus the organization would reap long term benefits on the basis of that strategy. According to Lamb (1984), strategic management is a continuous process that controls and evaluates the business undertaken by the organization, evaluates the potential of its competitors of the organization, and it specifies goals and strategies for the organization in order to enable it to face the threats posed by the competitors, and then re -evaluates the efficiency and effectiveness of the strategy on a periodic basis. Strategic management also assumes the responsibility of determining whether the strategy requires any modification due the change in the external environment of the entity. The initial stage of strategy formulation is the determination of a mission statement for the organization. ... zation conducts an internal and external analysis of the entity in order to assess the threats posed to the organization by its environment and the opportunities that the organization possesses. One of such analyses is known as SWOT analysis which considers the strengths, weaknesses, opportunities and threats of the organization. SWOT analysis is used to assess the effectiveness of an already implemented strategy as well (Armstrong et al 2009). This analysis is highly important for the strategic core of an organization as it provides critical information regarding the environment in which the organization operates. By having such information, the management would be able to design such competitive strategy that would help the organization survive in the industry amidst the competition posed by its competitors. Internal analysis of an organization includes the evaluation of the resources possessed by the organization and the internal processes of an organization. The management evalua tes the resources possessed by the organization as compared to other organizations in the industry. If the organization possesses a resource that is available to that and that organization only, it can be given the status of the competitive advantage of the organization. Competitive advantage of an organization is a resource or a quality acquired by an organization that helps it survive in the industry notwithstanding the size and potential of its competitors. If the competitive advantage of an organization is identified, the strategic core of the organization can design the strategy in such a manner that it capitalizes over the potential of the organization’s competitive advantage. Competitive advantage of an organization may be the distinct quality of its products, a technology