The Importance of Creating a Strategic Fit between Organizational Structure, Objectives and the Environment

AN ANALYSIS OF SELECTED AUTOMOBILE COMPANIES (BMW, VOLKSWAGEN AND TOYOTA)

1 INTRODUCTION

2 LITERATURE REVIEW

• Strategic Management

Peter Drucker popularized the concept of strategic management in the 1950s following his economic theory-based research on the management approaches used in industrial organizations (Wolf, 1996). The American business consultant notably said that ‘management is doing things’ whereas ‘leadership is doing the right things’ (Avery and Bergsteiner, 2011). Drucker held the opinion that the only leadership group comprises of managers, noting that if managers of major business corporations fail to address environmental, social and governance (ESG) issues, no one else can or will take responsibility for the common good (Finlay, 2010). Thus, strategic management is an important feature of both small and large corporations because it determines their survivability and sets the pace for global sustainability (Pertusa‐Ortega et al, 2010; Vătămănescu et al, 2016).

In a business environment regularly disrupted by external factors (such as changing government policies, technology advancement, COVID-19, climate change and global warming), strategic management can be the key to value creation and sustainable profits (Laorden et al, 2022). However, organizational leaders must continually scan the external business environment to understand current strategies applied by competitors. It is also important to identify internal core competencies in order to forecast and take timely decisions that can increase opportunities for growth and reduce risks. According to Polonsky (1995), an understanding of global trends, particularly stakeholder expectations and the competitive landscape, can provide competitive advantage if organizations have the right structures. Employees must also understand and support the mission statement (objectives) while managers ensure that resources are equitably distributed based on needs (Tan et al, 2011). This highlights the importance of organizational structure and commitment to strategic planning in any marketplace (Kurzynski, 2012; Thakur et al, 2022).

Evidence-based research shows that strategic management encourages inclusive leadership and goal-setting for the workforce thereby improving employee motivation, engagement and overall productivity (Avery and Bergsteiner, 2011). Other benefits include financial gains and long-term competitiveness. But it is not enough for organizations to just implement strategic management plans. To sustain growth, leaders need to regularly monitor progress, assess performance to align activities with the corporate blueprint on ESG impact, and make changes where necessary to achieve sustainable growth (Kurniawan et al, 2014).