Investigating the relationship between competitive strategy, organizational structure and performance of food industry companies based on a resource-based perspective

Master's Thesis in Business Management, International Business Orientation

Abstract

The purpose of this research is to investigate the relationship between organization structure, business strategy and then their impact on the promotion and improvement of the performance of food industry companies in Tehran province using resource-based theory. The organizational structure includes the design of systems by which all units are coordinated and integrated, and as a result, effective communication in the organization will be guaranteed. On the other hand, strategy shows a plan, how and how to get from one point to another, and provides a pattern and framework for decision-making and action in front of the organization. Since the continuous improvement of organizational performance is one of the desirable and desired indicators of managers, it is important to know how the relationships between these two factors affect the achievement of organizational excellence by using the perspective based on resources.

In this research, the effect of organizational structure as an internal resource through competitive strategy on the performance of the company has been examined. 60 companies producing dairy products in Tehran have been identified. Among the identified companies, companies with more than 150 employees and with a history of more than 10 years were considered as the target society. The method of this research is applied research in terms of its purpose. The research design in this research is descriptive research of correlation type. The sampling method in this research is stratified sampling; The correlation between the dimensions of the research variables in the target society shows a positive and significant relationship between these dimensions of the variables.

The results of the average test show that the organizational structure, competitive strategy and performance in the companies producing dairy products in Tehran province are in a favorable condition. Also, the results of the structural equation model show a positive and significant causal relationship between "organizational structure" and "organizational performance" through "organizational strategy". Keywords: structure; competitive strategy; organizational performance; Resource-based theory

Chapter 1

Research overview

Introduction

Reforming the organizational structure is always one of the concerns of managers because an important part of managers' activities is focused on the proper organization of factors that require the creation of a proper organization. Organizational structure is the framework by which the activities of the organization are divided, organized and coordinated. Every organization has a special structure and it is important that this structure is such that not only the factors of doing work are coordinated with each other but also controllable. The organizational structure determines the official relationships and shows the levels that exist in the administrative hierarchy and defines the control area of ??the managers. Also, the organizational structure includes the design of systems by which all units are coordinated and integrated, and as a result, effective communication in the organization will be guaranteed. On the other hand, strategy shows a plan, how and how to get from one point to another, and presents a pattern and framework for decision-making and action in front of the organization. In fact, the strategy, in addition to determining the vision, ideal and direction of the company, shows the organization how the company or organization will be in the future. Since decisions related to product or service provision are included in most of the strategy, hence the importance of the successful implementation of the strategy will be a fundamental and vital factor in the success of organizations. Although various aspects show its importance, since the organizational structure is one of the important pillars of strategy implementation, dealing with it is an integral part of managers' duties. Since the structure itself is the creator of the strategy and on the other hand it is decisive in the allocation of resources, the change in the organizational structure should always be considered. The structure should be designed in such a way that the implementation of the strategy is facilitated. The design of the organizational structure and the successful implementation of the strategy both play an important role in achieving the company's performance, which is the success of the organization. Therefore, the relationship between structure and strategy can be examined based on their effect on organizational performance. In the present chapter, the problem and its necessity are stated at the beginning. Then the research propositions are presented in the form of research questions, hypotheses, goals and variables under investigation.. The research method is also one of the other topics discussed in this chapter. Finally, research concepts are defined operationally.

1-1- Statement of the problem

Contingency approach has been the dominant thinking in organization theory for a long time. This point of view emphasizes that the credibility, effectiveness, efficiency and productivity of the organizational structure depends on the contingent factors such as strategy, organization size, technology, environment, organizational plan and power (control). It depends. Paying attention to these contingent factors in the current competitive situation is vital and in some cases determines the survival of the organization. Therefore, the structure should be designed with these factors in mind so that it can provide the context for the realization of the organization's goals and strategies (Balig [1] and others, 1992). As mentioned above, one of the determining factors of organizational structure is strategy. The most important research done in relation to the effect of strategy on structure can be mentioned Chandler's research [2] in the early 1960s and Miles and Snow's research [3]. In summary, these researches insist that the fit between strategy and organizational structure affects performance. Therefore, it can be said that the change in contingent variables disturbs the existing balance between strategy and structure; The resulting disproportion leads to structural change; And the change in the structure creates a new balance that revives the performance (Scott[4], 2010: 152).

In contrast to this contingency theory, the resource-based perspective and looking at the organization from the perspective of differentiating capabilities, which provides a new approach in organization and management studies, has a different opinion. This point of view, emphasizing the internal resources of the organization against the competitive situation in the industry, states that resources are valuable for us only when they increase efficiency and allow us to invest in opportunities and deal with threats. Peppard and Rylander [5] state that resource-based theory provides a comprehensive perspective to understand how to use resources in value creation for organizations (Peppard and Rylander, 2001). So that the resource-based view as the key to competitive priority in many organizations' activities includes the organization's strategy, information technology capability and organizational structure (Chang[6], 2004). Research has shown that the resource-based perspective[7] allows organizations to create, deploy, and use scarce resource capabilities (Batt[8], 2002). In short, this view is based on the principle that organizations are different in resources, which include tangible and intangible resources, and therefore have different competitive status. Therefore, considering that the emphasis of the resource-based perspective is on internal characteristics, this bias causes researchers to reframe the relationship between strategy and structure by analyzing the organizational structure as a valuable resource and source of competitive advantage. Apart from being one of the elements of implementing the company's strategy, the organizational structure is also an important source of competitive advantage (Pertosaartega[9] and others, 2010). Therefore, it seems that knowing and examining the structural dimensions as one of the valuable resources of the organization that can influence the organizational strategy will improve the organizational performance. In other words, contrary to the contingent approach, the resource-based perspective states that not only the organization's strategy has a little determining feature for the organization's structure, but the organization's strategy is based on the existing resources, including the organizational structure and is also formed. Therefore, it can be said that the orientation of the contingency approach is based on changes outside the organization (environment); While the resource-based approach seeks to examine the organization's internal resources as the basis for gaining a competitive advantage. In addition, the difference between these two views can be summarized as follows: First, most of the theoretical knowledge about the relationship between strategy and structure in improving organizational performance dates back to several decades ago, and the environmental conditions are different from the environmental conditions of that time, when Chandler concluded that structure follows strategy. Modern companies face a rapidly changing, hypercompetitive and turbulent environment where customer preferences are highly variable and technology is passing scenarios. In such a situation, the resource-based perspective can better describe the sources of sustainable competitive advantage than the organization's external-based orientations.