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CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Rajasthan Cement Ltd. is implementing a diversification strategy. The management finds that the existing organisational structure, with its rigid hierarchy, slows decisions in the new business. It decides to change the structure so that it supports the strategy. This reflects which principle of strategy implementation?

This reflects the principle that structure follows strategy. The diversification strategy is already chosen, and management modifies the rigid hierarchy so it supports quick decisions in the new business. Structure is adapted to the strategy, not the strategy bent to fit existing structure.

  1. AStructure follows strategyCorrect
  2. BStrategy follows structure
  3. CCulture is independent of strategy
  4. DControl precedes planning

Explanation

Chandler's principle holds that the organisational structure should be designed to fit and support the chosen strategy. Here the strategy of diversification is fixed and the structure is modified to suit it. The reverse option would mean strategy is adjusted to fit structure, which is not what is happening.

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