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Companies’ operational activity depends mainly on their structure because this component affects relationships within an organisation. It defines its ability to achieve objectives by outlining the specific actions that should be performed. The company in question did not alter its structure in over 20 years, and this factor influences the effectiveness of work. It is necessary to revise it to ensure that the mission, vision and goals of the business are met. This report aims to explore essential components to consider when altering the structure and evaluate the implications for management and development.
The first factor that should be considered is the size of the organisation, which undoubtedly affects the relationship between management and employees. According to Harper (2016), it is believed that with an increase in size a company becomes less centralised. This data presents an understanding that executives may have difficulties with managing big companies; therefore, a need for delegation arises. Thus, the analysis of the size and management techniques that can be applied to ensure that tasks are accomplished is necessary to create an appropriate structure.
The next component that influences the structure is a particular product or service that a company develops. According to Porter and Heppelmann (2015, p. 4), “the core functions — product development, IT, manufacturing, logistics, marketing, sales, and after-sale service — are being redefined, and the intensity of coordination among them is increasing.” This is especially important for this company because its structure has not been revised in twenty years. Therefore, while approaches to product development have changed, the actual operations remained, which provides a competitive advantage to rival companies that adjusted their structure.
The structure in which companies choose to focus on products and services is referred to as the divisional model. In this scenario, it is necessary to select a category by which employee teams would be divided; for instance, business clients and individuals (‘Business organisational structure’ n.d.).
Products affect the structure as the focus on them provides an opportunity to diversify the production because adding another division is relatively easy. Thus, in case the company in question should expand the product or service range, the focus on the divisional structure will allow the executives to ensure quick growth. Additionally, the responsibilities for each department are clearly defined following a specific development. It can be concluded that products and services influence the organisational structure because a focus on them allows companies to expand their range and provide better services to customers. However, it should be noted that some functions, for instance, finances or human resources, should remain centralised.
The organisational life cycle is another component that should be considered when developing a structure. This factor has several models that can be traced and related to the establishment and development of a company (Organizational life cycle n.d). It should be noted that products or services have traceable cycles as well. Depending on a particular firm’s stage of development an its internal circumstances an organisation can choose a model that will help it excel.
It can be argued that a recently started company has a simpler structure when compared to the one that has a long history. For this business, it is evident that a more complex structure is required, due to its 100-year history. At the stage of growth, a more decentralised approach to division of power can be seen, which is reflected in the growth of authority for middle management (Organizational life cycle n.d.). At the next stage, the companies focus their attention on enhancing internal processes, and a matrix type structure becomes more appropriate than the traditional hierarchy.
The strategy is among the essential forces that identify the path of development and growth for a company. It can be argued that the component combines other factors, such as produces or services because it presents an understanding of how a company would manage its operations. Chandler states that if the structure does not correspond to the strategy, an establishment is unable to carry out its tasks properly (as cited in Marx 2016).
Therefore, it is necessary to align the two components, which would enable the efficiency of operations for this company. Marx (2016) conducted a study in which the author evaluated Chandler’s claims. According to the findings from the research, specific changes in the external environment of an industry can affect the possibility to align structure and strategy. However, misalignment can lead to severe consequences; therefore, together with other components strategy defines the organisation of a firm.
Business environment refers to external forces of an industry in which companies operate. It is crucial to consider resources and competition when creating a strategy because a firm should be ready to respond to the challenges and changes within its niche. More specifically, “higher levels of competition require different organisational structures to offset competitors’ advantages while emphasising the company’s strengths” (Factors to consider in organizational design n.d., para. 4). Additionally, if this company experiences uncertainty, it should prioritise the ability to adapt, which would allow changing the activities more quickly.
Type of workforce and its specific characteristics affect the structure because the two components determine the possibility of decentralisation and human resource development. Harper (2016) states that the expertise of the workforce is a crucial component that affects the efficiency of operations. It is because the factor determines whether the delegation of tasks is carried out correctly. It can be concluded that larger organisations would benefit from expert employees because decentralisation would not have an adverse effect on the work.
Tree workforces can be defined as a culture, professional core, contractual fringe and flexible labour force. These were developed by Handy (2015), who states that choosing an appropriate structure a company defines its viability. The author developed the idea of a shamrock organisation, which consists of executives, employees and contractors. According to the approach, the employee should be flexible and committed to a firm, which is defined by an internal culture.
It can be concluded that for this organisation to function correctly, it is crucial to review the current structure and the existing products, life cycle, strategy, workforce and other factors that were discussed. Based on the development plan for future operations the executives will be able to choose and implement a new structure, enabling the establishment to reach its objectives. The following part will provide an evaluation of company structure on various components of the company.
Evaluation of Implications
It can be argued that any company strives to receive revenue and grow in order to achieve its goals. Moreover, Harper (2016) states that firms should be regarded as members of society and they affect their external environment – political, social, and economic. Evaluating specific components that affect the process can help create an adequate approach that would guide this establishment. Jury (2004, p. 1155) lists these factors as essential to consider– “the size of the company, model of organisation structure, motivating factors, productivity, competitive market effect, financial results of companies, usage capacities, planning and controlling.” Due to the fact that the majority of them were discussed when identifying critical factors for organisational structure, the latter will be examined in greater detail.
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The relationship between the organisation and its employees is affected by the structure of the establishment. According to Dubey and Singhal (2016, p. 110), “the organisational structures plays a very vital role in employee’s empowerment” because the recognition of human resources as crucial components for development increases the motivation of individuals. Additionally, this factor affects performance levels and thus impact the success of a firm. Creating a structure that can leverage the employees and provide the basis for a good connection between executives and
The impact of information technology on the development of people and resources is vast. As was previously mentioned, products and services affect the organisational structure. In recent years the approaches to designing and manufacturing were altered due to the emergence of various innovations. The implication for organisational structure and to create an environment in which information technology would allow better communication between staff members.
Demand for flexibility refers to a need for changing approaches and activities in accordance with the external environment. This factor is connected explicitly to human resources and staff development because the ability of individuals to adapt affects the businesses’ operations. According to Pawlowski (2016, p. 2331), “for all dimensions of organisational structure, the level of flexibility depends on the functional area of the enterprise (marketing and sales, research and development, operational activity, administration).” Therefore, the implication is to ensure that each component of the firm’s structure can adapt to changes by creating an appropriate arrangement.
Management of change is defined as a transition carried out to achieve future goals. It is among the essential practices that enable growth for an establishment (Burke 2018). The executives of the company in question desire to change the structure to ensure that it applies to the goals that were set for the future. Thus, it is necessary to analyse the external environment in alignment with the strategy and choose a flexible structure that would allow to grow and develop.
Financial implications are essential for a businesses’ operations because they determine the amount of investment that can be made in the development of individuals and resources. The management should take into account the revenue and external environment changes to identify which departments are essential for the firm. This process will allow determining which parts of the company can be eliminated or transformed to enhance efficiency.
Overall, various factors impact the decision-making process of changing the organisational structure. It is evident that the company’s current structure is not feasible because it was not reviewed in over twenty years. It is crucial to analyse the components that were discussed above and design a new, flexible structure. Additionally, it is necessary to ensure that people and resources can develop through the chosen management approach.
Burke, WW 2018, Organization change: theory and practice, Sage, London.
Business organisational structure n.d. Web.
Dubey, A & Singhal, AK, 2016, ‘Role of organizational structure in employee’s empowerment’, Journal of Education and Management Studies, vol. 6, no. 1, pp. 110-115.
Handy, C 2015, The shamrock organisation. Web.
Harper, C 2016, Organizations: structures, processes and outcomes, Routledge, New York, NY.
Jury, B 2004, ‘Organization, factor of competitive advantage: empirical research’, An Enterprise Odyssey. International Conference Proceedings, Zagreb, Croatia, pp. 1155-1169.
Marx, TG 2016, ‘The impacts of business strategy on organizational structure’, Journal of Management History, vol. 22, no. 3, pp. 249-268.
Organizational life cycle n.d. Web.
Pawlowski, E 2016, ‘Flexibility of organizational structure in a context of organizational innovations and modern concepts of enterprise management’, Proceedings of PICMET ’16: Technology Management for Social Innovation, Portland, USA, pp. 2331-2337.