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3033 Words
Introduction To Organization Design and Management Assignment
Business structure consists of different department of the organization that contributes in achieving overall goal and vision of the company. Companies use different kind of models and strategy to organize and manage the business organization. Moreover the following assessment will identify different aspects of structure in some contemporary firms. Further the implication for the organization and its stakeholder from different aspects of structure will be discussed. Nevertheless it will also identify different existing company for each aspects of structure like Tesla and Amazon etc. Like the Hierarchical structure is used by Amazon with this the Starbucks use the functional structure. Moreover the flat structure is used by the valve corporation mainly because this structure helps the startup or small company. At last the geographical divisional structure is implied by the coca-cola to manage the organization.
Main Body
Hierarchical organizational structure
Hierarchical organization is mostly used by large organizations it include different department that work on different levels. Moreover the flow of the organization is always goes from top to bottom of the management. This structure helps the organization in managing the data and information in the company (Saiti and Stefou, 2020). At the same time this structure also known as pyramid-shape organization chart. Nevertheless this structure mostly work in those companies who sell large quantity of product but not much in the variety.
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Implications for the Organization
- Authority: the organization has a clear line of authority and no misunderstanding occurs in the decision-making. It also helps the worker to know whom they have to report and take instruction from. That results in employees being aware of the roles and responsibilities that they have to perform in the daily operations.
- Accountability: If the roles and responsibilities of the worker become clear they tend to take accountability for their action or mistake. Moreover, the sense of responsibility makes Amazon much better in terms of quality and performance.
- Opportunity: As in a hierarchical organizational structure there are different departments and each has its responsibility. It results in employees of Amazon having the opportunity to specialize in their field of career.
Implications for Stakeholders
- Manager: The manager has high control and power over the workers of the teams that can be empowering as well as manage the employees more effectively. Moreover, the manager has to take responsibility for their team which results in them being more active and productive.
- Customer: With the implementation of a hierarchical structure in the Amazon, the customer gets good quality of product and services. At the same customer get the consistency in the quality of experience.
- Investor and shareholder: As the hierarchical structure gives a clear line of accountability the investor gets rest assured on the Amazon's performance as well. Moreover, this structure also provides transparent financial and nonfinancial information.
- Supplier and partner: meanwhile the suppliers can expect delays in decision or instruction. Further, that also gets delayed in future processes of the organization's operations.
Real World Example of Company: Amazon
The company Amazon is an America based global company that is known for its online retails and other services as well. The company follows hierarchical structure mostly because of its Size in terms of employees (Pelikan, 2022). So the most of the time the employees have to report to the manager and the further chain goes according to the role and the position.
There are different department as well like Software development, Information technology, Human resources, Finance, Business operations and Product management some other as well. The hierarchical structure make things easy of the Amazon are various factors. Some of the factor is like in terms of employee and manager as the company has divided each department into various sectors as well (Cimini, et. al, 2020.). So that result in the manager can be with the individual team and mentor and guide them in effective way. Moreover the trust of the investor remains on the company as well like the company provide as the company provide transparent information to the investor and stakeholder. At the same time the company is always take responsibility of their action and good quality of services to the customer. Further that result in customer being loyal to the company and it attract more consumers toward the organization.
Functional organizational Structure
Functional organizational structure is a very common aspect used by many companies but mostly large or medium-sized companies. In the functional structure, the departments are made based on their function and expertise (Taylor, 2019). By which the employee also gets the department based on their qualification and skills. For example, there will be a separate department for every function like marketing, sales, designing developers etc. Moreover, the head or the specific manager of the department will directly report to the higher authority like the CEO or the president of the company.
Implications for the Organization
Productivity: the productivity level of each department or the overall company gets higher because every individual can work or perform a specific task based on their interest and the skill they possess. So the skill set and interest allow the worker to make a good level of outcomes for the company.
Job satisfaction: The employee gets job satisfaction from working in the organization because they work for themselves as well as for the Starbuck's. Moreover, the higher job satisfaction among the workers results in a higher retention rate in the company as well.
Skill growth: As the employee gets to work based on the skill set they can develop and grow their skill in the specific field of work as well (Andersson, et. al, 2019). Moreover, as the teams are mostly small the flow of information and knowledge become easy so the employee can learn from other as well.
Training: As the department for each function gets separate the manager can focus on which employee needs special training and session to develop the skill. This not only helps the company to get more skilled workers in the organization but the employees get specialization in the field of career.
Implications for Stakeholders
Manager: The manager can have effective leadership skills as the department size is small and they have to handle a small number of teams. Moreover, the manager's control and power become low in this organizational structure (Joseph and Gaba, 2020). Nevertheless, the manager can focus on individuals in the department and solve any issue or problem they are facing.
Customer: As the company each department focuses on and has specialization in the specific department the Quality and service get better and consistent. Moreover, when it comes to adopting a new environment to match consumer preferences the process will be slow. Nevertheless, the Starbucks can have a hard time handling the different departments.
Investor and shareholder: The functional structure also gives a transparent report on the company's growth and financial statement. That results in an increase in the trust of the investor and shareholder toward the company.
Supplier and partner: The supply chain management goes smoothly in the company because of the different departments. At the same time, the company can ensure the quality and safety of the products while transporting of the products.
Real-World Example of the company: Starbucks
Starbucks is a popular coffee brand serving coffee and is known for its quality products and services it is an American-based company. The company was established in 1971 and till now Starbucks has opened multiple stores all over the world. Starbucks has divided the departments into Functional and product-based. Moreover, as the company has a wide range of stores across the globe the functional structure works very well for the company.
With the functional structure, the company has many departments and there are multiple reporting heads as well. Moreover, the decision making process remains on the company's Board of directors. The decision-making and functional structure completes the overall structure of the company.
Horizontal or flat organizational structure
The Horizontal or flat organizational structure consists of a few departments that help the company to supervise a few departments and it encourages employee involvement as well. Mostly start-ups or small companies use this structure (Lee, 2022). Moreover, this functional structure helps the startup company in managing the internal environment because they are on a growth face. Nevertheless, some other companies also use this structure because it needs less supervision and encourages open conversation between the management and the employees. Nevertheless, it also improves coordination and helps in implementing new and innovative ideas.
Implications for the Organization
Flexibility: As the departments are few implementing new models or ideas in the company becomes easy. Moreover, the internal environment of the company becomes more flexible in adopting new changes. Nevertheless, the leader can focus on the individual so training them for the new environment becomes more effective.
Responsibility: In the functional structure the employees are also given some major responsibility in the company. Moreover, the employees can decide on their relevant job roles. This helps the Valve Corporation to have more independent employees which results in increasing the productivity in the organization.
Less clarity: As the Responsibility is distributed sometimes it can occur in some misunderstanding or confusion among the worker. For example, there will be no clarity on who will give instructions or whom to report as well (Zsuzsanna, 2020). That is the reason why a flat structure only works for new startups and small-scale businesses like Valve Corporation that are in growth face.
Implications for Stakeholders
Manager: In the flat structure the manager has more power while deciding so the process becomes easy and fast. Moreover, the managers have more influence in the company directly which can sometimes be rewarding as well. Nevertheless, the manager has to manage large no of people in one team which can lead to a lack of resources for training.
Customer: The flat organizational structure helps the worker to give quick responses to consumer Queries and issues. That results in providing better customer service and satisfying the needs and demands of the consumers. Nevertheless, without supervision, customer service can be consistent in the Quality of products or services.
Investor: As the company is good at adopting new changes it can attract more investors for the organization (Flat Organizational Structure, 2023). Moreover, the Valve's flat structure also can lead to a cost saving that attracts more attention from investors and shareholders. Further, as the reporting structure has many layers the shareholder will have difficulty in collecting financial and nonfinancial information.
Supplier and partner: The flat structure of the organization can lead to Quick decision-making that later helps the supplier in continuing further processes. At the same, the whole process helps both parties in time and cost savings as well. It will be easy for the supplier to collaborate with directly the decision-makers.
Real-World Example of company: Valve Corporation
Valve Corporation is a video game developer company which is also known as Valve Software that also a publisher and distributer. The company is based in America and was established in 1996 with headquarters in Washington. The Valve Corporation does not follow the traditional method and prominently uses a flat structure in the organization. Moreover, the employees of the company do not have managers or supervisors instead the workers are self-organized and manage work. Nevertheless, the employee has the right to join the team in which they have an interest and want to work. Further, the employees consistently provide each other feedback and are responsible for improving each other mistakes or errors.
Geographic divisional organizational structure
The geographical divisional organization allows the company to divide the departments based geographically instead of centralizing. For example, the department will have more rights while deciding for their departments (Ascani, Faggian and Montresor, 2021). Moreover, if the department makes decisions based on market demand and requirements it results in more efficiency in organizational operations. Further, the teams are divided based on product and service lines instead of the function of the departments. Moreover, like a company sells many kinds of products in different regions then each area will have a dedicated department for it (10 types of organizational structures (+ org charts for implementation), 2023). This structure helps the company to focus on the products and local market more effectively.
Implications for the Organization
Define responsibility and roles: In the geographical divisional structure roles and responsibilities are clearly defined. So the manager also has the awareness of when they have to make decisions independently and when they have to depend on the management. Nevertheless, the managers can make decisions like budgets, resource allocation and business strategies for their respective departments.
Communication and Coordination: The coordination and communication between management and the employees become much better. This included the daily reporting and meetings that helped the managers and director to coordinate.
Resource allocation: The companies can easily analyze the requirements of each department and distribute the resources accordingly. This structure ensures that every department has the necessary resources so Coca-Cola can perform daily operations without any issues.
Implications for Stakeholders
Manager: The regional leaders have more power and authority on decision making which helps them to be more independent. Moreover, they can also develop a good knowledge of their local market that will enable them to develop skills and knowledge.
Customer: The customer will have a good quality product and services as the department is based on the local market. It also enables prioritizing the customer need and demand that retain the customer and increase their loyalty toward the organization.
Investor and shareholders: As the department is divided based on the geographical areas the Coca-Cola would focus more on each local market which will increase productivity and profit. Moreover, the high profits will increase the investor and shareholders toward the company.
Real World Example of company: Coca-Cola
Coca-Cola is an American-based company known for its soft drinks and also markets other nonalcoholic beverages. Some of the famous drinks are Coca-Cola, diet Coke, sprite and others. The company follows a geographical divisional structure because of its worldwide range. The geographical structure helps the company analyze the local market and can comply with the customer needs. Moreover, this structure also helps in supply chain management and can connect with each region. Nevertheless, the company can use different products and marketing strategies according to the consumer preference. Further Coca-Cola has decentralized the decision making which results in the operational activity being done without wasting time. The geographical divisional structure reflects how a global company can effectively manage the organization
Conclusions
The file has identified different aspects of the organizational structure that help various kinds of firms whether it's a small, medium or global corporation. Moreover, many types of organizational structures are mentioned like functional, hierarchal, geographical and flat organizational structures. Further, the implication for the organization and stakeholders helped to understand the advantages and disadvantages of each organizational structure. Moreover, every aspect has its benefits and drawbacks. Nevertheless the implications for the organization and its stakeholders are also discussed. Moreover, the file also is at the same time it identified some existing companies for each above-mentioned aspect of structure like Amazon, Coca-Cola, Starbucks and Mc Donald. These companies have implemented the different aspects of the organizational structure according to which suits them the most. Moreover, those structures also helped the company to manage and organize the company's internal environment very well.
References
Books and Journals
- Saiti, A. and Stefou, T., 2020. Hierarchical organizational structure and leadership. In Oxford Research Encyclopedia of Education.
- Pelikan, P., 2022. The Formation of Incentive Mechanisms in Different Economic Systems. In Incentives and economic systems (pp. 27-56). Routledge.
- Cimini, C., Boffelli, A., Lagorio, A., Kalchschmidt, M. and Pinto, R., 2020. How do industry 4.0 technologies influence organizational change? An empirical analysis of Italian SMEs. Journal of Manufacturing Technology Management, 32(3), pp.695-721
- Taylor, S.P., 2019. Organizational structures. International Journal of Housing and Human Settlement Planning, 5(2), pp.28-33.
- Andersson, T., Cäker, M., Tengblad, S. and Wickelgren, M., 2019. Building traits for organizational resilience through balancing organizational structures. Scandinavian Journal of Management, 35(1), pp.36-45.
- Joseph, J. and Gaba, V., 2020. Organizational structure, information processing, and decision-making: A retrospective and road map for research. Academy of Management Annals, 14(1), pp.267-302.
- Ascani, A., Faggian, A. and Montresor, S., 2021. The geography of COVID?19 and the structure of local economies: The case of Italy. Journal of Regional Science, 61(2), pp.407-441.
- Lee, S., 2022. The myth of the flat start?up: Reconsidering the organizational structure of start?ups. Strategic Management Journal, 43(1), pp.58-92
- Zsuzsanna, C., 2020. Startup: Hype or tendency?. Journal of Organizational Culture, Communications and Conflict, 24(3), pp.1-9
Online
- 10 types of organizational structures (+ org charts for implementation), 2023. Online. Available through: < https://www.lucidchart.com/blog/types-of-organizational-structures >
- Flat Organizational Structure, 2023. Online. Available through: <https://study.com/learn/lesson/flat-organizational-structure-hierarchy-examples.html#:~:text=A%20flat%20organizational%20structure%20is%20a%20company%20with%20few%20or,communication%20and%20collaboration%20between%20employees. >
