Introduction
This paper will examine which organizational structure is appropriate to accommodate executive board members of a successful 50-partner firm to diversify and sustain a competitive advantage. This firm already provides accounting services to corporate clients but this firm is also interested in offering management consulting services and expanding these services to smaller clients. Considering a simple, a functional, or a multidivisional organizational structure the firm may be able to diversify, sustain a competitive advantage, enhance information processing, coordination, and control by implementing one of the aforementioned structures.
Decisions about how to select an appropriate organizational structure is a way for this firm to gain or keep a competitive advantage. The importance of organizational structure for these executives is to improve the firm performance by enhancing the firm’s information processing, coordination, and control through service expansion. The relationship between the organizational structure, competitive strategy, and the firm’s goals will be analyzed using each structural approach.
Simple Structure A simple organizational structure is ideal for small businesses. This is because a small business structure may not have several departments or more than one level of management. A simple structure is when the manager makes all major decisions, while their staff executes those decisions (Hitt, Ireland, & Hoskisson, 2015). This simple
The report is based on the e-learning activity of week four and week six, which focuses and outlines the idea of diversities in organizational management and the role of structure and strategy. Blog four mentions about the interrelationship between the managerial structure and the strategy and how they each act to attain the goal and objectives. Blog six is based on linear programming.
The relationship between an organization’s strategy and structure are extremely important because it “directly impacts a firm’s performance” (Rothaermel, 2013, p. 309). Also, as an organization grows, it should reevaluate the current strategy and structure to ensure that it remains the optimal choice for the organization (Rothaermel, 2013). The four types of organizational structures, listed in order of least to most complex according to Rothaermel (2013), are: (1) simple, (2)
An organization must align its strategy and structure to allow itself to achieve performance improvements over time. The four different structures, simple, functional, multidivisional, and matrix, are all suited to allow companies with different strategies to succeed but the company must decide which of these is correct for itself. A small start-up company will overburden itself with excessive cost if it seeks to implement a functional structure because it clearly will not have the talent on hand to create whole departments of HR employees or accountants. On the other hand, a company that grows to become a large multi-national
Organizational structure refers to the way that an organization arranges people and jobs so that its work can be performed and its goals can be met. According to USA their structure states in order to provide clear alignment and focus for the planning process of USAA’s organizational structure, a planning team was assembled with strategic-thought leaders to author a strategic market outlook.
small business can use one of three primary organization structure options: functional, divisional or matrix. Essentially, the organizational structure creates a business hierarchy to increase the efficiency and effectiveness of the business operations. Different small
The structure of the company also has an influence on the organization. Organizing the company by department allows the employees to build strong teams. It also allows the teams to support each other’s daily functions. The structure of the organization also effects number of personnel hired into the company. The structure also effects departmental and organizational hierarchy. The departmental organization within the company is also important as it helps to determine departmental collaboration as well as the role of each person in the department (www.smallbusiness.chron.com 2013).
Miles and Snow have produced a typology of business level strategies. Their typology involves four strategic types: defenders, prospectors, analyzers and reactors. Using Miles and Snow’s strategy typology that consist of; defender, analyzer, reactor, and prospector, I will categorize Dollar Tree in its strategy typology. In the first strategy defenders try to carve a niche in the market where stability can be found. As in the prospector strategy, companies are constantly producing innovations. I understand through Miles and Snow typology of business level strategies that defenders, analyzers, and prospectors are forms of organizations. Therefore, if an alignment is reached between a chosen strategy, and organizational structure mentioned above Dollar Tree has the potential to be a
Simple structure configurations are starter companies. They hire top level managers to ensure the company serves its mission in the most effective way. Employees who work for these types of companies only answer to one manager which is typically the owner. These businesses mostly have a small crew that work there. These types of organizations work their way up the divisional structure. An example of this type of business would be a pet grooming. The owner is usually always present and there are no managers.
An added bonus - this business model is inherently sustainable. This type of structure needs a powerful leader whom the staff look up to as power is centralized and he gets to be more involved with the running of the company.
Aside from educating a manager through formal training in managing an organization through change, there are many ongoing activities that will increase a manager's awareness and aid them in supporting a more complex organizational structure as it develops. A company's organizational structure is a road map of its communication patterns. A well-designed structure can also make it easier to identify inefficiencies and new problems as the organization grows. Reviewing the organizational structure on a regular basis will help ensure that the organization set up for optimal growth well into
In a study by Bhardwaj, B. R., & Momaya, K. (2006), it was stated that in order to achieve competitiveness in the global markets, one of the key elements that an organization needs to focus on is corporate entrepreneurship. This would thus require an organizational structure that allows flexibility.
The results of data analysis indicated the priority of structure on other mentioned obstacles. Inappropriate structure may decrease flexibility and may also weaken organizational ability to be in harmony with the environment especially whenever the organization needs alteration in the strategic priorities in order to improve its competitive place. Allocation of the highest priority to the structure may show inefficiency of the efforts of contractual companies managers in order to prepare structural sequences which may help execution of strategies in addition to facilitate activities of the companies in the field of contractual works. The inefficiency, may show its effects on decrease in flexibility against the changes, in the shape of increase in organizational costs, and inability to attract market opportunities. Among the set of obstacles under study, resources allocation received highest priority after structure. The negative results of this factor on strategy implementation in contractual company may refer to its role in decreasing creativity and innovation in organizations. Third priority is belonging to operational planning. Inability to interpret organization strategy to the operational plans has been always one of the most important issues, under attention of the researches and delivered the most damages to the goals sympathy in different organizational stages. Weakness in operational planning, similar with inappropriate structure, may decrease ability of coping with
The organizational structure plays very significant roles within the organization so as to foster beneficial and successful outcomes. The organizational structural performance, therefore, includes; first, the power and
Organizational structure allows guidance to employees by laying out the official reporting relationships that reign the workflow of the company. The formal outline of a organization 's structure makes it easier to add new positions in the company, as well as, providing a flexible and ready means for growth. Organizational structure also helps operational efficiency by making clarity to employees at all levels of a company. A thoroughly outlined structure provides a road-map for internal promotions, allowing organizations to create solid employee advancement tracks for entry-level workers.
A modern organization has departmentalization at the top of the company that is either functional or divisional. Freedom for lower-level managers that communicates with employees that incorporates new ideas is considered a flexible approach. Alternative mechanisms are implemented to ensure managers are working towards the company’s overall objective. Shared values and vision act as guides to behavior, and reduce chances of lower-level managers to perform in ways that are counterproductive. A factor in designing the structure of a business includes strategy, external environment, internal technology, and the organization size. Customers, competitors, suppliers, and government regulatory agencies are an organization’s task environment. When strategies affect the organization’s structure, the organization adapts to its environment.