Hyper-Competition and Its Relationship to Organizational Structures

It is the degree to which decision making is concentrated at a single point in the organization. In a centralized organization, top management makes the key decisions with little or no input from lower-level personnel. Centralization builds consistency in the procedures and techniques that representatives use in performing errands. Along these lines, it advances work environment amicability among laborers and diminishes the expense of creation. Centralization is typically useful when an association is in emergency and/or faces the danger of disappointment. The advantage of having centralisation is it helps to create consistency and making quick decision and make uniform actions as decisions are made by only top level people. In small companies where the level of competition is low, centralized system is used. Various levels of administrations are needed in centralized system. This system is basically used in companies with tall arrangements (Kenneth J. and John B. 2003).

The structure of an organization is very important because it determines the different roles and how all the departments perform. The organizational structure consists of a group of people that works together to achieve the goals that are implemented.

One of the themes in Thomas McCraw’s book American Business Since 1920: How It Worked is mastering centralized control through decentralized management. As the business world rapidly expanded competition for market share between the larger companies increased. More task management was necessary in order to delegate within the businesses as they expanded. The market was also changing and as an answer to that some companies implemented a revised version of traditional management; decentralized management (McCraw, 2009).

Types of organizational structure: defines how activities such as task allocation, coordination and supervision are directed toward the achievement of organizational aims.

“The next era of growth evolves from the successful application of a decentralized organization structure. It exhibits these primary characteristics: 1. Much greater responsibility is given to the managers of plants and market territories. 2. Management often concentrates on making new acquisitions which can be lined up beside other decentralized units. 3. Communication from the top is infrequent, usually by correspondence, telephone, or brief visits to field locations” (Greiner, 1998).

Caterpillar (CAT) has become “the industry leader in earth-moving machinery” for several reasons. However, a sole reason for the company’s success is the patent for their “farm treads” (Kotler, Keller 395). If CAT failed to trademark these treads, they would have never received the advantages resulting from their contract with the Army in the mid-20th century. This relationship helped CAT build their brand equity, all while gaining market share. Besides the trademark, the company’s restructuring in the 1990’s helped CAT to manage its sales, profits, and losses. According to Chron, decentralizing improves a company’s decision making process because managers have greater authority and control (Joseph). Furthermore, the managers will begin to evaluate each decision thoroughly since the outcome reflects directly back on them. Moreover, decentralization is a primary reason why CAT was able to bounce back from the 1980’s recession. Decentralization constructs separate business units which encourages each organization to assume responsibility for their actions (Joseph). The individualized organizations allow managers to adapt their strategies to the varying market environments. In other words, managers have the authority to react appropriately to different environmental situations, as well as, allows them to respond in a timely fashion. Furthermore, CAT investing in research and development has contributed greatly to the company’s success. The development of “new technologies,

An organizational structure is a framework set for certain activities at the work place like coordination of activities, supervision of employees and task allocation to be organised (Mills, 2005).

Decentralisation: A shift to decentralised system resulted in increased responsibility for managers, provided them with a clear career progress path thereby motivating them to perform better and helped management better identify star performers.

Organizational structure is a formal relationship between management and the employees. It is a way to motivate the employees and get them to working. It is also away to get employees to follow the company goals, and work together as a team. To make an organization work they need to have an organized structure to be able to run the company. The mission

There are two types of responsive organization that is the mechanistic organization and the organic structure. The characteristic of mechanistic organization is it is centralization. The decision making is concentrated on top management. The next characteristic is standardization, the task must be standardize and formalized so that the task can carry out smoothly. While, the characteristic of organic structure is decentralization, when the environment is unpredictable and dynamic, the complicated decision making will involves lower level managers. Therefore, the decision making power assign to lower rank so that they

Because of the growth of economic markets, developments in the legal system and transformations in the nature of authority, organizational analysis arose. Weber views organizational efficiency as product of the mix of two structures namely: first, a scheme of clear specific and categorical rules and policies implemented by a specific detail organizational structure and documentations and second, a unique division of labor. Authority departs from once known as succession to a now bureaucratic one that drives those from lower levels of the structure to obey managers. Organizational analysis finds ways in which organizational goals affect organizational structures. Another model of organizational analysis that arose was that of Simon and Marsh that states that organizational decision makers base decision makers on uncertainty of situations confronting the organizations (Hannah,

In a centralized organizational structure one individual is responsible for making all the decisions and maintains control of the company by giving direction. While Decentralized organizational structures often rely on several persons with the authority to make final decision for the company’s well being. Some benefits associated with a centralized organization are as follows: Reduction in cost in the work environment, having a focused vision on one common goal and Reduction in conflict. A Few drawbacks of a centralized organization include, No secrecy because all ideas and decisions are conveyed to all, No special attention and Delay in work. Advantages associated with Decentralization are; Huge relief is provided off the top managers, Greater use is made of employees skills and Decision making is left up to educational and well informed people.

One of the major advantages of decentralized way of taking decisions is witnessed during a sudden change in the local business environment such as the onset of recession or currency devaluation, etc. Businesses are able to respond and adapt quickly to these changes when authority is decentralized.

Organizational structure is a system that consists of explicit and implicit institutional rules and policies designed to outline how various work roles and responsibilities are delegated, controlled and coordinated. (Investopedia, 2017) , It determines the guidelines of activities such as task distribution, coordination, and supervision to reach and achieve organizational objectives. The organization can be structured in various ways, depending on its objectives.

A decentralized structure is one that empowers middle managers by taking control away from top managers and allowing the middle managers to make decisions for themselves. Managers at high levels give lower-level employees the responsibility to make