The Contingency And The Resource Dependence Paradigms Play A Vital Role Of Business

In a hyper competitive market, the ability of an organization to respond and adapt to changes i.e. threats from competing firms, they have to spread the decision making power throughout the organization. The disadvantage of this type of decentralized structure is that at some points there might be contradictory decisions being made which would cause conflict within the organization and the success of any unit would depend on the capability of the head, on the other hand, it would be advantageous in the sense that in addition to enabling organizations to respond faster to changes in the market, it also builds confidence of employees and therefore is a means of

Hillman (2009) indicated that “Resource Dependence Theory” refers to a business entity as an open mechanism that is reliant on contingencies in the external environment (p.2). That is, the theory views a business in relation to its resource dependences with other businesses in the environment (Salazar, 2012). Pfeffer and Salancik (as cited in Sheppard, 1995, p.28), stated that the essence of a company’s survival concerns its ability to get and maintain resources. The hypothesis helps explain why businesses should enter into exchanges with related parties and the manner in which the entity can maintain its survival. Pfeffer and Salancik (as cited in Sheppard, 1995, p. 28 - 29) conveyed that this survival occurs via demand management, namely the demands of interest associates upon which the entities rely on for resources

The organization of power within a corporation is a rigid dichotomy between centralization and decentralization. Substitute strategies can exist anywhere along the spectrum whether they are completely centralized, completely decentralized or somewhere in between. Though Cervus’ methods are substitutable, centralized policies have not proven to be nearly as successful in maintaining

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)

Why is it important for an organization to have alignment between its strategy and structure?

It is depicted that modern organizations tend to incorporate the aspects of the open systems with those of the natural and rational perspectives. Examples include the institutional, transaction cost, and the contingency and the contingency theories. Organizations adopt the open system that accommodates the other two theoretical perspectives for it to exist (Davis & Scott, 2006). These organizations tend to have structures that are based on the processes, the products, and the function.

Structure is the basis through which an organization seeks to create control the direction of an organization. This is completed through clear definitions of the allocation of work, differentiation, and the coordination of having those responsibilities working together towards the efforts of the organization, integration (Bolman & Deal, 1993, pp). Through these methods, the organization is able to devise a division of labor that collaborates to bring about the missions and goals of an organization. The structure that comes about from this can be varied in their rigidness and flexibility it allows, and to an extent this is a great contribution to its success.

It is evident that both positive and negative aspects of both approaches exist in the current climate, and from a basic understanding it can be drawn that varying aspects of each approach can nullify the negatives of the other in some manner. Consequently I believe the works of the Burns and Stalker (as cited in Grey, 2012) should be considered, in which it is suggested organizations can be seen as mechanistic and organic (roughly translated to bureaucratic and post-bureaucratic) depending on contingencies. This contingency approach would see organizations exhibiting differing behaviors based on the environmental factors that they work within and the assets that they have so that they may better suit the needs of workers, employers, consumers

The Contingency theory, developed in 1950s, argues that there is no 'one best way ' to structure an organization and we face different possibilities when determining how it should be structured and how it should be managed. Successful organizations adopt structures that are an appropriate response to a number of variables, or contingencies (Enoch, 2006).

The contingency theory of leadership works to predict which style is best in which circumstance, because what may work in one situation, may not work in another. Imagine that as a CEO, Helena always applied a democratic based leadership style, but one day the company was faced with a dilemma that she had to address immediately. Without the ability to consult her employees, Helena has to make a decision, and this will affect the entire company. This would be an example of the contingency theory of leadership, being able to change ones leadership style to suite the situation.

According to Miles et al. (1978, p. 547), an organization is both its purpose and the mechanism constructed to achieve the purpose. It means that the concept of organization is embracing both goals and all the elements that represent unique combination. Miles et al. (1978, p. 553) draws the conclusion that structure and the processes taking place inside the organization are closely aligned; it is hard to speak about one without mentioning the other. It is important to understand the conclusion drawn by Miles et al. (1978). It illustrates how the

Table 1. Coordination mechanisms for collective strategies Coordination mechanism Regulative legislation Contracting Mergers Joint ventures Interlocking directorates Trade associations Collusion and industry leadership Degree of formalization High High High High Moderate Moderate Low

Contingency Theories:- Stoelhorst and Peter (2013) said that this leadership theory mainly focus on particular variables which shows the relation with the environment. This will indicates about what kind of leadership will be the most effective? This theory simply states that no theory is universal perfect but the implement of theories depends on the variability, it also

After reading the case of the “Paradoxical Twins Acme and Omega Electronics”, I found Both Acme and Omega produce similar products and offer similar services. Acme president John Tyler is a very tough going individual and he is portrayed to be an autocratic individual because there is one way communication in Acme. The case provides an opportunity to evaluate both Acme and Omega’s organization structure of a business. Both companies used to have the same organizational structure but after they were sold to different investors, as a consequence of this, each company has its own procedures and company

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.