Introduction
The tenth chapter of “Principles of Management” by Morden & Morden provided general information about the history of organizational structures, their development, and the implications of emerging organizational structures. Generally, an organizational structure refers to how authority, work, and information flow within an organization. Traditionally, organizational structures were hierarchical and represented a command structure that determined an individual’s status, rank, and salary. However, due to inherent weaknesses of the hierarchical structure, such as slow decision-making, and centralization of power on a single individual, which hindered innovation and initiative, change was required (Achterbergh & Vriens, 2019). This change came in the form of multiple organizational structures that organizations could tailor to meet their needs. Consequently, the creation of effective organizational designs topic covered in week ten was informative because it shed light on the various traditional and new organizational structures. Specifically, chapter ten covered topics such as the traditional forms of organizational design, the relationship between strategy and culture, implications of organizational culture, and boundaryless organizational designs.
Traditional Forms of Organizational Designs
In the traditional forms of organizational design, the text emphasized that an organizational structure is required to effectively and prudently apply an organization’s resources for the achievement of the mission. In addition, it asserts that organizational structures make a clear distinction between the executive, managerial, and administrative organization of a company clearly outlining the hierarchical flow of authority (McKenna, 2020). The author also affirms that organizational structures impact human interaction and the flow of information within an organization. While most of the information regarding traditional organizations as stated in the text is true, it is helpful to point out that organizational structures have evolved over the past years. Specifically, as technology evolves and advances organizational structures have had to make radical changes leading to the emergence of flat and agile organizational structures among many others.
Relationship Between Strategy and Culture
The author argues that changes in organizational structure are necessary as a company grows from one milestone to another. Consequently, several organizational structures fit different organizations depending on their size. For example, a firm with a simple structure is described as engaged in efforts to increase the volume and value of sales over time while engaging in vertical integration to secure key supply lines and sources (Morden, 2021). With constant growth, the simple structure can then be upgraded to a functional one. The functional structure’s main goal is to increase efficiency and enhance operations and products. At this stage, a firm is big enough to group its operations into functional groups such as departments, functions, and geographical areas. Since the goal of the functional structure is to improve operational efficiency and products, this stage can also be associated with the creation of competitive advantage (Kaupa, 2022). This competitive advantage distinguishes a firm’s product from competitors through prices, quality, or both.
From the functional structure, a firm’s strategy changes correspond with changes in the organizational structure to a divisional structure. Under the divisional structure, a firm does its best to mitigate against the risks of overreliance on particular products for profitability. Consequently, a diversification strategy is adopted leading to the creation of divisions within the organization (Morden, 2021). Additionally, the exponential growth of the firm exhausts its reach in the domestic market and thus necessitates expansion to the international markets. Thus, from a divisional structure perspective, a firm has several options to choose from which include the worldwide matrix, worldwide division, and international division among others. However, deciding on which organizational structure to apply is a product of three factors that include the degree of product diversity, international expansion, and the type of strategy adopted.
Implications of Organizational Culture
The third subtopic covered in chapter ten was the implications of organizational culture in the context of an international operation. In this subheading, the text argued that managers must maintain an international outlook and ensure that their strategies align with the organization’s structure. The text also notes that an expansion in the international market is fraught with challenges and often leads to fundamental changes in an organization’s structure as it seeks to respond to changes and problems encountered during an expansion (Morden, 2021). In choosing a suitable strategy for a firm engaged in international operations, three factors are considered. The first factor is the types of strategy driving international expansion, the extent of dependence on international sales, and product diversity. As international operations become important gross profit generators, managers must make changes to the organizational structure of an organization to reflect this importance. These changes can come in the form of new organizational structures such as geographical area structure, and international division among others.
One of the items that the subtopic does not cover is the interaction of local culture with a corporation’s organizational structure and culture. While some individuals may prefer less supervision, others require constant supervision and a figure of authority over them to competently and efficiently accomplish assigned tasks. This phenomenon changes depending on the national culture. It is especially apparent in the collective and individualistic cultures of the East and the West respectively (Isac & Remes, 2018). Consequently, any organizational structure changes must also align with the realities of the national culture. Thus, while it is important to align a corporation’s organizational culture with the mission and strategic goals, it is also important to consider the local and national cultures.
Boundaryless Organizational Designs
The fourth subheading covered in chapter ten was on boundaryless organizational designs. Chapter ten maintains that building an organizational structure that responds to all the external and internal environment needs is fundamentally difficult. Thus, it proposes the combination of the various organizational types as a way to maintain competitive advantage and engage in multiple alliances. Chapter ten subtopic on boundaryless organizational structures also touches on the consequences of external pressure on a corporation’s organizational structure (Morden, 2021). Accordingly, it maintains that a firm is likely to focus on internal consolidation rather than growth through international trade and diversity when external pressures mount. To ensure that an organization can respond effectively and efficiently in the face of internal and external pressures, a boundaryless organizational structure is recommended.
The recommendation of boundaryless organizational structures to solve inherent organizational structure leaves a firm exposed to other risks despite its feasibility. The first is the lack of control and coordination among groups. Hindered communication and the lack of clear goals among the various groups run the risk of undermining the achievement of an organization’s mission (Morden, 2021). Despite this disadvantage, boundaryless organizational structures are well suited to propel organizations to achieve competitive advantage and overcome problems with the internationalization of their business. They inspire innovation, support individual initiative, ensure proper and prompt communication and decision-making, and motivate employees to remain in an organization. Finally, another topic covered towards the end of chapter ten includes ambidextrous organizations which describe organizations simultaneously concerned about incremental organizations and breakthroughs in innovations.
Conclusion
The organizational structure represents the information and authority flow within companies and other organizations. Their evolution from traditionally hierarchical structures has been characterized by efforts to decentralize decision-making. As a result of the delegation of authority, organizational structures such as flat and boundaryless have emerged. However, their adoption depends on a company’s strategic direction and business model. Chapter ten concepts were a sneak peek into the unlimited possibilities that could accrue to organizations that match their culture and decision-making on proper organizational structure.
References
Achterbergh, J., & Vriens, D. J. (2019). Organizational development: Designing episodic interventions (1st ed.). Routledge, Taylor & Francis Group.
Isac, F. L., & Remes, E. F. (2018). The relationship between culture and strategy – A managerial perspective approach. Studia Universitatis „Vasile Goldis” Arad – Economics Series, 28(3), 76–85. Web.
Kaupa, S. (2022). Organizational learning culture and sustainable competitive advantage: Implications for organizational development specialists. Development and Learning in Organizations: An International Journal. Web.
McKenna, E. (2020). Organizational structure and design. Business Psychology and Organizational Behavior, 609–665. Web.
Morden, T. (2021). Principles of strategic management (3rd ed.). Routledge.