Organization Strategies and Structures - Assignment Example

Organization Strategies and Structures Question Corporate strategy can be distinct as art and science of originating, executing and assessing cross-functional decision which facilitate an organization to attain its objectives. The term ‘corporate strategy’ at times is referred as strategic planning. The purpose of initiating this notion in organizations is to develop and generate noble and different opportunities for future (David, 2007). Strategic management is applied in an organization in three stages. The initial stage deals with the formulation of strategies in an organization where the organization develops its vision and mission along with identifying its industrial opportunities and threats. The organization also puts emphasis on meeting long-term objectives in the initial stage. In the following stage, the organization deals with the implementation process where it requires establishing its annual goals, develop policies, encourage employees, and assign resources so that formulated strategies can be executed in an effective and efficient manner. Strategy evaluation is the final stage of the process. At this stage, the managers observe the overall business environment of the organization to manage the strategic process effectively and competitively (David, 2007). Notably, there are five types of corporate strategies that can be used by organizations to achieve long-term objectives which are integration strategies, intensive strategies, diversification strategies, defensive strategies, and Michael Porter’s Five Generic Strategies. Horizontal integration, forward integration and backward integration are at times collectively known as integration strategies. Through this strategic alliance, an organization endeavors to gain control over distributors, suppliers, and its competitors. This stratagem is commonly used by the organization which looks forward to sell a type of product in numerous markets. Two of the major advantages of strategic alliance can be regarded as its assistance to organizations in responding to the economic imperatives and in improving the international competitiveness. On the contrary, a disadvantage of the strategy is often considered as its failure to accomplish the objective and the goal of the organization when it is deficient in capital and human talent to successfully manage and diversify the organization (Scribd, 2012). Intensive strategies deal with the factors such as market penetration, market development, product development and diversification which enable an organization for effective growth and potential augmentation. When the current markets are not saturated with a particular product or service then these strategies is often used by the businesses or corporations with a purpose to increase their rate of present customer extensively. The advantage with regard to this strategy is that it provides an effectual process for the organization to compete with their competitors. The disadvantage is the fact that these strategies bear out to be competent when organization has the strong management team or else it may turn out to be severely unsuccessful (Scribd, 2012). Diversification strategy refers to that strategy through which organizations introduce their products and/or services in a newly targeted market. Organizations use this strategic alliance to create and develop economies of scope and strive to operate its existing capital and potentiality in other market(s). The advantage with regard to this strategy is that it helps the organizations to expand their economic risk over different markets. On the contrary, a disadvantage possessed by this strategic alliance is that it generates complexity and intricacy of coordination between dissimilar but allied business wings (Scribd, 2012). The defensive strategies are such concept which includes three factors such as retrenchment, divestiture, and liquidation. The retrenchment mainly guides the organizations when they face obstructions to meet their objectives and goals over time. The strategy of divestiture can prove effective when a scrupulous division is accountable for an organization’s deprived performance. When an organization witnesses unsatisfactory results even after implementing retrenchment and divestiture strategies, it moves towards liquidation to minimize its losses. It can be done through selling organization’s assets. The major advantage of this strategy is that it is less risky than other strategies and requires lesser resources. The disadvantage of this strategy is that it does not allow development. It is worth mentioning that organizations using defensive strategy may be able to drape on to their present positions and current competitive advantages, although it does not allow them go beyond that stage (Scribd, 2012). According to Porter, generic strategies assist organizations to increase competitive advantages from different bases such as price leadership, segregation and focus. Price leadership provides an effective guidance in producing standardized products at a lower per-unit cost for consumers who principally act as price sensitive. This strategy recommends the organizations to endow with the high-quality product, although in low cost. Differentiation or segregation is regarded as the strategic alliance which suggests developing the product and/or services of an organization in a unique method compared to that of its competitors. It is used by the organization in generating its individuality in the marketplace. Similarly, focus refers to the strategic alliance intended to create products and/or services that accomplish the needs of the diminutive groups of consumers. Focus strategies can be implemented in organizations through two ways, i.e. by serving its product at the lowest price in the market for niche customers and by rendering the products to diminutive range of customers at the finest price value available in the market. The advantage of this strategy is that it provides an effective way for competing in unstable and high-velocity markets (Scribd, 2012). The disadvantage regarding this strategy is that it compels an organization to concentrate only on a particular market segment, thus narrowing down its scope for future prospects (Universidad De Huelva, 2012). Question 2 Organizations should systematize their work according to their business environment. Notably, the activities which are included in organizational structure are supervision, task allocation and coordination. A clear structure makes it easier to observe the responsibilities separately on the basis of every separate department in the organizational structure. There are a few ways to structure a business such as functional, divisional, and matrix structure (Food and Agriculture Organization of the United Nations, 2012). These structures are described as follows. In comparison to simple organizational structures, the functional structures are useful for relatively big companies. Based on the functional structure, the employees are differentiated into groups to perform a specialized set of task according to their department. For instance, the financial department would be staffed only with financial executives having sufficient knowledge to deal with financial affairs of the company. The advantage of this structure is that it can make it possible for organization to produce homogeneous goods and services at huge volume and low cost. However, the disadvantage in this form of a structure is that it leads to miscommunication between the functional departments within an organization through which the exertion of organization is likely to become dawdling and rigid (Food and Agriculture Organization of the United Nations, 2012). In a divisional structure, the teams are structured as per their divisions in terms of product and services or geographical location. According to divisional structure each division has its own set of functional units such as marketing, operational, and research among others and, is completely autonomous. The advantage with regard to divisional structure is that it creates a positive competition between the divisions. On the contrary, it leads to the lack of internal control in terms of communication and building up coordination in excess of each separate division which can be regarded as a disadvantage of this system (Food and Agriculture Organization of the United Nations, 2012). Matrix structure is the combination of both functional and divisional structure. This form of structure is created with a purpose to take advantage of the potencies as well as to make up for the flaws of functional and divisional structure. A matrix organization often takes the advantage of human resources for a team to complete a particular process. The advantage of this form of structure is that it creates an improved and effective flow of communication between the departments of the organization and the disadvantage is that it will increase the cost of production if more managers are required to manage a particular project (Food and Agriculture Organization of the United Nations, 2012). Most of the aspects are bound to change in the course of the business in terms of legal implications or due to other external environment which forces the organizations to switch off to another structure and provide a better opportunity for further growth and development. Apart from this, organizations also tend to switch their structures in case they are incurring high-cost in terms of production. With the purpose to tackle such problems, the organizations can intend to bring about certain changes which often influence the configuration of the organizational structure to avoid these dilemmas (Cyber Cemetery, 2009). In the similar context, organizations can either be following a tall structure or can also follow a flat structure. The tall structure comprises of a traditional hierarchy with a high probability to lead towards miscommunication between the lower level and the top level of employees. The employees are not able to discuss their problems directly to the top level manager with regards to the existing rigid hierarchy system. Hence, to avoid this problem organizations generally prefer applying the flat structure compared to the tall structure. The advantage of flat structure is that it facilitates the companies to improve their communication between the authority and the employees. The flat structure also endows with more autonomy to the employees assisting them to become efficient, accountable and responsible towards their work (McMillan, 2001). In addition, it should also be noted that there is a significant role of empowerment in terms of shifting the structure of an organization from tall to flat. In tall structure of organization, the employees are restricted with their authority to take the decision regarding their work. However, in the flat structure of organization, it gives more autonomy, liberty and responsibility to an employee to take decisions as per the requirement. Hence, it can be stated that a flat structure increases the motivation of the employees which in turn augments the overall productivity leading the organization to achieve its desired goals and objectives (Dubrin, 2008). Question 3 Structure of an organization mainly consists of technology, position, culture, people, along with the procedures of the organization. An efficient structure facilitates the formulation that how the sections, divisions and processes work collectively. With regard to attaining the mission and goals of an organization, the structure should be completely incorporated with the strategy. In case, an organization is applying a noble strategy to reach its goal, it must change its structure to hold up the latest strategy unless it drags the organization back to its earlier phase. Thus, with a purpose to attain the long-term objective determined by an organization, the organizational structure tends to support the strategy and seize the path of success and development (Chandler, 2003). Question 4 There are different types of strategic alliances existing in business environment and assisting organizations to reach their goals and objectives. These strategic alliances consist of a few advantages as well as disadvantages which can be identified with due consideration to the changes witnessed in the internal and the external business environment. It is in this context that organizations intend to change their strategies related to their structures as well as operational processes according to the situational demand or the challenges faced by it. Thus, with reference to the above discussion, it can be stated that not a particular structure can be rigidly beneficial for organization. For instance, if a tall structure provides the advantage of better control on organizational process, it also possesses the limitation of inefficient flow of information. On the contrary, the flat structure provides better coordination between departments but minimizes control. Therefore, a company should focus on its business environment to develop its structure. References Cyber Cemetery, (2009). Transforming organizational structure. Retrieved from http://govinfo.library.unt.edu/npr/library/reports/tosexe.html Chandler, A. D. (2003). Strategy and structure: Chapters in the history of the American industrial enterprise. United States: Beard Books. Dubrin, A. J. (2008). Essentials of management. Stamford: Cengage Learning. ­­ David, F. R. (2007). Strategic management: Concepts and cases. USA: Pearson Prentice Hall. Food and Agriculture Organization of the United Nations, (2012). Structure of an organization. Retrieved from http://www.fao.org/docrep/w7503e/w7503e04.htm McMillan, E. (2001). Considering organization structure and design from a complexity paradigm perspective. Retrieved from http://www.ifm.eng.cam.ac.uk/mcn/pdf_files/part5_5.pdf Scribd, (2012). The nature of strategic management. Retrieved from http://www.scribd.com/doc/28967525/Strategic-Management-Notes-Fred-R-David-12th-Edition Scribd, (2012). Supplementing the chosen competitive strategy. Retrieved from http://www.scribd.com/doc/16591594/Strategic-Management-Chap006 Universidad De Huelva, (2012). Theme 8: Generic strategies. Retrieved from http://www.uhu.es/45122/temas/Theme8_presentation.pdf Read More