Theory and Design of Organization: Company Analysis - Coursework Example

Theory and Design of Organization: Company Analysis Introduction Modern organizations arecurrently being forced to rethink their competitive strategies due to the intense competition being launched by both profit-making and not-for-profit organization. Any keen observer of the current corporate environment must have realized that organizations are no longer basing their competitiveness just on their core product or service they provide to the consumers. Every company is currently concerned with efficient delivery of value to the already overcrowded market as well as securing their long term survival in such markets. As such, the structure and design of these organizations is fast becoming the foundational block upon which corporate competitive strategies are being built (Gemba & Kodama, 1999). This new trend is continuously being reinforced by the volatile environment in which business is being done. Every organization is trying to adopt more flexible and proactive structure in order to survive the ever-changing taste and demands of consumers. Besides having the challenge of dealing with dynamic customers, current organizations are faced with task of controlling or adapting to other external factors such competitors, technological advancement, social challenges, and government regulations among others. The increased number of competitors has eliminated every notion of assured sales even to the once monopolistic companies. Almost every industry is currently witnessing regular emergence of companies offering similar products or services to the same market. This reality is forcing businesses to continuously and efficiently improve the quality of their products. It is only through a well thought plan that an organization will be able to make its brand standout among other brands in the market without jeopardizing its long-term survival. Society is also increasing its interest on the ways companies are doing their businesses. The concept of Social Corporate Responsibility has become an indispensible part of business management. Whereas company owners are concern with the amount of wealth the company is bringing their way, the society and the surrounding community are putting more pressure on the management uphold high ethical standards in their operations. More demanding is the expectation of companies to participate in fostering social welfare of the community. Companies that understood the importance of identifying themselves with the surrounding community are exploiting such venture for the marketing and promotion of their products and services. Neumann and Gujer (2008) noted that different types of organizational structures offer different levels of flexibility and responsiveness to the organizations. It is therefore justifiable for different organizations to adopt varied structures and designs according to their target market and environment in which they operate. In order to provide a deep insight into the ongoing discussion, this paper seeks to explore the strategies being employed by some two world’s leading technological companies; International Business Machines Corporation (IBM) and Oracle Corporation. Company Analysis International Business Machines Corporation (IBM) International Business Machines Corporation is one the today’s computer manufacturing giants whose origin can be traced from the merger of three ancient technology companies; Tabulating Machine Company, Computing Scale Company, and the then American International Time recording Company. The company’s long-standing transformational leadership style is greatly attributed to the foundational leadership of Thomas J. Watson Sr. who joined Computing-tabulating-Recording Company, the IBM’s parent company, in 1914. Since then, the company has continued to sustain its operations and market leadership through forward-thinking management strategies rather than short-term profitability. Even though the company boosts of wide range of technological products, it has consistently prioritized learning and innovation in its operations and market dominance (IBM, 2014). The company thrives on the five knowledge doctrines of its founding manager, Watson Sr, listed as Read, Listen, Discuss, Observe, and Think. As such, the company focuses on building workforce teams of empowered individual employees who are ready to search for information both as individuals and as a team. The doctrines of listening and discussing lays emphasizes on the employees willingness to exchange knowledge freely and learn from each other in order to build a stronger organization. Level of environmental uncertainty Even though IBM Corporation experienced a high-moderate level of environmental uncertainty due to the much focus on hardware production and after-sale services in the better part of the 20th century, it is currently experiencing a purely high level of environmental uncertainty. By shifting it service philosophy from mere hardware production and after-sales activities into offering e-business applications, IBM Corporation has establish itself in a highly volatile environment where subsequent developments can hardly be predicted. However, the fact that IBM is still holding on producing hardware solutions, its environment seems not to be as complicated as that of Oracle whose entire operations are founded on software applications. In order to continue thriving in this field, IBM needs to adopt an organic design in which it will be able to identify and develop the skills and organizational capabilities necessary to adequately satisfy specific needs of the clients. From the lessons learnt by the company in the initial stages of venturing into service business, the company needs a structure that would enable it commit its operations to the long-run changes in the environment. More focus on learning instead of basing their operations on improving efficiency would help the corporation to align its resources to customer demands more closely. It is through this avenue that efficiency will be a default result. Oracle Corporation Oracle Corporation experiences high level of environmental uncertainty due to the volatile and complex environment in which it serves. Being purely based on business information applications, the company subjects itself both to the influences arising from the change in commercial operations as well as technological changes. The top management and all other decision makers in this company needs to continuously access information concerning multiple elements of their environment. However, the unfortunate fact is that decision makers hardly access all the information that is relevant to their areas of operations. Neumann and Gujer (2008) also noted that almost all executives will never exhaustively generate possible courses of actions for their businesses and accurately predict the future consequences of such decisions. The case of Oracle Corporation is further exaggerated by the two major features of its products and thus business environment. To the same extent that a change in business management and commerce would impact the business and operational decisions of this noble company, every change in technological trends would also affect its operations. The company’s mission of transforming businesses through the provision of appropriate databases and applications puts it at a highly volatile position of bridging the gap between information technology and commerce. As such, it has to adjust its business strategies not only by subsequent changes in technology sector but also by every change in commerce, socio-economics, and management. Type of Organization Design Due to the higher level of environmental uncertainty that surrounds this company, organic organizational structural would be highly appropriate. The giant IT Corporation needs to match its internal structure with the continuously changing IT industry. The extraordinary pace with which technology is changing can only be countered by organic organizational structure since it would encourage the company’s employees to embrace the spirit of teamwork. As such, each tasks in the Oracle’s main product lines such as Databases, Fusion Middleware, and Enterprise Applications will be redefined and adjusted continuously through the integrated teamwork of the employees. A volatile industry such as today’s information-based enterprises obliges players to embrace structures that facilitate free sharing of information and knowledge across the organization. Organic structure there stands out to be more appropriate for Oracle Corporation if it is to secure the long-term competitiveness. As noted by Daft (2007), environment with high level of uncertainty requires organizations to be more inclined towards promoting teamwork in a decentralized and participative structure. For the sake of maintaining long-term relevancy in the market, Oracle should lean more on inculcating learning culture rather than sticking on improving efficiency in its operations. Even though efficiency is highly recommended for any business entity, its idolization at the expense of in a dynamic industry such as the one Oracle is operating in is likely render the organization irrelevant in the long run. Too much focus on improving efficiency would compromise its flexibility and ability to sense fundamental changes that might have occurred in the industry. Learning, on the other hand, is a focused and valuable component of an organization’s strategy. It keeps the organization a breast with new developments both in the micro and macro environment. It not only helps the organization to function competitively but it also gives the organization a leap to stay ahead of its competitors. The company will therefore be able to continuously meet and surpass the ever-growing expectations of its customers. Appropriate Strategy According to Porter’s Cost-leadership and differentiation framework, Oracle Corporation should adopt the differentiation strategy in order to maintain and even tighten its grip in the business and technology market. As pointed in the previous section of this paper, the company needs to adopt learning orientation through which it will be able to acquire the much needed flexibility. Instead of concentrating on minimizing the cost of production in the company, the company should invest more resources in producing unique and profitable products and services. The only wise strategy to take by players in the increasingly competitive industry such as today’s IT industry, is for companies to position their products in way that would make them outstanding. It is true that many companies are currently emerging to offer databases and enterprise applications just like Oracle Corporation but only a few companies will be able to meet the exact needs of the market. Even though differentiation would increase the initial costs of production and that of promoting the product, its consistent application would ensure that the company satisfies their current clients and also attract more loyal clients. IBM on the other hand needs to adopt Miles and Snow’s analyzer strategy. This hardware and e-business oriented company needs to perfectly balance between its learning and efficiency approaches even though the hardware market, which forms its strongest brand, is relatively more predictable than the software and enterprise-applications market. As observed by Miles and Snow, companies with analyzers’ approach tend to create more stable and flexible internal environment. This approach would allow IBM to securely control more established operations and at the same time give more room for innovation. Whereas tight control will help the company keep the current consumers of its traditional products, room for innovation and free thinking will push the company into penetrating the new markets. Recommended Type of Organization Structure In the case of Oracle Corporation, Global Matrix structure would be highly recommended. Daft (2007) describes matrix structure as an integrated system in which an organization can be designed to simultaneously achieve both the vertical and horizontal coordination of its functions. Since Oracle Corporation is a multinational company with 400 thousand corporate customers to serve worldwide, it is important for it to be designed with some global orientations. Daft (2007) also points out that efficient communication across all the branches of multinational companies should be greatly enhanced in order to overcome the management challenges that might come with the geographical distances separating the company’s production units. Global matrix structure will therefore help to the complexity in coordinating different tasks within the organization. On the other hand, geographic divisional structure will be quite appropriate for IBM Corporation. Since the company is operating several regions around the globe, it is important for its employees to be organized in such as a way that all the company’s functions and products are represented in every region. Adopting this structure would ensure that the company remains equally competitive in every region. Additionally, the divisional aspect will help the regional branches to respond promptly to any environmental change. This is very important given that different regions are affected uniquely and no single response can be applied uniformly across the globe. The political, socio-cultural, and economic conditions in these regions are obviously distinct. The current type of organization structure Due to the close identity of the two organizations, Oracle Corporation and IBM Corporation, they tend to have almost similar organizational structures. The Oracle’s 2011 annual report describes the company as have been built on functional matrix structure. Here the executive managers are assigned according to the distinct functions or line products of the company. For instance, the company’s leadership is topped by Chief Executive Officer and two presidents; Safra A. Catz who is the Chief Financial Officer and Mr. Mark Hurd (Oracle, 2014). The rest of the leadership is purely based on functions and regions they are located. In a closely related manner, IBM organizes its workforce in a divisional structure that reflects its five key business areas. The areas include; Global Services, Global Financing, Technology, software, and systems. The company adopted this structure in order to establish customer and product focused workforce. This kind of structure is also reflected in the company’s regional branches. Whereas Oracle Corporation is currently being run a slightly different structure as the recommended global matrix structure, IBM is running on similar structure as the geographic divisional structure (Oracle, 2011). The major different in Oracle’s current structure and the recommended one is the excessive emphasis on improving efficiency in its operations as opposed to the improving learning and innovation among the employees. In fact, it is sad to note that Oracle’s emphasis on improving efficiency has led to reduction in the number of its workforce and business premises. This shows lack of creativity in using the extra human resource to create more competitive products and services. Conclusion As observed in the two technology giants, the design and structure of organization are becoming increasing indispensible in positioning organization to compete favorably in the modern business environment. The volatility and complexity in every industry makes it important for organizations to evaluate their approaches to management and strategic positioning. References Daft, R. L. (2007). Understanding the theory and design of organizations. Australia: Thomson/South-Western. Gemba, K., & Kodama, F. (1999). Environment industry creation by interindustry competition and technology fusion.. Environmental Systems Research, 27, 773-778. IBM - United States. (n.d.). IBM - United States. Retrieved April 24, 2014, from http://www.ibm.com/ IBM-United States. (2013). 2013 IBM Annual Report. Retrieved April 24, 2014, from http://www.ibm.com/ Neumann, M. B., & Gujer, W. (2008). Underestimation of Uncertainty in Statistical Regression of Environmental Models: Influence of Model Structure Uncertainty. Environmental Science & Technology, 42(11), 4037-4043. Oracle (2011). Oracle Financial Services Software Limited. Retrieved April 24, 2014, from http://www.oracle.com/us/industries/financial-services/annual-report-2012-2013-1976460.pdf Oracle.com (2014). About Oracle: Less Complexity. More Innovation. Retrieved April 24, 2014, from http://www.oracle.com/us/corporate/index Read More