Factors that Affect Organizational Structure - Example

Organization success depends of several factors and organizational structure is one of them. Organization based on basic principles look towards determining the organizational structure which will be most beneficial for them and best on those looks towards selecting the organizational structure. There is no fixed formula which would determine which organizational structure is better or the best as each organizational structure has its strengths and weakness. This makes the role of management important as they have to determine the forms of organizational structure which will yield maximum efficiency and based on it need to select the organizational structure they consider the most appropriate. This will help the organization to ensure that they are able to use the resources in the best possible manner and will help to formulate strategies according to the organizational structure. This will ensure that the resources are used in the most positive manner and will have relevance in bringing the change that the business is looking for. The paper thereby looks towards describing the different form of organizational structure and provides the different functional parameters based on which the organization has to choose the structure so that maximum efficiency can be garnered and long term success of the organization can be guaranteed. Before moving on it is important to understand what organizational structure actually means. Organizational structure is a framework which is developed so that the entire organization works around it and the underpinnings ensures that all the resources work in a coordinated manner and work together. It is thereby an operating manual which provides description pertaining to the manner in which the organization works and determines the authority and responsibility relationship which is present in the organization. This thereby determines the body based on which leaders are chosen, the other members are chosen and the process through which business decisions and strategies are taken (Gibson, Ivancevich and Donnelly, 2009). This has resulted in the development of organizational structure which is varied and fulfills different requirements based on the organizational requirements. Some of the type of organizational structure which is quite prevalent is functional form of organizational structure, product based organizational structure, and geography based organizational structure, matrix structure and so on. Each of the organizational structure looks towards having a different form of authority and responsibility relationship which requires that the fundamentals act in a manner which will ensure better use of the resources to achieve the business goals (Lazonick, 2010). This will also require that the organization structure selected is according to the nature of the business and other factors which will determine the manner in which the organization is able to use the resources and gain maximum efficiency. Organization in the current changing business environment thereby has to ascertain the form of organizational structure which they want to follow because it lays the foundation of the business. Organizational structure determines the form of communication whether they are vertical, horizontal, sideward, upwards or downwards. This also helps to fix authority and responsibility relationship like in case of functional form of organizational structure where the floor manager have to respond to the sales manager and every floor manager works and contact the sales manager thus determining their responsibility and authority relationship based on which they take decisions. This will thereby help to dictate the different layer of management level that exist in the organization and will determine the manner in which reporting structure will be determined. This will help to fix responsibility and clearly demonstrate the role that the person is involved in (Whitley, 2003). This clearly brings to the fact that no organizational structure is best and will fit all organization but instead the different factors have to be considered while determining the organizational structure which will be most beneficial. Organizations that want to be successful have to examine the following described factors and based on it look towards selecting the organizational structure so that the resources are not wasted. An organization which produces and sells in different areas will require offices in different areas so that they are able to cater to the requirements of the people there. This will require that the business looks towards decision based on the areas where they are working and have to look towards selecting and recruiting people based on the local conditions. This will thereby require that the decision making authority is decentralized to a certain extent so the determination of the strategy will be done on a central level. This form of business will require a geographical form or organizational structure so that local control of activities becomes possible. This form of organizational structure will also give rise to better reporting, consistency in the process in which decisions are taken, reliability, and a locally focused sales personnel and employees who will be able to work on behalf of the company. This form of organizational structure will help the business to streamline their activities and will prove most beneficial for them. Thus, the nature of the business and the geographical location has a role in determining the organizational structure which will be most beneficial for the business (Acvedo, 2012). In a similar manner the size of the business also has a role in determining the type of organizational structure that the business will adopt. For example an organization which is huge in size and is involved in large number of transactions will look towards having a complex form of organizational structure. This form of organizational structure will increase the layer of management and will use more formal chains so that better decisions making authority can be developed. In a similar manner an organization which is small will look towards informal form of communication which has few layers so that decisions can be taken quickly and better managerial control can be exercised. Organization thereby based on the size of the business has to look towards determining the organizational structure which will fit their requirements and based on it has to develop the required resources through which the organization is able to ensure maximum efficiency in the use of resources (Acvedo, 2012). The environmental factors can also have a role in determining the type of organizational structure that an organization should choose. Organizations which are stable and don’t have to fact tough competition don’t have to look towards innovation and can continue their business operations by having a formal structure. The formal structure will clearly dictate the roles and responsibilities of the different members and by following the same organizational structure efficiency can be gained in the manner the business looks towards using the resources. Similarly for organizations that have to deal with competition will require innovation and development of new products and services. Such organizations will look towards choosing a functional form of organizational structure where the different product lines determine the manner in which the relationship will be established. This will require that the organization uses a product line functional form of organizational structure so that they are able to use the resources in the most positive manner. This will help to increase the level of flexibility and will ensure that the organization based on it will be able to find out a mechanism through which the organization will be able to gain maximum efficiency (Acvedo, 2012). In a similar manner the business strategy also determines the organizational structure that is most suited for the business. Organizations which deal in multiple products and services and have multiple sales channels, product line and method can look towards using product focused business structure. This form of business structure will help to decrease the response time and will multiply accountability due to which the concerned person will look towards carrying out the responsibility in a proper way (Hicks and Gullet, 2001). In a similar manner organization which deals in a single product or service will look towards using a form of structure which best fit them. In a similar manner organization focusing on project based activities will look towards using a matrix structure which is more complicated and will look towards having the services of both a functional manager and a project manager. This will ensure that the managers work in coordination with each other and look towards using the resources in a manner which ensures that the business is able to use the resources in the most efficient manner and will multiply the effectiveness in the work that has been carried out (Acvedo, 2012). Organizations will thereby have to determine the form of organizational structure that seems most appropriate and that should be done on a basis which will ensure that the resources are most effectively used. This has resulted in different research to be carried out in this direction so that the most appropriate form of organizational structure can be determined. This will act as a step through which the success of the business can be strengthened and will help to develop the required infrastructure through which resources are used in the most effective manner (Acvedo, 2012). Organizations look towards using a wide range of organizational structure depending on the complexity, uncertainty and interdependence of the resources so that maximum efficiency can be gained. The fact that organizational structure has a large impact on the ability of the business to manage project (Oberlender, 2000) it is imperative that organizations based on different factors look towards determining the manner in which the business will be able to gain maximum efficiency from using the structure. This has been supported by a finding which states that organizations have to understand the importance of changes and the manner in which dynamic changes are being witnessed due to change in environmental factors (Kerzner, 2004). This will require that the organization determines the form of organizational structure which will help to gain maximum efficiency in the use of resources. Organization while looking to determine the organizational structure have to deal with the conflicts that organizational structure has to deal with and while looking to do so efficiency has to be maintained by keeping the cost as low as possible (Akpan & Chizea, 2002). Any form of organizational structure which an organization chooses should look towards ensuring that the business based on it is able to develop formal procedures, centralized authority, direct supervision and specialized labor so that maximum efficiency in the use of resources can be determined. The organizational structure choosen should ensure that coordination and problem which occur at the higher level of authority are dealt in a manner which will help to gain efficiency. Despite the manner in which different organizational structure benefits the business it was witnessed that during 1800s and early 1900s more formal form of organizational structure was used. This form of organizational structure looked towards using rules and authority, centralized authority and division of labor so that the resources could be used which will work according to the business requirements. The growth and manner in which the degree of competition has changed has made organization focus on functional form or organizational structure or product form or organizational structure or matrix form of organizational structure depending on the business requirements (Hicks and Gullet, 2001). The functional form of organizational structure looks towards departmentalizing the work based on different functions. This also helps to fix authority and responsibility relationship like in case of functional form of organizational structure where the floor manager have to respond to the sales manager and every floor manager works and contact the sales manager thus determining their responsibility and authority relationship based on which they take decisions. This will thereby help to dictate the different layer of management level that exist in the organization and will determine the manner in which reporting structure will be determined (Zammuto and Krakower, 2001). This will help to fix responsibility and clearly demonstrate the role that the person is involved in In a similar manner a product based organizational structure looks towards departmentalizing the work based on different products and services that the organization looks to provide. This form of business structure will help to decrease the response time and will multiply accountability due to which the concerned person will look towards carrying out the responsibility in a proper way (Lazonick, 2010). Matrix form or organizational structure which is widely used today is thereby as it is mix of functional form or organizational structure and product form organizational structure. In a similar manner organization focusing on project based activities will look towards using a matrix structure which is more complicated and will look towards having the services of both a functional manager and a project manager. This will ensure that the managers work in coordination with each other and look towards using the resources in a manner which ensures that the business is able to use the resources in the most efficient manner and will multiply the effectiveness in the work that has been carried out. This is one of the most widely prevalent forms of organizational structure as they are more complex and helps to determine the different responsibility that the employees have to cater to. This form of organizational structure will increase the layer of management and will use more formal chains so that better decisions making authority can be developed. This will thereby ensure that they are able to develop the different directives through which the organizational structure can be determined. The manner in which complexities have multiplied for organizations it has become imperative that organizations determine the best form of organizational structure which will help them to gain efficiency. While looking towards determining the form of organizational structure it is important that communication process is determined which will be either vertical, horizontal, sideward, upwards or downwards? This also helps to fix authority and responsibility relationship like in case of functional form of organizational structure where the floor manager have to respond to the sales manager and every floor manager works and contact the sales manager thus determining their responsibility and authority relationship based on which they take decisions. This will thereby help to dictate the different layer of management level that exist in the organization and will determine the manner in which reporting structure will be determined. This will help to improve the importance of organizational structure and will provide maximum benefit to the business. Thus, there is no fixed form or organizational structure which is best suited for organizations. Instead organizations have to determine the form of organizational structure which will help them. This makes the role of management important as they have to determine the forms of organizational structure which will yield maximum efficiency and based on it need to select the organizational structure they consider the most appropriate. This will help the organization to ensure that they are able to use the resources in the best possible manner and will help to formulate strategies according to the organizational structure. Organization based on their requirements and different factors will help to determine the form of organizational structure which will benefit them and should look towards using their resources based on it. Even developing relationship based on it which looks into accountability, authority and others will be looked at. This will provide maximum benefit and ensure that the goals are achieved in the best possible manner. References Akpan, E.O.P. and Chizea, E.F. (2002). Project Management: Theory and Practice FUTO Press Ltd. Owerri Nigeria Acvedo, L. (2012). Factors that Affect Organizational Structure. Retrieved on February 4, 2013 from http://smallbusiness.chron.com/factors-affect-organizational-structure-3829.html Gibson J.L., Ivancevich J.M. and Donnelly J.R. (2009) Organizations, Behaviours, Structure and Processes. Third Edition Irwin-Dorsey Limited, Business Publications Inc, Dallas Texas Hicks, H.G. and Gullet, C.R. (2001). Management: Fourth Edition McGraw Hill International Book Company Kerzner, H. (2004). Project Management: A System Approach to Planning, Scheduling and Controlling 2nd Edition CBS Publishers and Distributors Lazonick, W. (2010). The Chandlerian Corporation and the Theory of Innovative Enterprise. Industrial and Corporate Change 1, 317‑349 Oberlender, G.D. (2000). Project Management for Engineering and Construction. Second Edition. McGraw Hill Boston Whitley, R. (2003). 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