Organizational Culture and Structure in Flight Centre - Essay Example

? Business Analysis Report Table of Contents Introduction 3 2. Organizational culture – the case of Flight Centre 3 2 Definition of organizational culture 3 2.2 Limitations of organizational culture theory 4 2.3 Culture in Flight Centre 5 3. Organizational structure in Flight Centre 6 3.1 Definitions and examples of common organizational structures 6 3.2 Advantages and disadvantages of organizational structures 7 3.3 Organizational structure in Flight Centre 7 4. Environmental impact 8 5. Recommendations 9 6. Conclusion 9 Appendices 10 Reference List 14 1. Introduction The successful expansion of firms in the global market is related to certain factors; organizational culture and structure are key elements of a firm’s strategic planning, especially in case that the firm wishes to develop its activities worldwide. Current paper focuses on the culture and structure of a well-known Australian company, the Flight Centre. The firm is based on a unique principle: the establishment of small operational centers is preferred instead of large departments; autonomous and flexible small units are used for developing the firm’s operations worldwide. At this point, the firm is strongly differentiated from its rivals – which are likely to use large operational units which can handle a high volume of work but which are characterized by lack of effective communication among their members. Despite its success until today, as explained in the case study, the firm needs to update its culture and structure in order to respond to the challenges of its external environment. The key elements of the firm’s culture and structure are critically evaluated in this paper using relevant literature; the choices available to the firm in terms of culture and structure are also presented, taking into consideration the conditions in the global market but also the firm’s existing resources and characteristics – meaning its current culture and structure. 2. Organizational culture – the case of Flight Centre 2.1 Definition of organizational culture Different approaches have been used in the literature for defining organizational culture. In accordance with the most common view, organizational culture has to be considered as a framework indicating the methods that should be used for managing the various business activities; from this point of view, culture can promote ‘integration and cohesion across the organization’ (Nickson 2007). From a similar point of view, Deal and Kennedy (1988) note that organizational culture indicate ‘the way we do things around here’ (Deal and Kennedy 1988, p.4, in Nickson 2007). Robbins (2009) refers to a quite common definition of culture, which is based on the view that culture, as an element of modern organizations, is ‘a system of shared meaning held by members, distinguishing the organization from other organizations’ (Robbins 2009). Moreover, Dessler (1976) uses three different approaches for defining culture: ‘the structural, subjective and synthetic approaches’ (Dessler 1976, in Dwivedi 1995). The above approaches could be analyzed as follows: the structural approach perceives culture as ‘a set of characteristics which differentiate an organization from another one’ (Dessler 1976, in Dwivedi 1995). At the next level, the subjective approach refers to culture as ‘the view of employees on their organization’ (Dessler 1976, in Dwivedi 1995). Finally, the synthetic approach is based on the combination of the two previous approaches for defining organizational culture (Dwivedi 1995). On the other hand, Schein (1992) describes culture as the ‘perception of a group of individuals/ employees on their organization’ (Schein 1992, in Miller 2008). In the context of the above definition, organizational culture can be successfully defined only if the communication across the organization is satisfactory. The close dependency of culture on communication is also highlighted in the study of Inceoglu (2002); in the above study, reference is made to the sharing of beliefs and values among employees as a criterion for the development of organizational culture (Inceoglu 2002). 2.2 Limitations of organizational culture theory The potential elements of organizational culture can be identified in the graphs 2 to 5 of the Appendix section; through these graphs it is made clear that organizational culture can be differentiated across organizations, being aligned to the organizational mission, as included in the organization’s strategic plan, and the conditions in the internal and external environment. In this context, organizational culture theory cannot respond to all the needs of modern organization, at least not through the same mechanisms of support or not through the same strategic priorities. In other words, the organizational culture theory has certain limitations, which refer to one or more of the aspects of the specific concept. In accordance with Keyton (2005) one of the most important limitations of the above theory is its realization, being based on the perception that organizational culture is developed through the conversation of employees on their organization’s mission and priorities. From a similar point of view, Schein (2010) notes that organizational culture is closely related to leadership, meaning that the form of culture developed within each organization is depended on the style (the perceptions and the initiatives) of its leader; in organizations where the leadership style is ineffective, the organizational culture would also face significant barriers in order to be fully established. A similar approach for criticizing the limitations of organizational culture is used by Brooks (2009); the above researcher notes that the culture of organizations that do not have a clear identity is difficult to be defined with accuracy (Brooks 2009); in these organizations also, the confidence of employees to organizational practices is low, a fact that could limit the effectiveness of organizational culture (Cameron and Quinn 2011). 2.3 Culture in Flight Centre In Flight Centre, culture focuses on the promotion of communication among employees within each one of the firm’s units; it is explained that in this way, the manager of each unit can have a more effective control on the performance of employees; in this way, the risk of major failure is minimized. Also, the firm has a clear identity, a fact that helps its culture to remain effective. In any case, culture in Flight Centre meets the requirements of an effective organizational culture, as the term has been described in the literature presented above. Therefore, in terms of culture, no major changes would require for Flight Centre; focusing on team working would remain a key characteristic of the firm’s culture, since this characteristic has been proved to be a competitive advantage of the firm within its industry. 3. Organizational structure in Flight Centre 3.1 Definitions and examples of common organizational structures In terms of business activities, structure is a term used in order to reflect the ‘grouping together of individuals into departments and of departments into the total organization’ (Daft 2009). From a similar point of view, the term organizational structure shows the hierarchy of organizational activities, as part of the organizational life (Senior and Swailes 2010). Moreover, Kirst-Ashman (2010) notes that organizational structure shows the distribution of tasks among the employees of a specific organization; it also shows the terms for coordination among employees for the completion of the above tasks. In accordance with Griffin and Moorhead (2009) the organizational structure can be characterized as ‘the system of task, reporting and authority relationships’ (Griffin and Moorhead 2009) on which the completion of the organizational tasks is based. A series of examples of organizational structures is presented in the Appendix – Graphs 1, 6, 7 and 8. 3.2 Advantages and disadvantages of organizational structures Organizational structure has a key role in the development of organizational activities; in fact, an effective organizational structure can help the organization to standardize its performance and meet successfully all the market challenges. Another advantage of the organizational structure is that it can be useful for promoting specific organizational plans – having a particular hierarchy of priorities, can help employees to deal more effectively with their organization’s plans. Also, through effective organizational structure, time is saved for completing tasks and identifying failures, under the terms that the managers of the units would be informed within a limited period of time on any potential organizational failure or need and act immediately (Pfister 2009). On the other hand, the organizational structure could reduce a firm’s flexibility – meaning especially the ability of a firm to promote changes within its units. This problem does not necessarily exists in firms where bureaucracy is highly developed but also in organizations the units of which operate in the form of a network each part of which is highly independent in terms of strategies and resources, as in the case of Flight Centre. 3.3 Organizational structure in Flight Centre The structure of modern organization can be highly differentiated under the influence of the conditions in the internal and external environment, the organizational culture and the resources available for the realization of the organizational plans. An indicative example of organizational structure is presented in Graph 1 (Appendix). Other examples of organizational structure are presented in Graph 6, Appendix – divisional form of organizational structure, in Graph 7 – matrix form of organizational structure and in Graph 8 – network form of organizational structure. The current structure of Flight Centre belongs to the category represented in Graph 8, i.e. the firm is organized as a network aiming to secure integrity and communication within its units. The firm’s current structure would be changed – a central IT unit should be developed so that all information on the firm’s services and facilities to be available online; the network structure of the organization could continue to exist but under the following term: all sub-units should be depended on the firm’s central unit in which an IT department – having control on all the firm’s activities – should operate. 4. Environmental impact Technology used in various industries worldwide is continuously updated. The specific phenomenon is also well developed in the tourism industry. The continuous increase of the number of people booking their flights through the Internet is an indication of the particular trend. At this point, a significant weakness of Flight Centre can be identified: the firm’s website has been proved to be ineffective; many complaints of customers have been reported when trying to use the firm’s website for booking their flight. As a result, they are likely to prefer other firms operating in this sector, especially Qantas, Singapore Airlines and Hilton – as noted in the study of Brown on the particular subject (Brown, September 2009). Alternatively, the customers can use online services like Expedia and Webjet, through which a booking of flight can be effectively arranged within a quite short period of time (Brown, September 2009). The expansion of Internet in the hotel and airline industry has been resulted because of the limitation of time available for booking a flight or a hotel; the increased costs in traveling within cities or using the phone have also a key role in the changing of customer preferences regarding the booking of flights and hotels. Moreover, technology is continuously developed; advanced features and services have been made available to mobile users, so that online booking through the mobile has become a common phenomenon in countries worldwide – especially in developed countries where such technology is more likely to be available. 5. Recommendations In accordance with the issues discussed above, Flight Centre should proceed to changes – referring especially to its structure, so that the exchange of information among its departments to be more effectively supported, a fact that will also help to the increase of effectiveness of its website. The establishment of a ‘working structure’ (Doty and Turner 2009) in Flight Centre would be based on the following initiatives: a) a central department of control of the firm’s activities worldwide should be developed; in this way, local needs could be identified and addressed by suggesting appropriate solutions; the specific initiative would be based on the compliance theory on organizational structure, which focuses on the increase of control over organizational activities; a normative power would be used over the firm’s employees, meaning that incentives would be used instead of threat in order for employees to increase their performance – where necessary (Ornstein and Lunenburg 2007), b) in the context of the central department, as described above, an IT department would be incorporated which would be responsible for gathering, storing and providing information necessary for the development of organizational activities worldwide; the above strategy would help towards the improvement of the firm’s website – increasing its competitiveness towards the rivals, as explained above. The implications of the above initiative for the firm’s culture would be the following ones: emphasis should be given not on independency of each unit but on cooperation among the firm’s units for providing appropriate information to the customers. 6. Conclusion The current performance of Flight Centre can be characterized as quite satisfactory; however, in the long term the survival of the firm in its industry could be possibly threatened. This risk is related to the fact that its rivals have highly developed their online services being able to attract more customers – who highly appreciate the online booking features of firms operating in the tourism and hotel industry. Of course, the firm’s existing culture and structure had a crucial role in the expansion of the organization in the global market. However, under the influence of its external environment, which is characterized by the extensive use of Internet in booking flights and hotels, the firm needs to update its structure, in the context suggested above. Such initiative should also affect the organizational culture, under the terms that up today the firm’s activities were mainly based on the team working and coordination among employees in each unit. If appropriately organized, the specific initiative would have many chances to succeed, leading to the improvement of the firm’s position in the international market. Appendices Graph 1 – Organizational structure (Source: http://www.russellconsultinginc.com/images/levels.gif) Graph 2 – Organizational culture (Source: http://www.mikander.fi/img/pages/culture.png) Graph 3 – Organizational culture (Source: http://www.bibliomining.com/nicholson/images/ltrendka_img_0.jpg) Graph 4 – Organizational culture (Source: Johnson, Scholes & Whittington (2008), in lecture notes) Graph 5 – Organizational culture – elements (Source: http://www.nhorizons.ca/images/orgcult.jpg) Graph 6 – Organizational structure, an example (Source: http://sameh.files.wordpress.com/2006/05/Organization%20Structure2.jpg) Graph 7 – Structure of a matrix organization, example (Source: http://www.the-business-plan.com/image-files/matrix-business-organization-structure.jpg) Graph 8 – Organizational structure based on a network (Source: http://www.fao.org/docrep/w7503e/w7503e0c.gif) Reference List Brooks, I. (2009). Organisational behaviour: individuals, groups and organization. Essex: Pearson Education, p. 263 Brown, G. (2009). A new perspective on Flight Centre: Part 1. Issue 281. 29 September Brown, G. (2009). A new perspective on Flight Centre: Part 2. 13 October. Issue 282 Cameron, K., & Quinn, R. (2011). Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework. Hoboken: John Wiley and Sons. Daft, R. (2009). Organization Theory and Design. Belmont: Cengage Learning, p.90 Doty, S., & Turner, W. (2009). Energy management handbook. Lilburn, GA: The Fairmont Press, p.12 Dwivedi, R. (1995). Organizational Culture and Performance. New Delhi: M.D. Publications Pvt, p.9 Flight Centre (2011). Corporate website, available from < http://www.flightcentre.com.au/> Griffin, R., & Moorhead, G. (2009). Organizational Behavior: Managing People and Organizations. Belmont: Cengage Learning, p.407 Inceoglu, I. (2002). Organizational culture, team climate, workplace bullying and team effectiveness: an empirical study on their relationship. Munchen: Herbert Utz Verlag, p.16 Keyton, J. (2005). Communication & organizational culture: a key to understanding work experiences. London: SAGE, p.28 Kirst-Ashman, K. (2010). Human Behavior in the Macro Social Environment: An Empowerment Approach to Understanding Communities, Organizations, and Groups. Belmont: Cengage Learning. Miller, K. (2008). Organizational communication: approaches and processes. Belmont: Cengage Learning, p.88 Nickson, D. (2007). Human resource management for the hospitality and tourism industries. Oxford: Butterworth-Heinemann, p.52 Ornstein, A., & Lunenburg, F. (2007). Educational administration: concepts and practices. Belmont: Cengage Learning, p.54 Pfister, J. (2009). Managing Organizational Culture for Effective Internal Control: From Practice to Theory. New York: Springer. Robbins, S. (2009). Organisational behaviour: global and Southern African perspectives. Cape Town: Pearson South Africa, p.424 Schein, E. (2010). 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