1. What are the basic building blocks of organizational structure?
- What types of structures exist, and what are the advantages and disadvantages of each?
- Differentiate between the four major types of organizational structure.
- What is control and why is it important?
- What are the different forms of control and when should they be used?
- What are the key legal forms of business, and what implications does the choice of a business form have for organizational structure?
- Explain the connection been organizational culture and strategy.
- Explain why an organization may need to change its organizational structure.
- What is the purpose of the division of labor and explain why it is beneficial?
- Distinguish between vertical and horizontal linkages and what functions each fulfills in an organizational structure.
- Understand what division of labor is and why it is beneficial.
- Distinguish between vertical and horizontal linkages and know what functions each fulfills in an organizational structure.
Week 6 Discussion: Basic Building Blocks of Organizational Structure
With the basic building blocks of an organizational structure, the organization can be able to structure the shape of their people’s behavior, functions, and divisions. The building block of an organizational structure means having a clear and effective organizational structure. The building block of the organizational structure defines which elements of the structure play the decisive role by taking consideration into how employees behave inside the organizational premises and how they coordinate their work (Pratap, 2021). The various building blocks of the organizational structure come together and form two different configurations of the overall structure. Moreover, the basic building block of an organizational structure comprises centralization, formalization, hierarchical levels, departmentalization, and mechanistic and organic structure.
There are major 8 types of organizational structure which include line organizational structure, functional authority organizational structure, line and staff organizational structure, divisional organizational structure, project organizational structure, matrix organizational structure, hybrid organizational structure, and informal organizational structure (Chand, 2022). The advantages and disadvantages of each organizational structure are given below
- Line organizational structure
Simplifies and clarifies the responsibility assigned to each member of the organization. This organizational structure puts a lot of load on the specialists or organizational managers.
- Functional authority organizational structure
Overcomes the problems associated with the line organizational structure. Conflicts may arise in the organization because of violation of the unity of command.
- Line and staff organizational structure
The staff category is required to advise the line managers in the specialized areas. This organizational structure may raise conflict between staff and line managers.
- Project organizational structure
People are assigned to the project from their specialized background and are under the control of their managers. The work is not repetitive (Chand, 2022).
- Matrix organizational structure
The organizational structure follows a decentralized decision-making model. This organizational structure required high administrative costs.
- Hybrid organizational
In this structure, there is functional expertise and efficiency. The organizational structure can cause conflicts between the departments and units.
- Informal organizational structure
The organizational structure keeps on changing. The structure is very complex and involves persons from various departments.
- Divisional organizational structure
Different organizational departments are formed for an easier workload. Difficult to implement good skills in the organization.
The four major types of organizational structure include functional structure, divisional structure, flatarchy structure, and matrix structure. The differences between the four are given below –
Functional organizational structure- It is the organizational setup where each portion of the organization is teamed according to its purposes. In this organizational structure, there may be various department which includes marketing, sales, production, etc.
Divisional organizational structure- This structure is mainly used in larger companies with broad geographic areas or with those organizations that have separate smaller organizations to cover various products and market areas.
Matrix organizational structure- It is the form that combines divisional and functional organizational structure which is mostly used in MNCs (Small Business Chrontake, 2019). The structure allows the organization to take benefit of both divisional and functional organizational structure in one structure.
Flatarchy organizational structure- In this kind of organizational structure, the organization has no level of management. Therefore, the organization using this structure will have only one manager among all executives and employees.
The process of planning and controlling are closely related to each other, however, the process of controlling is more persuasive than planning. With the controlling process, the managers of the organization can be able to monitor the planning, organizing, and leading activities (Toader, Todrican & Filip, 2020). Through this process, the organization can be able to determine which organizational task is accomplished to evaluate the performance of the employees and take correct measures to boost their performance as a whole. The process of controlling is very crucial for an organization because it assists in making the effective use of organizational resources, helps in maintaining the standards of the organization, motivates the employees, facilitates coordination amongst them, and maintains the goodwill of the organization.
With control, the organization can focus on events before or during the process. Therefore, the process of control does not end with the sales process, instead, organizations need to focus on the after-sales process too for an adequate controlling procedure. With proper control, the organization can ensure high-quality products and profits even before the sales of the products and services takes place. Meanwhile, there are three types of control process which includes feedforward control, concurrent control, and feedback control. Feedforward control is the attempt to identifyprevent and preventing the standard deviation before it occur in the organizational premises (Sihag & Rijsdijk, 2019). It focuses on the human, material, and financial resources of the organization. Meanwhile, concurrent control monitors the activity of the employee to make sure that the organization is consistent and maintains the standard of quality. On the other hand, feedback control is the process of reviewing the information so that the performance of the employees meets the standards of the organization.
Choosing the legal form of the business is one of the crucial decisions of the organization. Because it will directly impact the business structure, resources, and assets. On the other hand, to business owners, there are various types of legal form of business available which includes sole proprietorship, partnership, corporation, and LLC. The sole proprietorship is the kind of legal form of business where the firm is owned by a person. In terms of legal opinion, the organization and owner are the same under sole proprietorship. Hence, all the profits will be enjoyed by the owner, and all the losses also need to be bear by the owner. Meanwhile, in a partnership form of business, two or more partner shares the ownership of the organization. However, the partners are only the beneficiaries of the firm’s profits. On the other hand, the corporation forms of business have separate ownership and management and they sell their ownerships in the stock markets and are managed by professional executives (Open text, 2022). The LLC is a Limited Liability Company where the governing body of the country will continue to treat the LLC as a corporation and not a partnership form. Hence it resulted in double taxation for the investors and proved to be hazardous for the tax health. It can be said that each of the business forms either makes the organizational structure complex or simpler for the executives to operate their business.
Organizational culture and strategy are the primary levers of the top leaders’ and the organization is required to maintain an effective balance between its organizational culture and strategy to op[operate in this highly competitive market. On the one hand, the organizational strategy provides the formal logic to the organization’s goals and allows the people to grow around it. Whereas the culture expresses the goals of the organization with its values and beliefs and guides the organization through assumptions and group norms. With strategy, the organization can focus on its actions and decision-making procedure (Groysberg, Lee, Price & Cheng, 2018). The organizational strategy relies upon the plans to mobilize the employees of the organization and enforce the system of rewards. On the other hand, culture is more of an elusive lever because it is anchored in unspoken decisions, behaviors, and social patterns.
The major reason behind changing the organizational structure is to build or execute a new strategy to ensure that the organization is performing well and achieving its major objectives and goals. Hence as the business strategy is changing, it calls for a need to implement a new business structure toothat both organizational structure and strategy support each other to ensure the effective delivery of the goals (Ni Business info, 2022). Other than adopting a new strategy, there can be other reasons as well which include disruptive technologies, changing market demand, quality improvement, more productivity, profit, etc. Meanwhile, the change in the organizational structure can take place with planning or without planning, remedial or development, etc.
The division of labor is the process of production that segregates into various parts and every part of them is taken by various employees or laborers who hold specialization in the production of the part. Nowadays, the process of production becomes very technical and complicated and it demands various ranges of employees to perform various tasks as per their capacity and ability (Shaikh, 2022). As a result, the products that come at the last stage with the cooperation of different workers seem to be more interesting and worth the price. With the labor division, producers, laborers, nations, and customers enjoy the benefits which include an increase in the overall production process, reduction in the production cost, large-scale production, maximum utilization of the machinery, time-saving, inventions, and innovation encouragement.
The major difference between vertical and horizontal linkage is that vertical linkage is associated with the top-down management structure. On the other hand, the horizontal linkages os associated with the flat structure for greater and huge employment autonomy. The vertical linkage as said has a pyramidal structure where the CEO, president, or organizational owner will always stay at the top, the middle section of the structure will comprise the manager and supervisor, meanwhile, the bottommost section of the structure will have regular employees (Quain, 2019). Furthermore, the horizontal organizational structure means that there are few managers, and authority is granted to the rank-and-file employees. Hence the employees section in the organization will become more powerful and empowered as they can also contribute to making important decisions.
The division of labor is the process of production that segregates into various parts and every part of them is taken by various employees or laborers who hold specialization in the production of the part. Nowadays, the process of production becomes very technical and complicated and it demands various ranges of employees to perform various tasks as per their capacity and ability (Shaikh, 2022). As a result, the products that come at the last stage with the cooperation of different workers seem to be more interesting and worth the price. With the labor division, producers, laborers, nations, and customers enjoy the benefits which include an increase in the overall production process, reduction in the production cost, large-scale production, maximum utilization of the machinery, time-saving, inventions, and innovation encouragement.
The major difference between vertical and horizontal linkage is that vertical linkage is associated with the top-down management structure. On the other hand, the horizontal linkages os associated with the flat structure for greater and huge employment autonomy. The vertical linkage as said has a pyramidal structure where the CEO, president, or organizational owner will always stay at the top, the middle section of the structure will comprise the manager and supervisor, meanwhile, the bottommost section of the structure will have regular employees (Quain, 2019). Furthermore, the horizontal organizational structure means that there are few managers, and authority is granted to the rank-and-file employees. Hence the employees section in the organization will become more powerful and empowered as they can also contribute to taking important decisions.
References
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Toader, M. I., Todrican, M. G., & Filip, A. I. (2020). The Necessity and Importance of Insurance Controlling. Ovidius University Annals, Economic Sciences Series, 20(2), 1087-1092. Retrieved on 18th October 2022, from: https://www.researchgate.net/profile/Anca-Iacob/publication/355700342_A_Theoretical-conceptual_Approach_to_the_Particularities_and_Functions_of_the_Stock_Markets_in_the_Context_of_the_Pandemic_Period/links/617a5333a767a03c14c020e4/A-Theoretical-conceptual-Approach-to-the-Particularities-and-Functions-of-the-Stock-Markets-in-the-Context-of-the-Pandemic-Period.pdf#page=1103
Sihag, V., & Rijsdijk, S. A. (2019). Organizational controls and performance outcomes: A meta‐analytic assessment and extension. Journal of management studies, 56(1), 91-133. Retrieved on 18th October 2022, from: https://onlinelibrary.wiley.com/doi/abs/10.1111/joms.12342
Open text (2022). Legal Forms of Business. Retrieved on 19th October 2022, from: https://opentextbc.ca/strategicmanagement/chapter/legal-forms-of-business/
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Shaikh, S. (2022). Division of Labour: Meaning, Forms, and Advantages | Economics. Retrieved on 19th October 2022, from: https://www.economicsdiscussion.net/labour/division-of-labour/division-of-labour-meaning-forms-and-advantages-economics/13757
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