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The Internal environment (What is organisational structure?…
The Internal environment
Situational factors
Organisational size , when organisations grow and become increasingly complex they tend to adopt structures that encourage effective coordination and control of a diverse range of operations and people
Environmental uncertainty , Tends to threaten the well-being of an organisation, very difficult to develop an organisational structure that supports firms strategy. Firms which choose to operate in uncertain industries adopt structure that endorse changes within the work setting
Balanced scorecard , aims to provide managers with clear measures that may track and also drive performance. It allows managers to look at the business from four crucial indications of current and future performance
Internal business perspective (what must we excel at), It is important for organisations to decide the processes and competencies they must excel at and provide measurements for each
Customer perspective (How do customers see us), Managers must identify the customer and market segments in which the company competes and clarify the appropriate measure of performance in these targeted segments
Innovation and learning perspective (can we continue to improve and create value), continuous improvements to existing products and/or processes as well as the introduction of entirely new products are an ongoing activity essential to company performance
Financial perspective (How do we look to shareholders), Define the long term objectives of the organsation
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Organizing for change, creativity and innovation ,
Systems, we need to look into the specific organizational systems that support and promote creativity at work
Goal setting and reward systems , organisations that manage creative people should (1), Define goals and objectives in broad terms, focusing more on the generation of ideas rather than their implementation, employees are given the opportunity to approach the problem unconventionally . (2) Focus on how work is carried out rather than on its outcomes. Concentrate on stratigies that are adopted by individuals while providing support so problems can be solved
Resources , Proponents of the resource-based view (RBV) argue that the firms develops competitive advantage through its resource base . Four characteristics that are important for competitive advantage (Grant 1991).......
Transparency , reflects the degree of difficulty others experience in determine the source of competitive advantage. Less transparency means more difficult to imitate
Transferability , relates to the ability to acquire a source of advantage once it has been identified. E.g. costs of relocating equipment and hiring highly specialized staff may put the company in a disadvantaged position against competitors
Durability, rate at which resources depreciate or become obsolete over time
Replicability, whether or not a competitor can reproduce the source of advantage
Organic structures , are better suited to rapidly changing external environments where innovation is perceived as a important factor in maintaining a form competitive advantage. Endorse more informal and participative interaction and communication
Mechanistic structures tend to be evident in environments that are stable. Are characterized by formal relationships and communication channels that operate on a hierarchical basis, based on rigid rules and procedures with formal chain of command
Structural forms , may adopt several structural forms to accommodate these situational variables
Traditional structures
Functional structure , groups similar/related tasks into fictional areas based on domain expertise (Product, Accounting, Marketing, HR departments)
Divisional structures , is made up of several units such as product groups or geographic regions . Divides the firm into relevant divisions that are managed by a divisional manager who has authority over their unit.
Entrepreneurial structure , is simple, built around the founder/manager, who acts as an authority figure making most of the decision and runs the day-to day operations
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