Organizational Design Key Concepts

It is also vey wise to go for a flat structure because it saves a lot of money. Statistics show that companies can save about three hundred million dollars annually each by getting rid of 1000 excess employees. Maintenance of a flat structure can prevent the problem of layoffs. One would wonder why some organizations have too many managers. Parkinson’s Law states that individuals may add the number of managers beneath them so as to boost their status and power. But the minimum-chain-of-command principle states that organizations need to operate under minimum hierarchies based on their environment and the goals of the company. On the other hand, span of control (or number of employees managed by a superior) can also restrict the over level of management. It has been shown that simple repetitive tasks allow a wider span of control while more complex ones tasks restrict the number of employees supervised. The second aspect that affects the level of span of control in any organization is the level of connectedness between different tasks. If this is high, then span of control will be narrow and vice versa. (Jones, 2004)

Additionally, another element of organizational design choice that can affect organizational performance is horizontal differentiation where this refers to the number of sub units found in each level. This ensures that control is still maintained even when the number of hierarchies is low. All the functions found in a particular enterprise need to decide for themselves what they can live with and what they cannot. For example, sales teams need less units as they already have their own targets. In summary organizational design choices affect motivation performance and control but this depends on the kind of organizational structures chosen – the latter will be analyzed below. The same may be said for Best Snacks.

Organizational Structures

Various companies have their own reasons for choosing a certain organizational structure. New companies opt for functional structures. The latter are characterized by groupings based on similar roles. The major advantage with this is that it maximizes differentiation but it may not incorporate interrelatedness so it may not work for complex situations.

Alternatively, a company may adopt the product structure, in this kind of arrangement a company is designed on the basis of the kind of product being produced. Usually, such a structure is characterized by high level of autonomy in the various divisions but control is asserted by a higher authority that monitors their activities. The main advantage with this is it ensures efficient production and use of resources. On the other hand, it may create coordination problems when there are several products to be produced. (Jones, 2004)

Companies may choose to adopt a market structure in which groupings are done based on client needs. The major advantage with this approach is that it ensures fast and efficient response to consumer needs as this is the main focus. On the other hand, it may be common to find that companies using such structures may not be sensitive to changes in resource and manufacturing applications. It should be noted that this is a form of divisional structure.

Alternatively, a company may possess a matrix structure. Such models are characterized by groups with similar functions or product types. The main advantage with this approach is that it allows companies to cope with quick advances in production methods and also changes in market trends. It also allows various functional teams to learn from one another and it allows the use of all company skills. It facilitates minimization of both cost and quality. On the other hand, such a model allows little control as role ambiguity is a common problem. This vacuum may allow bureaucracy to creep into the teams. (Jones, 2004)

On the other hand, when companies need to respond to the needs of different locations of consumers, then the best structure would be the geographic one. The main advantage with this approach is that it allows customization of products depending on what consumers require. Such an approach may be disadvantageous in cases where consumer tastes vary very rapidly. Alternatively, some geographic areas may not be as profitable as others thus firms may not get due returns on concentrating equally on all geographic segments.

Some companies may choose to go for network structures in instances where there are is high level of coordination between various stakeholders in an industry. This model is characterized by cooperation between competitors since companies only carry out value adding services and then outsource or contract the rest to other specialists. The major advantage with such a system is that it gives a company flexibility to change with its environment as it has not invested too much in time and resources needed to carry out a