Organizational Structures: History and Development

Traditional Forms of Organizational Designs

In the traditional forms of organizational design, the text emphasized that an organizational structure is required to effectively and prudently apply an organization’s resources for the achievement of the mission. In addition, it asserts that organizational structures make a clear distinction between the executive, managerial, and administrative organization of a company clearly outlining the hierarchical flow of authority (McKenna, 2020). The author also affirms that organizational structures impact human interaction and the flow of information within an organization. While most of the information regarding traditional organizations as stated in the text is true, it is helpful to point out that organizational structures have evolved over the past years. Specifically, as technology evolves and advances organizational structures have had to make radical changes leading to the emergence of flat and agile organizational structures among many others.

Relationship Between Strategy and Culture

The author argues that changes in organizational structure are necessary as a company grows from one milestone to another. Consequently, several organizational structures fit different organizations depending on their size. For example, a firm with a simple structure is described as engaged in efforts to increase the volume and value of sales over time while engaging in vertical integration to secure key supply lines and sources (Morden, 2021). With constant growth, the simple structure can then be upgraded to a functional one. The functional structure’s main goal is to increase efficiency and enhance operations and products. At this stage, a firm is big enough to group its operations into functional groups such as departments, functions, and geographical areas. Since the goal of the functional structure is to improve operational efficiency and products, this stage can also be associated with the creation of competitive advantage (Kaupa, 2022). This competitive advantage distinguishes a firm’s product from competitors through prices, quality, or both.

From the functional structure, a firm’s strategy changes correspond with changes in the organizational structure to a divisional structure. Under the divisional structure, a firm does its best to mitigate against the risks of overreliance on particular products for profitability. Consequently, a diversification strategy is adopted leading to the creation of divisions within the organization (Morden, 2021). Additionally, the exponential growth of the firm exhausts its reach in the domestic market and thus necessitates expansion to the international markets. Thus, from a divisional structure perspective, a firm has several options to choose from which include the worldwide matrix, worldwide division, and international division among others. However, deciding on which organizational structure to apply is a product of three factors that include the degree of product diversity, international expansion, and the type of strategy adopted.

Implications of Organizational Culture

The third subtopic covered in chapter ten was the implications of organizational culture in the context of an international operation. In this subheading, the text argued that managers must maintain an international outlook and ensure that their strategies align with the organization’s structure. The text also notes that an expansion in the international market is fraught with challenges and often leads to fundamental changes in an organization’s structure as it seeks to respond to changes and problems encountered during an expansion (Morden, 2021). In choosing a suitable strategy for a firm engaged in international operations, three factors are considered. The first factor is the types of strategy driving international expansion, the extent of dependence on international sales, and product diversity. As international operations become important gross profit generators, managers must make changes to the organizational structure of an organization to reflect this importance. These changes can come in the form of new organizational structures such as geographical area structure, and international division among others.

One of the items that the subtopic does not cover is the interaction of local culture with a corporation’s organizational structure and culture. While some individuals may prefer less supervision, others require constant supervision and a figure of authority over them to competently and efficiently accomplish assigned tasks. This phenomenon changes depending on the national culture. It is especially apparent in the collective and individualistic cultures of the East and the West respectively (Isac & Remes, 2018). Consequently, any organizational structure changes must also align with the