Organizational structure and competitive advantage

why is organizational structure important

A half of all enterprises in the survey sample think that they have a significant advantage to competitors from their industry. Strategic thrusts became more sophisticated as the company combined global category and local market intelligence.

Some of these business units are also grouped in a virtual structure.

organizational structures

In addition, some businesses view outsourcing as a way of infusing their operations with innovation and using it to maintain a competitive advantage—not just as a way to cut costs. In fact, it seems that only enterprises that have product focused organization do not have significant competitive advantage.

A small proportion of enterprises that have achieved unattainable competitive position have absolute fit among strategy and structure. Regression analysis of strategy vs.

This includes innovations in organization design such as: foster entrepreneurial activities at every level in organization, information drivers for value creation, identifying and capturing new capabilities, internalizing activities to grow, assembling virtual corporations and stimulating knowledge workers flow across organizations. Unlike coworkers in traditional teams, virtual team members rarely meet in person, working from different locations and continents. The following case studies demonstrate how structure and strategy are inextricably intertwined. However, if we look for the second most common organizational structure in Croatian enterprises, differences among enterprises exist. Especially if they employ high number of employees and the organization design they have adopted is not suitable to their environment, they will see organization as a source of inefficiency rather than efficiency. Reengineering is a complete redesign of business structures and processes in order to improve operations. The way these jobs are grouped vary from one organization to another and can be according to one of five different forms of departmentalization.

All of these enterprises declared to have absolute fit among corporate strategy and organizational structure. Be sure to support your arguments and cite your sources. Exhibit 3 — Financial Services Company: Better Structure Making Better Strategies Happen The insurance company was able to achieve both independence and dependence by letting the value driver dictate structure and establish a clear process and set of tools to fill the blind spot.

As a manager, what do you do with employees who are talented but unapproachable? What Is Organizational Structure? So for example, a tech company may have a mobile phone department, a home appliances department, and so on. Explore other free areas of the site to learn more about the job of project manager. This paper is based on the exploration of possibilities for organization structure to be a source of competitive advantage in Croatian enterprises. Value exemplars often use organizational design to gain strategic advantages and help deliver consistent, superior returns to shareholders. Why or why not? Centralized vs. Select three articles that discuss how companies approached the change process, and summarize their experiences. There are six such systems. The ability to rapidly create new structures turns out to be a competitive advantage — enabling organizational focus on the right issues at the right time across customers, products, and channels. Every company has many formal and informal rules, based on assumptions about technology, people, and organizational goals, that no longer hold. As a possible reason for such distribution we find the fact that due to lack of knowledge about organization design principles, small enterprises that are involved in manufacturing of a limited number of products wrongly consider their organization to be product focused. Each job is divided among a few specialized parts and they all carry out their tasks to help achieve the overall goal of the job in question. The sample covers manufacturing, service and trading companies.

There is no managerial hierarchy at Gore, and top management treats employees, called associates, as peers. In a functional organization, although compensation can still be tied to product-line profitability, the link between the choices for which managers have responsibility and the performance metrics on which they are rewarded is weakened, injecting greater noise into their compensation.

The Project Management Institute is a professional organization for project managers. The significance is very high so it means that we can reject the hypothesis that these two variables are significantly correlated. They will also treat your customers better and the customer will be happier. In general, Croatian managers assessed organization to be moderately significant to significant contributor to competitive advantage. Pick two examples, and prepare a summary of their reorganization efforts, including the underlying reasons the company chose to reorganize, the key elements of the reorganization plan, and if possible, how successful it has been. Working through a multinational contractor that will manage the outsourcing process, UCSF has also asked workers who will soon be out of a job to train their overseas replacements via videoconferencing calls to India. Virtual teams mean that travel time and expenses are eliminated and the best people can be placed on the team regardless of where they live. Beyond designing a new organizational structure, one of the most difficult challenges when merging two large companies is uniting the cultures and creating a single business. This arrangement also forces employees to spend considerable time developing relationships. Select three articles that discuss how companies approached the change process, and summarize their experiences. Structuring for Global Mergers Recent mergers creating mega-firms such as Microsoft and LinkedIn, Amazon and Whole Foods, and Verizon and Yahoo raise some important questions regarding corporate structure. References 4. If you organize around local markets, you miss the latter.

Pick two examples, and prepare a summary of their reorganization efforts, including the underlying reasons the company chose to reorganize, the key elements of the reorganization plan, and if possible, how successful it has been. This includes innovations in organization design such as: foster entrepreneurial activities at every level in organization, information drivers for value creation, identifying and capturing new capabilities, internalizing activities to grow, assembling virtual corporations and stimulating knowledge workers flow across organizations.

Organizational structure and competitive advantage

Functional organizational structure is a predominant type of organizational structure regardless of the criteria of examination: size, manufacturing or service orientation.

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The Advantages of an Effective Organizational Structure