Modern organizational structure reflects an external focus, flexible interaction, interdependency, and a bottom-up approach. Three fundamental trends are driving decisions about effective organizational structures in the twenty-first century: globalization, the internet, and speed of decision making.
The need for global coordination and innovation is forcing constant experimentation
And adjustment to the right mix of local initiative, information flow, leadership, and corporate culture. Global once meant selling goods in overseas markets. Today it will call on talents and resources wherever they can be found around the globe, just as it now sells worldwide. It may be based in the USA, due its software programming in New Deli, its engineering in Germany, and its manufacturing in Indonesia.
The Net gives everyone in the organization the ability to access a vast array of information – instantaneously, from anywhere. Ideas, requests, instructions zap around the globe in the blink of an eye. It allows the global enterprise with different functions, offices and activities dispersed around the world to be seamlessly connected so that far-flung customers, employees and suppliers can work together in real time.
Leading-edge technologies will enable employees throughout the organization to seize opportunity as it arises. These technologies will allow employees, suppliers, and free lancers anywhere in the world to converse in numerous languages on line without need for a translator to develop markets, new products and processes. Again, the ramifications for organizational structures are revolutionary.
The primary organizational structures is:
1. A single-product or single dominant business firm should employ a functional structure.
2. A firm in several lines of business that are somehow related should employ a multi-divisional structure.
3. A firm in several unrelated lines of business should be organized in strategic business units.
4. Early achievement of a strategy-structure fit can be a competitive advantage.
When re-structuring your business, it is important to realize that some activities within your business’ value chain are more critical for a successful strategy than others. There are two things to remember when restructuring, first, you need to design a business structure around those critical activities in the value chain. The second consideration is to design the organizational structure so that it helps coordinate and integrate the support activities to maximize their support of strategy-critical primary activities in the firm’s value chain and does so in a way to minimize the cost for support activities.