Organization Structure Simulation Essay Example

to focus on this business and plans to increase its revenue to 80% of total sales, targeting $12 million in the next nine months. Harold has set quarterly revenue growth targets and employee involvement measures based on industry benchmarks. His mandate is to transform Synergetic from a computer trading organization into a networking design "hothouse" in the next nine months. The challenge is to redesign the work environment and organizational structure, transitioning from a departmental structure to a team-based one, and implementing new HR policies and programs to aid in this transition. Additionally, improving current employee skill sets or hiring new employees with relevant skills is necessary (Apollo Group, Inc., 2003).Effective Organizational Structures for Constant Change

In today's ever-changing business environment, where competitive advantages tend to last for only about 18 months or less, flexibility and adaptability are essential. As a business like Synergetic strives to become a learning organization, it must prioritize open-mindedness and agility (Apollo Group, Inc., 2003). To remain successful in the market, it is often necessary to adjust the organizational structure to meet shifting demands in the market. Organizations must choose flexible structures that allow for continuous improvement even after they put new processes in place.

While a small organization, such as a sole proprietorship or partnership, may not require a formal structure due to frequent face-to-face communication, larger corporations and limited liability companies necessitate a more defined structure to facilitate decision making and delegation of tasks. Corporate leaders establish management procedures and structures that determine how essential functions are prioritized and responsibilities assigned (Jones, 2004). There are various organizational structures that organizations can implement.

The structures of organizations can

be viewed from two distinct viewpoints: traditional and contemporary. Traditionally, organizations such as hierarchies and bureaucracies have been founded on the premise that they exist in a calm environment where changes occur only as infrequent disturbances. However, contemporary structures such as product team and multidivisional matrix structures consider change a natural state and managing change a continuous process (Apollo Group, Inc. 2003). Modern contingency theory suggests that to succeed, an organization should design its structure and control systems to fit its operating environment (Jones, 2004). This involves differentiating and dividing workers to match them to the tasks that the organization must perform. Differentiation has two aspects: vertical differentiation determines how an organization designs its authority hierarchy, while horizontal differentiation clusters roles into subunits such as functions and divisions (Jones, 2004). A functional structure groups people with similar skills or resource usage, including finance, R;D, marketing, and engineering. All organizations start as functional structures.

While a functional structure is simple and straightforward, it may struggle with complex challenges. As an organization begins to produce numerous products or faces specific needs, such as addressing different customer groups or expanding into new regions, a more complex structure becomes necessary. As Synergetic aims to quickly produce their new networking technologies to meet customer demand, they require a new organizational structure. This shift is based on three design choices: increasing vertical differentiation, horizontal differentiation, and integration. Most organizations transition from a functional structure to a divisional structure, such as a product, geographic, or market structure. Three types of product structures include product division, multidivisional, and product team structures. Product division structures are appropriate when an organization produces similar products requiring

the same support functions. Multidivisional structures accommodate rapidly growing organizations producing a variety of products or entering different industries.

A self-contained product division is utilized in a multidivisional structure and its operating structure is based on its needs. The central headquarters staff coordinate the divisions in the organization. If there is a need for coordination between divisions, a multidivisional matrix structure can be implemented. The focus in a product team structure is on the product and functional specialists are organized around it to speed up product development. Synergetic is best suited for a product team structure because of the need to quickly deliver a new product that has never been produced before. The recently trained and certified four engineers in networking technologies can be the foundation of the new product team Synergetic requires. As the number of products and product teams increase, Synergetic can evolve its structure into a multidivisional matrix to coordinate efforts more efficiently. The team approach has a number of advantages including lower level employees gaining more authority and responsibility, leading to quicker decision-making with fewer managers, and higher employee motivation and participation in the change process. (Jones, 2004)

The removal of departmental barriers within an organization can enhance cross-departmental cooperation and facilitate prompt responses to customer demands and environmental changes. However, adopting a team approach requires considerable investment of time and resources in coordinating goals and meetings, which can hamper productivity. Additionally, employees participating in multiple teams may face timing conflicts due to increased responsibilities. Furthermore, the team approach may cause teams to lose sight of the larger organizational goals, leading them to make detrimental decisions. Geographical structures are ideal

for organizations expanding their operations into new areas, while market structures are best suited to address the unique needs of specific customer groups. Matrix structures combine product and functional activities and are useful in handling new or rapidly changing markets with technically advanced products. (Jones, 2004).

Synergetic's ambition to rapidly develop and market new and technologically sophisticated products in the dynamic IT market aligns with the potential benefits of a matrix structure. This approach fosters total communication and idea cross-over among team members, supporting the creation of a cohesive company culture. Rather than focusing on individual teams or departments, the matrix structure prioritizes project or product success, making it an effective tool for responding to technological and market changes. However, this structure may limit total communication to senior management, lacking control from the top and formal bureaucracy that can cause resistance from managers (Jones, 2004).

On the other hand, network structures arise when an organization forms agreements or contracts with other parties to carry out specific functional activities that add value. These structures extend efforts to enhance horizontal coordination and collaboration beyond the organizational boundaries.

The organization aims to establish a network structure by subcontracting major functions, like design, transportation, manufacturing, and distribution, to other companies and coordinating their activities from a central headquarters. This approach allows for easy removal or addition of parts to meet evolving needs (Jones, 2004). The network approach is advantageous as it enables organizations to be globally competitive by tapping resources worldwide for the best quality and price. It also facilitates worldwide sales of products and services while promoting workforce flexibility. This lean structure allows for hiring on an as-needed

basis, providing challenging opportunities and job varieties for permanent workers. However, the network approach also has disadvantages; managers have limited control over operations due to the subcontracted functions. Successful operation relies on contracts, coordination, negotiation, and electronic links (Jones, 2004).

The organization may face significant setbacks and possible bankruptcy if any of its subcontracted parts fail to provide the necessary services. Furthermore, the use of contracted companies and services may result in a lack of employee loyalty, as some employees may feel displaced from their jobs (Jones, 2004). In conclusion, given the ever-changing nature of today's markets, it is imperative that business leaders have a forward-thinking mindset, prioritize innovation, take calculated risks, and continually explore new solutions to remain competitive.