Key Concepts of Organizational Design
Nadine Mends MMPBL/550
November 29, 2010
Maria Marin
Key Concepts of Organizational Design The object of this paper is to discuss at least structures in Organization Design and Organization Design Choices. The paper will explain the importance of design choices as well as describing the characteristics, advantages, and disadvantages of various organizational structures. Next, the paper will assess the relationship between strategy, structure and process in organizations. Finally the paper will analyze the relationship between organization design and the decision making process. This will be based off the scenario of BestSnacks Inc and the opportunities facing BestSnacks in the area of Organizational Design. This paper will provide key concepts of organization design. It will describe the five best design choices and also will provide information regarding some common organizational structures. An organization will have to continuously look at the design and structure it uses to ensure that it is going to establish its goals and vision. Importance of Organizational Design Choices Organizational design choices are important for several reasons. First organizational design choices provide the firm with a choice of designs that are appropriate for achieving different purposes. Every design seeks to pattern the activities of organization towards a common outcome. From the perspective of Best Snacks Inc. it has a choice of selecting a design that will help it achieve its objectives. The choice of organizational design provides Best Snacks Inc a selection of designs each appropriate for different intended outcomes. The systems can be designed to encourage innovation/creativity. Technology can be used to increase the capacity of individuals at Best Snacks Inc, and the structure can be improved to increase communications. The external environment plays a large role in organizational design. As we saw in the case study, market conditions affected how the distribution channel was set up (to compete for shelf space), and how the packaging was created (in order to be eye-catching and standout from many other products). This is fairly sound business standpoint. You should design your organization so it can best compete in the external market. Problems arise, however, when you decide to do something that is fundamentally different, as Best Snacks did. I personally would recommend that Best Snacks split off the Healthy Snacks line into its own group, with its own funding, unique sales targets, and the ability to build distribution and marketing channels that better communicate and serve its customers. In my experience, whenever the words "this is how we've always done it" are uttered, it's a red flag. This seems to be what Hernandez is constantly saying. That attitude is a bad one for a corporate manager to have.
Organizational Structures There are different advantages and disadvantages of different organizational structures. The functional structure has the firm organized according to functions, e.g. marketing, finance, production etc, the advantages are that there is specialization in each function, there is accountability and clarity about roles, the disadvantages are closed communication, resistance to change, and difficulties in coordination. The divisional structure by way of products and activities is currently used by Best Snacks Inc. It has divisions like Groceries, beverages, and convenience stores. Organizational structures can be defined as the way or method through use of a hierarchy that a group, business, organization, people or objects collaborate to achieve success on One common goal (http://organizationalstructure.net). The type of organization structure used depends on the size of the organization and what the goals of the organization are. It includes what the organization is looking to accomplish. Most often, all organizations start out as a functional structure and will branch out into another structure or a combination of structures. The advantages are clear focus on market segment, competition between divisions, and good control. The disadvantages are duplication of efforts, corrosive competition, and low central control over each division. Another organizational structure is geographical structure or divisions by area. This structure has advantages like serves local needs, competes well with locals, good communication between the division and customers. The disadvantages are low central control, and duplication of resources/functions. Another structure is the matrix organization in which work is allocated in projects and each project is led by a project manager. The advantages are there is resource sharing, relatively lower costs, better coordination between the team, balance between team and shared authority, the disadvantages are can't be applied in all situations, and conflict of authority. In case of Best Snacks Inc it should select a flat structure if it wants to encourage creativity and innovation. On the other hand if it wants to go in for lower costs and economies of scale it should go in for a vertical structure with centralized production.
Strategy, Structure, and Process in Organizations Organizational Strategy, Structure, and Process focus on how an organization is able to adapt to their environment. An organization that has elements of being organic is more likely to be able to adapt to its environment. An organization needs to look at it strategy to ensure that it is effectively aligned with its environment. There is an intrinsic relationship between strategy structure and processes in organization. The strategy of a corporation can only be successful if it is supported by an appropriate organizational structure and processes. Best Snacks Inc is experiencing a change in the market place where customers are buying on the basis of price and not on the basis of brand loyalty. The two strategies that Best Snacks Inc is considering is whether to go in for innovation/creativity which would mean a differentiation strategy or it would go for cost reduction (a cost leadership) strategy. If Best Snacks Inc went for differentiation, the structure appropriate would be horizontal or flat structure with teams having minimal supervision. The processes in the team would include brainstorming, collection and evaluation of ideas, and selecting the best ideas. On the other hand if Best Snacks Inc went in for cost leadership it would require a vertical organization and close control over processes. The monitoring would be important and each process would be made more efficient. Organizational Design and Decision-Making Processes An organizational that as a well though out organizational design will have improved communications, productivity, and innovation. Employees will work effectively. Organizational design allows for an organization to look at what it wants for results and to change its structure and processes to establish its goals. Long-term commitment is needed and you must constantly make design choices that have an impact on your organization. There is a close relationship between organizational design and decision making process. Best Snacks Inc insists on going in for an organizational design that supports innovation and creativity, the decisions would be made in teams. The decision making processes would include brainstorming, generation of creative ideas, team members writing down the issues and ideas generated, encouraging and positive work environment, and selecting the most appropriate idea. On the other hand if Best Snacks Inc follows the market trend and goes in for cost leadership, decisions will be handed down to employees or decisions will be made according to rules provided to employees. Such decision making is designed to improve efficiency and control. Overall, there is a close relationship between organizational design and decision making. Rule based decision making in a vertical organization avoids chaos and brainstorming in teams leads to idea generation and innovation.
Conclusion
In conclusion, the relationship between design, technology, and talent management, you basically have a set of factors which create tension with each other depending on capacity. If the company has the technology and talent to make a design work, it will. If the company does have a talent problem, your design and technological systems may be stressed by the lack of people qualified to operate in them. Best Snacks is one step away from a talent management disaster. They know they have many disgruntled employees who are clearly experts in the healthy snacks line. Most, if not all, of these people are likely to leave shortly, and that would significantly hinder any future success in that product area. When it comes to communicating with talent, you have not only listened to those people, but act on their recommendations accordingly. If you have an expert who makes recommendations that are never acted on, that defeats the point of having that expert. Recognized experts should get a lot of leeway in what they are allowed to do. One way to have the employees communicates with managers in the confidential suggestion box. It may sound a little hokey, but these things actually work. Of course, you need a management team that is willing to listen to the suggestions and not just discard them automatically without any real consideration. I think Best Snacks has the leadership at the top, to make this work, and Elizabeth may consider this idea. While each structure has advantages and disadvantages, an organization must choose the structure that will provide them with the best operational design elements. An organization will need to continuously look to use decision making to improve and change its organizational design.

References

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