Key Concepts of Organizational Design

Topics: Organizational structure, Organization, Decision making Pages: 6 (1869 words) Published: August 2, 2010

Key Concepts of Organizational Design
Creativity, Innovation, and Organizational Design

Key Concepts of Organizational Design
An important part of organizational theory is organizational design. It is important to change management within the organization and shapes the organization’s culture, leading toward the achievement of reaching its goals. Organizational design becomes more complex as the company experiences growth. In this paper, I will provide some key concepts of organizational design and its importance, assessing the relationships between strategy, structure, and process in organizations and the relationship between organization design and decision-making processes are analyzed. In the next section, I will describe the five best design choices and the characteristics, advantages, and disadvantages of various organizational structures. Importance of Organizational Design Choices

One part of developing a strategy for a company is for an organizational design that fits the company’s purpose, culture, and processes. Organizational design has become a top priority because of increased competitive pressures and the use of information technology. Organizational design is important to its success, allowing an organization to plan for contingencies. For example, competitor that uses new technology in innovative ways. “Organizational design and change have important implications for a company’s ability to deal with contingencies, achieve a competitive advantage, effectively manage diversity, and increase its efficiency and ability to innovate,” (Jones, 2004, p. 12). Depending upon the design of the organizational structure that increases control over its environment, reflects how effective an organization will respond to certain factors in its environment. Because of the increasing pressure from consumers and competitors, it is becoming increasingly difficult to respond to the changing environment facing them. Organizational structure and culture are continually being developed by organizations to address these changes. Organizational Structures

Control is the main purpose of organizational structure, used to control how people are motivated to achieving organizational goals. "Organizational structure is the formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals," (Jones, 2004, p. 8). The type of organizational structure used will depend on the organization’s size and their goals. Out of the several types of organizational structures, the five types of structure chosen for this paper include Functional, Multidivisional, Geographic, Matrix, and Network. These structures have some similarities along with various advantages and disadvantages. Oftentimes, organizations begin using a functional structure before venturing into another structure or a combination of structures. Functional Structure

Functional structures group people and tasks together based on the functions of their jobs. According to Jones (2004, p. 160), functional structure is a design that groups people based on their common skills and expertise or because they use the same resources. Galbraith, (2002, p. 36) states the kinds of strategies executed best by this basic structure as: • Small-size, single-product line

• Undifferentiated market
• Scale or expertise within the function
• Long product development and life cycles
• Common standards
One advantage functional structures provide is the opportunity for people to learn from each other. When group members have common skills, they learn to solve problems better, and learn productive ways for performing a task and are able to supervise and control each other’s behavior, (Jones, 2004, p. 162). Jones (2004, p. 163) states many of the disadvantages in a functional structure, which includes control...

References: Galbraith, J. R. (2002). Designing organizations: An executive guide to strategy, structure, and process. New and revised. NY: John Wiley and Sons, Inc.
Interactive Business Communications. (2008). Why focusing on processes is the Holy Grail of business management . Retrieved from
Jones, G. R. (2004). Organizational theory, design, and change: text and cases, Fourth Edition. New Jersey: Prentice-Hall.
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