Factors Affecting Organizational Structure
by Osmond Vitez, studioD source: smallbusiness.com
Organizational structure is the framework companies use to outline their authority and communication processes. The framework usually includes policies, rules and responsibilities for each individual in the organization. Several factors affect the organizational structure of a company. These factors can be internal or external. Small business owners must be responsible for creating their companies organizational structure framework. Business owners may use a management consultant or review information from the Small Business Administration before setting up their organizational structure.
Free Org Chart MakerMake an organizational chart & work w/ others online. Free 7-day trialwww.lucidchart.com/org-chart-maker
Org. Size
Size is many times the driving factor for a company organizational structure. Smaller or home-based businesses do not usually have a vast structure because the business owner is usually responsible for all tasks. Larger business organizations usually require a more intense framework for their organizational structure. Companies with more employees usually require more managers for supervising these individuals. Highly specialized business operations can also require a more formal organizational structure.
Products Life Cycle
The company life cycle also plays an important part in the development of an organizational structure. Business owners attempting to grow and expand their company operations usually develop an organizational structure to outline their company business mission and goals. Businesses reaching peak performance usually become more mechanical in their organizational structure. This occurs as the chain of command increases from the business owner down to front line employees. Mature companies usually focus on developing an organizational structure to improve efficiency and profitability. These improvements may be the result of more competitors entering the economic marketplace.
Org. Goals & Strategy
Business strategies can also be a factor in a company organizational structure development. High-growth companies usually have smaller organizational structures so they can react to changes in the business environment quicker than other companies. Business owners may also be reluctant to give up managerial control in business operations. Small businesses still looking to define their business strategy often delay creating an organizational structure. Business owners are usually more interested in setting business strategies rather than developing and implementing an internal business structure.
Business Environment
The external business environment can also play an important part in a company organizational structure. Dynamic environments with constantly changing consumer desires or behavior is often more turbulent than stable environments. Companies attempting to meet consumer demand can struggle when creating an organizational structure in a dynamic environment. More time and capital can also be spent in dynamic environments attending to create and organizational structure. This additional capital is usually a negative expense for many small businesses.
Technology:
the dynamism and change in technology strongly affects needs, there for life-cycle, the way we do our business
Strategy Software
Rapidly build and report on BSCsusing Kaplan/Norton's ESMwww.esmgrp.com
