Organizational Structures Essay

Organizations function in varied ways. Each organization is unique in its own accord and its overall design depends on two main criteria; coordination and communication. No matter what structure an organization chooses, the ultimate result is to achieve coordination between units and communicate effectively for proper decision making and implementation. The current buzz word being the networked economy and organizations, many firms are becoming more sophisticated and evolving into more interconnected entities than ever before. It is important however to note that not one single structure is the most successful one. A firms arrival at a decision to adopt a certain structure entails careful analysis of the requirements of the industry it operates in. Then only can it decide which structure suits it best. Dell, based in the US, is a truly global organization. With lead times of delivery ranging in days across the globe, Dell had no choice but to adapt a structure which complimented its nimble and lean supply chain. This resulted in them adopting a networked structure as opposed to more traditional functional setup. The main criterion is not coordination here, but the proper channels of communication which are necessary to deliver information is the cheapest, fastest and most reliable way. Moreover, product life cycles of Dell are shorter than most other products and this again meant a quick supply chain backed by the most efficient communications strategy. Dell has been able to adopt this structure quicker and has grown to an extent which many never expected it to achieve (Sviokla, 2004). Dell does have departments and functions like any other organizations; it’s the method by which they operate which is different. Each function is coordinated and communicates to achieve one primary goal; deliver the good to the customer in the shortest time possible. By having a networked organization, information travels at nearly the speed of light and decisions are thus made in a shorter time. This is what Dell required to stay on top of its competition in the PC industry and thus, it adopted the best possible structure within the industry. Toyota, based in Japan, is a name of reliability. Their automobiles are well known for cost effectiveness and long life. All this was only achieved by the top notch structure that Toyota eventually evolved into over its long history. The work at Toyota is done by divisions; teams of individuals in each ‘function’ operating on assembly lines to produce cars. This along with a just in time inventory approach has enabled Toyota to become a truly global automobile maker and trendsetter in the industry. Till Toyota adopted it, JIT was something that many, especially in the automobile industry, wouldn’t dare to emulate. Toyota realized how its inventory, being huge and with long lead times would clog up work space and result in huge costs due to rental, obsolescence etc. Thus Toyota did what Dell did but in a different manner, let the supplier remain the owner of the materials until they are needed. This called for not just a good communications setup but an exceptional coordinated effort by the firms various functions as well. A delay in one function meant a halt in the whole firm as each is dependent on the other. Thus Toyota needed a structure which was stable, coordinated and yet, able to communicate well with its suppliers as well as dealers. This came in the form of an organization which was capable of dissipating knowledge throughout its firm effectively and acts upon decisions made quickly (Choo, 2002). This means that Toyota is a matrix organization rather than a functional one which one might think it is at first glance. Secondly, it various factories internationally could be seen as SBU’s (Strategic Business Units) working autonomously yet liked to a central point. Reference http://www.analytictech.com/mb021/orgtheory.htm