Newspaper article

Reasons for changing organizational structure

Overview:

There are various reasons for organizational structure changes, they are

1) Need to improve productivity, profit and quality by adopting change in technology and
market conditions.
2) Adopting new strategy, planning how business will use its major resources to meet its new
strategy plans.
3) Move into new product line.
4) Expand your business overseas.

2 factors affecting the organizational changes:

1) External Factors:
Following are the external factors that requires organisational changes:
address new markets
react to changes in product or service demand
keep up with new technologies or products from competitors

2) Internal Factors:

Following are the internal factors that prompts the need for organizational change:
to raise additional capital, improve cash flow or profitability of your business
to address outdated and inefficient working practices and processes
to eliminate excess job positions and remove duplicate management roles

to reorganise internal functions, such as sales and marketing, for efficiencies

Analysing strength, weakness, PESTLE analysis gives the other factors for change in
organisational structure.

Research paper

This paper evaluates the influencing factor and impact on organisational structure of a sample firm
located in Hanoi, Vietnam.

Organisations are formed by group of people to achieve objectives which individual cannot
achieve alone. To achieve these goals organisations create inner order and relations among
organisational parts that can be described as organisational structure. Organisational structures are
static in nature and so sometimes they cannot meet the requirements of efficiency and
adoptability. Organisational structure depends on the factors like size, environment, technology
that includes both the external and internal factors.
External factors include: All those factors that are not under organisation’s control like
environment, socio economic factors, political administrative factors, laws and regulations.

Internal factors include the

Organisational Structure: Organisational Structure includes hierarchical levels and span of roles
and responsibility and mechanism to problem solving and integration. Through structures
organisations set limits, boundaries for efficient performance of its members. Most important
factors of organisational structure includes formalization, centralization and control.
Formalization measures the extent to which organisations follow rules and procedures.
Centralization refers to hierarchal levels that has authority to make decisions. If the lower level
has the authority to make decisions, then it has decentralised structure. If the decision making
authority is with higher levels or top management that the organisation has centralised structure.
Organisational structure depends on the way organisations want to encourage the attitude,
environment desired behaviours and cultural values in the organisation.
Decision making authority is influenced by organisational structures. The flow of information is
essential to an organisation’s success. Companies arrange their company specific functions such
as marketing, accounting, finance and engineering to use skills of the employees for projects.
Companies that grow are those that makes the best use of their resources including management
talent.
Factors influencing organisational structures based on contingency theory are :
1) Decentralization of decision making:
2) Customer Interaction
3) Value of Innovation
4) Marketing Consideration
5) Liberalization of Economy