A quantity of factors determine how organizations are organized. These include the organization’s goals, social mores, and customs, the values and ideals of the founders or managers, environmental constraints, and available technology. As stated earlier, size, though an element of structure is also a determinant since it affects all the other elements.
Organizational goals clearly influence the way an organization was created. The quality value placed on efficiency, and quality as well as shareholder value acquired a major impact on the redesign of Westinghouse as a more varied and decentralized firm. Indeed, goals are the primary determinants of structure. If one is in the business of producing hamburgers, the purpose of delivering a gourmet product at a moderate price leads to different structuring plans than does the purpose of delivering a trusted product quickly at a minimal price.
Social customs during an organization’s delivery also determine how it is organized. It has been very important in the annals of business. For instance, the organizational forms adopted by the first companies in the automobile industry are not the same as the structures being adopted now. Historically production was organized throughout the set-up line.
Some workers always built chassis, which were then sent down the assembly line to other workers, who do such careers as putting engines and axles onto this framework. Currently, many automakers are adopting the work-group or team concept when a group of workers is accountable for more than simply one part of the automobile.
At enough time the car industry began, no one thought about using a group approach to building cars, given that it had not been consistent with the prevailing values about production. Constructions become common within an industry Once, they tend not to change. Certain interpersonal constructions remain long once they are no more suitable for situations.
For example, the railroad industry in America developed a structure that became dysfunctional as the engineering technology in the industry advanced. The propensity to stick to industry-specific buildings may be changing with the proliferation of mergers and acquisitions and a lot more rapid advancements in engineering technology. These developments may lead to the increased homogenization of structure as companies struggle to handle common problems of size.
Alternatively, the need for structural change could become apparent more quickly due to technological advancement. Another determinant of the structure is made up of the beliefs and values of the people forming the business. Many companies in the computer industry, formed by young entrepreneurs who favor informal life-styles, have loose, informal, and collegial structures that reflect those values.
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Alfred P. Sloan put his personal stamp on the business of General Motors in the 1920s, and it had not been until the turbulent times of the 1970s that significant changes were made. Interestingly, these changes were brought about mainly as a response to the environment. Environmental constraints include legislation, government regulation, court orders, market characteristics, social issues, and societal norms.
For example, major incursions by Japanese auto manufacturers into the U.S. American companies to improve their creation methods as well as the underlying constructions of their organizations. Laws concerning entry into or exclusion from certain businesses, the imposition or removal of rules, and such court-ordered actions as the breakup of American Telephone and Telegraph Company impact the structure of organizations. The birth of People Express and other air carriers was the direct result of the Airline Deregulation Act of 1978, which enabled new carriers to enter the airline business for the first time in decades.