Question

In: Finance

As organizations grow from being a new venture to adding employees and departments, they often change...

As organizations grow from being a new venture to adding employees and departments, they often change their organizational structures. How do organizations typically change their structures over time, and why?

Solutions

Expert Solution

Organization from being a small entity often grow becoming large entities having huge workforce, departments and process. For this there is a change in the organization structure in the following ways:

1. Decentralisation of authority:

Small companies are often centrally powered and one person makes decision for every thing but as the organization grows the hierarchy grows as well which needs decentralisation of authority.

2. Outsourcing of processes:

As the organization grows their is a need to perform only those activities in which you specialise. The companies try to outsource all the supporting activities like logistics, construction and sometimes recruitment to focus on their core competencies.

3. Raising of capital through sources of debt and equity for expansion: Small turned big companies go for public equity like issue of shares (equity and preference) and also go for long term debt through commercial banks.

4. Getting more capital intensive technology: The money raised by the company is utilised in investing towards technology which increase the productivity to a new level, thereby catering the increase in demand and achieve economies of scale.

5. Compliance rules and maintaining books of accounts for regular reviews: The bigger companies specify the compliance duties for all and also go for regular reviews of accounts, performance and operations to make sure there is no wastage.

These changes are required because of the following reasons:

1. Decision Making: it helps in making quick decisions thereby taking advantage of the situations.

2. Time saving: through decentralisation they helped in time saving thereby helps in first mover advantage.

3. To work with ethics and strict compliance of rules: It helps follow strict compliance thereby working according to the rules and regulations.

4. To attain economies of scale: Through large operations they would be able to attain economies of scale and attain efficiency.


Related Solutions

A project manager receives a change request from the customer. The change requires adding a new...
A project manager receives a change request from the customer. The change requires adding a new filtration system to the project in place of a cleaner bag. When the project manager evaluates the change, it is most important that she consider the impact on the: Sponsor Project constraints Communications management plan Subsequent work packages Conduct Procurements is a part of which process group? Monitoring and controlling Planning Initiating Executing A project manager is completing the WBS with the project team,...
One of the constant dilemmas being faced by organizations is dealing with employees' Conflicts of Interest....
One of the constant dilemmas being faced by organizations is dealing with employees' Conflicts of Interest. Some Conflicts of Interest (COI) are severe enough to require laws to deal with them, others are dealt with more internally through organizational policies. COIs fall into certain categories including, financial, relational, and competitive/confidentiality and others depending on the nature of the organization.    Examples of COIs in the workplace: Rowan, K. (214, Apr 15). Conflict of Interest Examples: Avoiding Lawsuits in the Workplace....
In organizations today, employees often take advantage of their company’s information systems. Email abuse is increasing,...
In organizations today, employees often take advantage of their company’s information systems. Email abuse is increasing, and so is the amount of time employees spend surfing the Internet on company time. Indeed, statistics suggest that approximately 70% of the total amount of time spent surfing the Internet is company time. 1.Explore and Evaluate the ethics of using IT for personal uses at work. Should employees have some rights to use these resources? 2.When does their behavior become unethical? Some companies...
You are a consultant being considered by a new business venture (department store) that plans to...
You are a consultant being considered by a new business venture (department store) that plans to engage its customers through an aggressive web - , mobile - , and social media - based marketing plan . Before they consider hiring you , however, you must become knowledgeable within their industry to ensure your recommendations provide a significant competitive advantage to the new venture. Prepare a simple proposal letter that demonstrates your knowledge of the industry department store industry.
Venture Capital is an alternative for financing new and often high-risk ventures. Briefly discuss minimum of...
Venture Capital is an alternative for financing new and often high-risk ventures. Briefly discuss minimum of 3 key considerations of choosing a venture capitalist. (Word limit 70 - 100 words)
Why is organizational change so challenging? How can new leaders make change easier for organizations?
Why is organizational change so challenging? How can new leaders make change easier for organizations?
After reading the “Organizational Collective Motivation: A New Framework for Motivating Employees in Organizations” article in...
After reading the “Organizational Collective Motivation: A New Framework for Motivating Employees in Organizations” article in the Module Three Reading and Resources section, answer the following: •Will you use this approach in the development of an organizational motivation approach? Explain •Consider the motivational models reviewed in Chapter 3 to discuss how you integrate current trends in understanding employee needs from this article. For example, what behavioral aspects influence your decision-making process in selecting a motivational model? Organizational Behavior ( OL-...
Describe how the cost of capital would change over different stages of a new venture? Explain...
Describe how the cost of capital would change over different stages of a new venture? Explain the reason for such a pattern?
Organizations change is the norm today. When designing a new or improved information system for an...
Organizations change is the norm today. When designing a new or improved information system for an organization, it has been said that the best success for the systems requires the redesign of some or all of the organization, procedures, and responsibilities of departments, managers, and individual employees. Thinking about an organization you are familiar with, what are the ramifications of this statement? Share your real life example with the class.
A computer factory is planning to change their production process. They hire 18 new employees and...
A computer factory is planning to change their production process. They hire 18 new employees and half of them applies the new production process while the other half applies the old procedure. The length of time in minutes required for each employee to assemble the computer is recorded at the end of the month. The resulting measurements are shown in the following table. We know that the samples are independent. Assume normally distributed assembly times and assume that the variances...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT