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Contextual Factors, types of structure, Influence
of Environment, Strategy, Size & Technology and
Power & Politics on Structure, Flat structure

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Effectiveness of a particular design is contingent upon many issues. There are 5 basic
factors influencing the contextual factors in conjunction with structural issues, they are
as under -

 
ÿ The external env. consists of suppliers, customers, financial institutions, scientific
technological base,
ÿ the industry, government and the community.
ÿ If the key elements are stable, predictable, then it is the ͚mechanistic design͛ which is
appropriate; if vice versa, as in dynamic and unpredictable, then it is the organic design
which will be more effective.

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ÿ The number of people, sales volume, total assets, market shares.
ÿ A small company will have - less no. of vertical layers, little / no differentiation and low
degree of division of labor ʹ so will be flexible to changes
ÿ A large company will have ʹ movement to monolith central hierarchy with well defined
roles ad high degree of horizontal differentiation and specialization.

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The knowledge, tools and techniques used for conversion of inputs to outputs and other
issues.
Org having manufacturing set up like line assembly consist of centralized control and
coordination mechanisms; difficult in adapting to external change.
Org having IT set ups will possess decentralized control, individual and group autonomy and
will respond to external change

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Strategy determines the impact on the structural issues of the org.
e.g., cost minimization / innovative strategies

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Culture determines the ideologies, values and norms in common by its members and their
manifestations in patterns.
It also represents the unwritten code of conduct that guides the responses of org members
to the demands and expectations of internal and external stakeholders.
If it employees behaviors are monitored / rigid, then it is centralized and vice versa.

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ÿ Simple structure,
ÿ Functional organization,
ÿ Bureaucracy ,
ÿ Product / Market oriented,
ÿ Project oriented and
ÿ Matrix organization,
ÿ SBU,
ÿ Adhocracy ʹ Mintzberg Framework
ÿ Horizontal / vertical structure
ÿ Multidimensional structure
ÿ Network
ÿ Virtual organizations

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ð&& ' 3 major areas
ÿ pimensions of environment
ÿ Nature of environment on structure
ÿ Relationship between structure and environment

These are explained below

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There are 4 dimensions ʹ pace of change, degree of connectedness, extent of similarity &
degree of uncertainty.

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Change can be ʹ evolutionary and relatively slow, then environment is stable
- transformational and abrupt, then environment is dynamic.

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This is extent to which factors are in connection with each other, as they will have their
influence / impact on the organization.
It is considered simple level of connectedness if there is low connectivity amongst the
factors in the environment.
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The environment of any org can be termed as homogenous, if various forces
share the similar properties and common features;
Heterogeneous environment forms if the different external forces in the
environment tend to vary and are dissimilar to each other.


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Org and their subunits need to adjust to such situations by effecting change in
their structures and processes, the dimensions of uncertainty are -
X Strength of social, political and economic pressures on the organization
X Frequency of technological breakthroughs in the industry
X Reliability of resources and suppliers
X Stability of demand for the organization͛s products / services

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Contributions by various researchers to in understanding the nature of env and its effect on
the structure of the organization are as under ʹ and are explained
ÿ Stable & dynamic environment
ÿ Causal texture of environment
ÿ pifferentiation & Integration

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Burns & Stalker report of their research study, which analyzed the effect of external
environment on their pattern of management. They have distinguished between two

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pemand for firm͛s product is stable & pemand for the firm͛s products can change
predictable dramatically
There is no change in the nature of Unexpected changes in competition can occur
competition
Technological innovations are There is an extremely rapid rate of technological
evolutionary in nature change
Govt policies are stable Govt policies undergo frequent changes to cope with
the new environments
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Burns and stalker examined the impact of stable and dynamic environment on three
structural components as in complexity, formalization and centralization.

Further, the two streams of mgmt practice and structure ʹ mechanistic system and organic
system were identified.

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Emiry & Trist conducted case studies and identified types of interdependencies and
linkages that are present in the organization. They reported their findings in the form of
factors as follows,

L ʹ Linkages
1 ʹ Focal org
2 ʹ External Environment
(refer to the diagram in the textbook)

Based on the linkages, three types of interdependencies were identified ʹ internal,

transactional and environmental.

Internal ʹ these are linkages between various functions within the focal org͛s such as those
between R & p, production and marketing.

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r!  )),- Two types

Input Transactional interdependencies represent direct linkages between the focal org and
the suppliers of inputs such as raw material, educational institutions for man power.

Output Transactional interdependencies i.e., linkages between the focal org and its output
in the environment such as sales and major customer.

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These are linkages between various aspects of external environment of the focal org. E.g.,
two or more suppliers can form a coalition and together formulate norms for supplies
to the focal org.

The Env. Interdependencies are also called ͚causal texture͛ of the org and are critical to
survival of the organizaiton.

Based on their ͚causal textures͛, Emery & Trist have introduced four types of causal textures
/ environments, they are - Placid randomized, placid clustered, disturbed reactive and
turbulent field.
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1 Placid Randomized Unchanging, evolutionary Tactics

change, low uncertainty
2 Placid Clustered Cluster of threats, suppliers or Strategies
customers may join hands to
form powerful coalition

3 pisturbed Reactive More complex, many Operations

competitors seeking similar
ends; 1 or 2 large org͛s can
dominate and have influence
over environment
4 Turbulent Field Most dynamic, high Multilateral
uncertainty, discontinuous / agreements
disconnected changes in the
environment
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Lawrence and Lorsch carried out research projects with an aim to establish relationships
between environmental differences and their effect on org structure.
Just as org as a whole has its own environment, various tasks within the org͛s also have
their environments which differ in terms of the degree of uncertainty.

This degree of uncertainty can be measured by the following dimensions, they are ʹ

 ð& +$ ʹ if info is available, then uncertainty will be low.

r ' && "ʹ this relationship can be established easily, then
uncertainty is low, if this relationship cannot be established / difficult to establish,
then uncertainty is high.

Î ! ʹ this can be short, moderate or long; if time is short, then
uncertainty is low and vice versa for the rest of the two.

 ð   ʹ task driven interpersonal relationship will be

appropriate for low and high uncertainty; whereas social relationships will be
required in situations of moderate uncertainty.
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&& ð# 

&& ' is the tendency among specialists to think and act in restricted
ways (tends to fragment the org)

ð# ʹ in direct opposition to differentiation, it involves the colloboration

among specialists needed to achieve a common purpose (tends to co-ordinate
the org).

/  " uncertainity, greater the differentiation (horizontal

complexity).

/  ")&&  greater the need for integration

ð# through personnel policies, financial control, interdepartment

transfers, inter departmental coordintion.

ð#  gives rise to vertical complexity.

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ÿ pifferentiation ʹ occurs through a division of labour and technical specialization (too
much differentiation leads to conflicts and politics)

ÿ Integration ʹ occurs when specialists cooperate to achieve a common goal.

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ÿ As organizations depend on their environment for resources, output
consumption and legitimacy, it is imperative that they develop designs that
would enable them to proactively respond to the issues relating to resources
availability, consumption pattern and legitimacy.

ÿ As competition increases, org͛s concern for quality / minimizing cost gets

reflected in the appropriate structure.

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ÿ As the environment is dynamic, greater is the need for restructuring the organization,
e.g., so if the env is uncertain / changing env, the org will move to a organic form to
react to the external changes.

ÿ Consumption patterns, expectations, aspirations and priority of values/goals of the

society, stakeholders issues are subject to changes, which adds to dynamic force of the
env.

ÿ Strategic decisions like mergers, acquisitions, joint ventures, strategic alliances and
partnerships are attempts on the part of the org͛s to gain control over the uncertainties
in the env and to ensure their survival.

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 #$  
Organizations need to develop mechanisms and intimate actions to deal
effectively with the opportunities and threats in their respective environments.
A set of broad decisions as to how an organization will direct its energy and
efforts to gain a competitive advantage in its environment.
Strategies are needed to enable org͛s respond to demands in terms of meeting
competition, coping with the dynamics of change and utilizing resources for
realizing its vision / mission.
Strategies represents a coherent set of actions aimed at gaining a sustainable
advantage over competition, improve position vis-à-vis customers or allocating
resources.

In a nutshell
A strategy thus can be defined as a series of goal oriented decisions and actions
that match an org͛s skills and resources with the opportunities and threats in
its environment.

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The core competencies include Skills and abilities in value creationable activities,
such as -
Manufacturing; R & p; Org design
To achieve superior efficiency, quality, innovation and customer responsiveness.

Alfred chandler during 1960͛s studied the relationship between the strategic
choice and the structure of the organization.
ÿ Simpler the structure, process and output, so will the strategy; and vice versa.
ÿ As org͛s deal with multiple products/services the high degree of
interdependence in the internal functions was required.

Based on his study, chandler has proposed two issues

ÿ Changes in corporate strategy preceded and led to changes in org͛s structure
ÿ Org structures followed the growth strategies of firms. Growth strategies
tended to follow certain patterns.
ÿ Growth patterns are as under ʹ growth strategies I, II, III, IV & V.

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/ 1"#& # 
ÿ /' ð3ð#ʹ single function, single location, single product, single
industry,; follows a predictable path.
ÿ /' ðð34ʹ in terms of producing, selling, distributing more
products / services
ÿ /- ððð3/# "
ÿ /ð434 ð# 
ÿ /43( )) &

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ÿ Time ʹ t ; progression I (GS 1)
ÿ Time ʹ t +1 ; progression II (GS 3)
ÿ Time ʹ t + 2; progression III (GS 5)

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Miles & Snow͛s classification of org into four strategies ʹ pefenders, Prospectors,
Analyzers & Reactors.

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Micheal Porter has classified strategies into 3 types ʹ Cost leadership Strategy,
pifferentiation Strategy & Focus.

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There are 5 major components in developing mechanisms for implementation of
strategies, they are
ÿ Task focus (Value)
ÿ Structure
ÿ pecision processes & Control
ÿ Reward Systems
ÿ People
And either side of the org ʹ we have Firm Strategy & Firm Performance.
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Perceived threats &

Opportunities in the
Environment Strategy Structure

SWOT in terms of
Competency &
Resources

Org͛s continuously seek to align themselves with changes in their environment by

rearrangement of various roles and functions in their systems. Some of the
ways are
ÿ Enlargement of scope of functions
ÿ Creation of new function
ÿ Partnering and networking
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Technology is the process by which knowledge, skills, tools and techniques are
used by transform inputs into outputs.

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This exists at 3 levels ʹ individual, functional / departmental & Organizational

ð'  '  

ÿ Input ʹ consists of skills, procedures and techniques, allows each org function
to handle relationships and management with external vendors.

ÿ Conversion ʹ a combination of machines, techniques and work procedures,

transforms intput into outputs. Other methods such as work redesign,
allowing employees to devise better ways.

ÿ Output ʹ effectively dispose of finished goods/ services to customers. Product

testing of the goods/services, after sales etc.

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!"#$  
Joan Woodward made an attempt to seek a relationship between technology and
structure. She studied and identified levels of technical complexity that are
associated with three types of production technology, they are
ÿ Unit & Small batch technology
ÿ Large batch & mass production technology
ÿ Continuous process technology

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Charles perrow, proposed a generic typology of technology which are applicable to all
kinds of org͛s, and identified two factors as its determinants, they are - ð5
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ÿ Refers to the numbers of exceptions (new or unexpected situations) that a person
encounters while performing a task.
ÿ Uniformity refers to few or no exceptions or unpredictable cases.
ÿ Input variability is considered to be high when there are exceptions and
unpredictable instances.

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ÿ Refers to the degree to which search activity is needed to solve a problem.
ÿ The problem is analyzable when the problems encountered in the process of
transformation of inputs to outputs can be easily analyzed, specified and solved by
using routine procedures.
ÿ Thus the decisions can be programmed as the problem can be anticipated and solution
can be arrived at routinely.

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he has used dimensions of the above two issues, to differentiate among four types of
technology, they are ʹ Routine technology / manufacturing; Engineering Technology /
production; Craft work / Technology; Non routine technology.

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ÿ The features are ʹ single product, highly mechanized process of production, mass
production, formal and centralized structure.
ÿ pecisions are easily made, defined ; manuals and instructions can be developed to
respond to any problems.
ÿ Centralized structure with high degree of formalization is likely to be appropriate design
for routine technology / manufacturing.
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ÿ The features are ʹ customized, customerized, flexible centralized structure.
ÿ In heavy manufacturing setups, the raw materials are highly variable with lots
of exceptions, but the problems encountered in the transformation process
can be anticipated, analyzed & specified.
ÿ pecisions can be programmed.

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ÿ Here the raw materials has few exceptions, but the problems encountered in
process of transformation cannot be analyzed / anticipated.
ÿ People need to develop unique methods to respond to unique problems/
issues.
ÿ People͛s experience, intuition and judgment, play a important role than pre-
specified solutions
ÿ e.g., potter
ÿ The above mentioned nuances cannot be captured in a rational, logical and
analytical framework , so cannot be predicted and programmed.

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* "#$
ÿ The features here are ʹ great variation in input and the problem in the
conversion process cannot be analyzed.
ÿ The problems are input specific.
ÿ Thus the structure has to be flexible enough to allow for continuous
innovation, experimentation and fundamental transformation in approach to a
task.

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Jp Thompson, devised a typology of technology based on the nature of
relationship between various tasks carried out in the input-conversion-output
process.

Three types of task interdepedencies were identified, they are ʹ

ÿ Serial interdependence ʹ mass production assembly line
ÿ Pooled interdependence - also called mediating technology; banking & public
utility org͛s
ÿ Reciprocal Interdependence ʹ R&p, Hospitals.
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