Competitive Advantage in business: Organizational Structures value
- Hierarchical or Tall organizational structure
- Matrix organizational structure
- Network organizational structure
The firm (organization) is an entity that exists primarily to make profits through the provision of commodities (both goods and services) to the market (consumers). The existence of the firm is born out of specialization in production and the pertinent risk of incomplete contracts in delivery of goods and services that are required by the market (Boyes). Therefore, organizational structures refer to the arrangement of employees within an organization and the jobs therein in a manner that helps the overall organization to realize set targets and objectives. It concerns who does what, where, and to whom does s/he report to within the organization?
The main objectives and purpose of formation of organizations (involved in any form of trade activities) is making profits (Miles and Snow). As such, the ability and the extent to which these two parameters are met is highly pegged on the organization's ability to stay ahead of other competitors within the same market segment. This concept is referred to as a competitive advantage. It is a complex function of the resources of the organization and the prevailing conditions in the market. Although, it should be noted that competitive advantage may exist even in the presence of market failures.
[...] This paper attempts to analyze whether an organization's structure can amount to competitive advantage for the organization. If so, how effective is the structure in either expanding or sustaining competitive advantage and profitability by examining the various types of organizational structures, their impact on the organization and ways of improving it where necessary. Discussion As mentioned earlier, organizations structures help to develop a formal structure to an organization from the manner with, which interactions as between the employees, the management, and the outside world, i.e., consumers and creditors. [...]
[...] Hierarchical or Tall organizational structure Each employee interacts with only one boss whom they report to within this organizational structure. It is used especially where employees are specialists in a particular production process, which happens to be highly technical (Baye). A Complex hierarchy organization arises when there is a need for employees to be in continued feedback with a group of employees but not all of them. Efficiency is achieved by dividing employees into groups and then proceeding further to organize the groups into larger ones. [...]
[...] product groups and functional departments. Regional coordination would increase the bargaining power of the firm in dealing with large external suppliers, pricing and promotional mechanism. The structure facilitates the use of highly specialized staff and equipment so specifically required by modern multinational firms and allowing for sharing of resources as needed. This further lowers the cost of operations of the firm and hence increasing its profit margin and competitiveness in the market. However, the model can hide great flaws too. [...]