Factors Affecting Organizational Structure

Factors Affecting Organizational Structure

1. Strategy – Management of Organization

Business strategies can also be a factor in a company. High-growth companies usually have smaller organizational structures so they can react to changes in the business environment in a quicker manner than other companies. Business owners may also be Unwilling to give up managerial control in Business operations.

2. business Environment

The external business environment can also play an important part in a company. Those external environmental factors are dynamic. Because of that consumer desires and behaviours are often more turbulent than stable environments.

3. Organizational Size

The larger organizations are more complicated. Because of the organizational size company should change its structure. In reality, if the organization is small sometimes it may not have a formal structure. Instead of following an organizational chart or specified job functions.

As an example, if organizations become multinational they cannot use small structures such as functional structures. They can use Multidivisional or Transactional strategies for their company.

4. Organizational Life Style

Organizations like humans, tend to progress through stages known as a life cycle. This consists of five stages. Those are,

Entrepreneurial Stages. Such as,

  • Growth Stage
  • Mid life Stage
  • Maturity Stage
  • Decline Stage

According to that stage, organizations should change their organizational structure. If not they cannot survive.

In the entrepreneurial stage, an organization can follow a functional structure. When in the growth stage they have to choose a formal structure for them. At the maturity level, they can follow the Matrix structure.

5. Technology

The common nature and difficulty of technology firm services can influence organizational structure. For example, computer technology and computerization have affected an organization's structure. Mainly two main ways technology affects the organizational structure. It converts the organizational structure into a flattered structure by reducing the number of middle-level managers. It will help to increase productivity and efficiency in the organization. Also because of technology organizations now have wide telecommunication facilities because of that organizations do need more employees.