Organizational structure purpose is to find the most effective way to delegate roles,

power, and responsibilities to its employees and departments. It also controls and
coordinates how information flows between different departments and levels of
management in an organization. Having a proper organizational structure will allow a
company to implement better operating procedures, and dictate which employees help
in making decisions or shaping the organization. Based on an organizations goals and
objectives it may be structured in many different ways. Two important structures
include Mechanistic and Organic structures.
Mechanistic structures are mainly for companies that operate in a stable environment,
use a centralized approach of authority, and maintain strong loyalty for management.
Organizations that use a Mechanistic type of structure generally do not need to change
or adapt their structure. This is mainly due to lack of innovation, creativity, and quick
decision analysis not needed. Examples of organizations using Mechanistic structures
include colleges and universities. If you think about it, they have long and strict
registration procedures, rarely have to adapt or change in order to keep students
enrolling, and most students tend to maintain high loyalty or obedience toward their
instructors.

Mechanistic Structures Include:

– Belief upper management is better capable of making decisions
– Management instructions must be followed
– Communication and control must proceed through hierarchical routes
– More emphasis toward completing a task opposed to achieving company goals
– Employees are more jobs specialized and placed into certain departments
– Low differentiation of tasks

Organic structures are used in organizations facing unstable environments and must
possess the ability to change accordingly. They have the ability to process, analyse,
and distribute information and knowledge very quickly. This ensures that they stay
competitive against other businesses. Businesses using Organic structures need to
communicate effectively and quickly by spreading information. This is done by
departments and different functional areas being closely integrated with one another.
Also, by implementing decentralized decision making, employees of lower ranking will
have the ability to make important decisions. This will help empower employees
leading to greater creativity and better problem solving. Google Corporation is a great
example of an Organic structure-based business. Their employees are encouraged to
use creative problem-solving skills and develop new products.

REFERENCE: https://www.volvogroup.com/en-en/about-us/strategy.html and Corkindale,G. Harvard

Business Review. The Importance of Organizational Design and Structure. Retrieved June 28,2011
from http://blogs.hbr.org/corkindale
Organic Structures Include:
– Large network of authority, control, and communication
– Problem solving is encouraged by all employees
– Employees are more goals oriented than job orientated
– Employee empowerment is encouraged

The structure of an organization will dictate how people interact with each other and
their relationship of roles in the organization. If a structure is out-dated or not
implemented correctly in a business, it will lead to many problems. These include
conflict among employees or departments, confusion of employee roles, and lack of
communication / coordination among departments.
In the past managers have simply tried to reorganize or work with the current structure
of a business rather than addressing the necessary issues. This could lead to greater
complexity rather than solving structural flaws

A good way to start problem solving regarding organizational structure in a business

is to ask 3 important questions:
1 – Is the problem the structure or the way management is managing it?
2 – Does the structure match out strategy?
3 – Has organization design been compromised due to accommodating to
personalities?

BEFORE DECIDING WHICH ORGANIZATIONAL STRUCTURE SUITS VOLVO, WE

EXAMINE THE EXISTING STRATEGY OF VOLVO

Creating customer value and

showing the way forward

REFERENCE: https://www.volvogroup.com/en-en/about-us/strategy.html and Corkindale,G. Harvard

Business Review. The Importance of Organizational Design and Structure. Retrieved June 28,2011
from http://blogs.hbr.org/corkindale
Every company exists for a reason – it has a purpose. Our solutions to global
challenges are driven by our mission to drive prosperity through transport solutions
and our vision to be the most desired and successful transport solution provider in the
world. We continuously develop our products and services to create value for our
customers and to support sustainable societies and the well-being and safety of
people.
We aspire to have leading customer satisfaction for all brands in their segments; to be
the most admired employer in the industry and to have industry leading profitability.
The Group’s values – Customer success, Trust, Passion, Change and Performance –
serve as a guide to our day to day behaviour and drive decisions on all levels of the
organization. Our Code of Conduct outlines how we do business in the Volvo Group;
ethically and in compliance with the law.
The foundation of our strategy is to create value by supporting our customers’
profitability. There are many paths to pursue to take on opportunities and challenges
and our seven strategic priorities consist of areas with large benefits for both
customers and the Volvo Group.

Driving prosperity through

transport solutions.

To be the most desired and

successful transport solution
provider in the world.

REFERENCE: https://www.volvogroup.com/en-en/about-us/strategy.html and Corkindale,G. Harvard

Business Review. The Importance of Organizational Design and Structure. Retrieved June 28,2011
from http://blogs.hbr.org/corkindale
Our vision describes where we want to be in the future. The aspirations are there to
guide us on our journey. Working towards them ensures that we are on the right track.

I. Have leading customer satisfaction for all brands in

their segments
The only true measure of success is customer satisfaction.

II. Be the most admired employer in our industry

By being the most admired employer, we attract and retain the best people.

III. Have industry leading profitability

Through strong performance we are able to invest in products, services and people –
and thereby own our own destiny.

Our company culture is how we interact with each other, with our customers and with
society as a whole, to achieve our business objectives. It is rooted in our history and
is critical to our company’s long-term success. It is the foundation on which everything
else is built.
The wanted Volvo Group culture is described by a set of five carefully chosen values.
They serve as a guide to our day to day behaviour, they drive our decisions at all levels
of the organization. They express our shared beliefs across regions and entities and
create the base for a high performing culture

REFERENCE: https://www.volvogroup.com/en-en/about-us/strategy.html and Corkindale,G. Harvard

Business Review. The Importance of Organizational Design and Structure. Retrieved June 28,2011
from http://blogs.hbr.org/corkindale
We have a culture of high performance created through employee engagement.
We value:

a. Customer success
 We truly understand our customers' business.
 We listen to and talk with our customers about their needs, desires and challenges.
 We focus on transport solutions that make customers successful and create value for
society.
 We deliver on our promises.

b. Trust
 We are transparent and have respect for the individual.
 We trust other teams to do their best and we respect the decisions made.
 We collaborate easily and create excellent results through teamwork and open
dialogue.
 We are empowered and have the courage to act.

c. Passion
 We are proud of the work and business we do.
 We are engaged and committed to meet our goals.
 We see how diversity strengthens us and try to bring out the best in everyone.
 We admit mistakes, fix them and learn from them.
 We are proud of our achievements, have fun and celebrate our success

d. Change
 We are curious about the world around us.
 We are innovative and find smart ways to create new solutions and business.
 We see change and transformation as a source of inspiration and energy.
 We are open-minded and share our knowledge.

e. Performance
 We have a strong business instinct.
 We have the skills, knowledge and intuition to do the right thing.
 We expect a lot from ourselves and others, and walk the extra mile to do a great job.
 We see the big picture and know when to let go of an idea, a project or a plan.

REFERENCE: https://www.volvogroup.com/en-en/about-us/strategy.html and Corkindale,G. Harvard

Business Review. The Importance of Organizational Design and Structure. Retrieved June 28,2011
from http://blogs.hbr.org/corkindale
Our Code outlines the expectations for how we do business in the Volvo Group;
ethically and in compliance with the law. Doing business this way builds trust with our
customers as well as with society in general, which builds our commercial success.

By understanding our customers’ priorities and challenges, we are able to provide

products and services that grow customers’ revenues and decrease customers’ costs.
In other words – creating value for our customers by supporting their profitability. This
is the foundation of our strategy.

1) Reinforce Volvo as a global premium heavy-duty truck brand and regain position and
market shares of Renault Trucks, Mack and UD as regional high-end truck brands.

2) Capture growth in Asia through having the joint ventures DFCV in China and VECV
in India as well as the Group’s value truck range in a separate value chain – and
leveraging it in other emerging markets.

3) Create the most desirable heavy-duty product and service portfolio tailored to
selected markets and segments.

4) Secure robust profitability through leading R&D, quality, purchasing and

manufacturing operations using Volvo Production System.

5) Have brand specific sales operations with a focus on retail excellence and a growing
service business where decisions are made more quickly and closer to the customer.

6) Leverage Group assets in the non-truck Business Areas, creating additional profits,
synergies and technology leadership.

7) Revitalize the Volvo Group culture with a focus on Customer Success, Trust,
Passion, Change and Performance. We believe that a strong culture leads to
engaged people. This in turn drives business performance.

REFERENCE: https://www.volvogroup.com/en-en/about-us/strategy.html and Corkindale,G. Harvard

Business Review. The Importance of Organizational Design and Structure. Retrieved June 28,2011
from http://blogs.hbr.org/corkindale
The contextual variables that should be considered when identifying an organization’s
structure are environment, technology, size, goals and culture. This awareness of
contextual variables is much more than just an identification process; it actually helps
to set the creation of structure. The ability for an organization to change approaches
within the contextual variables is crucial for long-term success. While organizations
usually recognize their overall paradigm, they often don’t realize the effect paradigms
have on the contextual variables.

VOLVO SHOULD ADAPT ORGANIC ORGANISATIONAL STRUCTURE

Organic and mechanistic types of organizations are defined by three general factors:
complexity, formalization, and centralization. Organic organizational system has a low
level of complexity, meaning that it's a flatly structured entity with few layers of
management. Organic organizations have very few rules and procedures with vague
member responsibilities and duties, resulting in a low degree of formalization.
Finally, you will find that organic organizations have low centralization, which means
that the members in the organization share in organizational decision-making and
power.
Mechanistic structure organizations are best suited for stable and predictable
environments in which they can leverage their standard procedures, centralization,
and formalized structure.
Organic structures are used in organizations that face unstable and dynamic
environments and need to quickly adapt to change. When an environment changes
an organisation must be able to gather, process and disseminate information very
quickly. Failure to do so can affect organisation’s ability to maintain its competitive
advantage.

CONCLUSION:
VOLVO BUSSINESS STRATEGY WILL MATCH ORGANIC STRUCTURE.

REFERENCE: https://www.volvogroup.com/en-en/about-us/strategy.html and Corkindale,G. Harvard

Business Review. The Importance of Organizational Design and Structure. Retrieved June 28,2011
from http://blogs.hbr.org/corkindale