In what ways does “Organizational Design” contribute or hinder strategic success of an enterprise?

The organizational design is very important to the enterprises. The primary reason is
that the design efforts can result in organizations which perform better than those which arise
naturally. The organizational design defined as a formal, guided process for integrating the
people, information and technology of an organization1. It is used to match the form of the
organization as closely as possible to the purposes the organization seeks to achieve. It is how
we can shape and functioning of an organization be satisfied to produce a desired result by
given all the knowledge about the organizations 2. With the organization design, the enterprise
can attainable of their strategic intent because it gives several contributions for the strategic
success. The strategy here means as the determination of the basic long-term goals and
objectives of an enterprise that include the vision, mission and the competitive strategies that
need to achieve by the organization for them to be success. Thus to implement those
strategise the enterprise should design their organization. That is how the organization related
to the strategic success.

The first value of the organizational design, we take a look on the organizational
structure. The organizational structure can be defined as the design of organization through
which the enterprise is administered. It specifies the work to be done and how to do it, given
the firm’s strategies such as formal reporting relationship, authority and decision-making
process. The nature of the strategy or structure relationship means that changes to the firm’s
strategy create the need to change how the organization completes its work 3. For example, if
the organization has the new business level strategy that need to adopted then the functional
structures need to be change to achieve that strategy.

Secondly, with designing the organization structure it may affect on its human capital
itself that will lead to strategic success. By designing the organization structure, we can see
that, the organizations members are become more effectives because, in delineating structure
the problems are broken into individually tasks, the authority also separated for control and
coordination, directly the rewards easily given because of to motivate and recognize
differences in contribution4. Furthermore, the communication among members are arranged
systematically because they get information they needed and avoid them with irrelevant data
and finally the people are differentiated by skills and interest, and matched with job
activities, satisfaction resources, and career development skills. Here, it show that when the
1
Essentials of Organization Theory and Design by Richard L.Daft (1998)
2
Organizations by Design: Theory and Practice by Jelinek, Litterer and Miles (1981)
3
Strategic Management by Hitt, Ireland and Hoskisson (2007)
4
Management: Challenges for Tomorrow’s Leaders by Lewis, Goodman and Fandt (2004)

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 In what ways does “Organizational Design” contribute or hinder strategic success of an enterprise?

resources been effective and efficient it will automatically help the enterprise to achieve their
strategies and success.

Besides that, organizational design can help to deal with the technology element, as it
is one of the factors affected by the strategic choice 5. Typically there is a range of options
about the technology to be used to achieve a given strategy. The CEO need to be very careful
to make decision on the availability of the technology because the technology may constraint
or determine the organization’s strategy at present or in future time. This is why good design
is needed. For example, manufacturing companies can adopt new computerized system for
database to support the strategy by ensure the design that been made is aligned with the
organizational structure and management processes.

Similarly, with the market environment. If the enterprise mission is to grab the large
market size in business, the organization design will be appropriate. The market environment
requires extensive and frequents product to be different from others, with the proper
organizational design it can lead to strategic success than those best suited for markets that
essentially stable and unchanging. Highly changed of market environment, need additional
resources for environmental monitoring and internal information processing 6. Thus, when
change is happened the adoption of new strategies might be change also. With these changes
the new design of organizational need to be taken. We can see that, for example, if the
enterprise needs to be number one in the market as computer supplier, it needs to change its
old corporate or business level strategy to the new strategy to achieve its goals by redesign its
organizational structure, maybe from being simple structure to multidimensional structure 7.
This will directly help the organization to be success.

The core point here is that the organization design very much related to the strategy of
the enterprise. As we all know that, the organization is social entities that created for specific
ends which engage in interchange with the larger society around them. By building their
strategies to achieve their goals and the effectiveness outcomes, the enterprises should
implement the organizational design to be strategic success. The organization members doing
the tasks to produce outputs provided with the external and internal environments, the
technology availability, and the human resources that the organization draws appropriately as
stated in their operational goals and competitive strategies has to be supported by the
5
Organizations by Design: Theory and Practice by Jelinek, Litterer and Miles (1981)
6
Organization Design by Galbraith (1977)
7
Introduction to Business by Madura (2004)

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 In what ways does “Organizational Design” contribute or hinder strategic success of an enterprise?

organizational design. Here, we can proved that, with the organizational design it can lead the
enterprises to achieve their strategy and directly to become success because with the
organization design it can plan of the structures to deal adequately of the above issues by
fitting, coordination, commitment and controlling of the environment, human resources,
technology element and the organizational structure. In other words, the effective design can
provide the firm to successfully implement its strategies and maintain its current competitive
advantages that lead to success in the market.