UNIVERSITY OF TECHNOLOGY SYDNEY

FACULTY OF BUSINESS
Graduate School of Business

Organizational Analysis and Design - 21718

Student Name: Sarang M Thakkar

Student Number: 10982294

Lecture Day: Tuesday 2p.m to 5p.m

Lecturer: John Gray

UTS: BUSINESS SCHOOL OF MANAGEMENT

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 CONTENTS

PAGE NO

INTRODUCTION………………………………………………………………………..3

STRUCTURAL DESIGN..................................................................................................4

BUREAUCRAY: MAX WEBER......................................................................................7

ORGANIZATIONAL RATIONALITY................................................…………..........10

ORGANIZATIONAL CHARACTERISTICS................................................................10

ORGANIZATIONAL STRATEGY.................................................................................11

ETHICAL POSTURE........................................................................................................12

CONSIDERATION OF SUSTAINABILITY..................................................................14

CORPORATE SOCIAL RESPONSIBILITY.................................................................14

CONCLUSION...................................................................................................................16

BIBLIOGRAPHY...............................................................................................................17

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INTRODUCTION

To implement strategy a firm must have an appropriate organizational analysis and design. This
includes the process and mechanism necessary to make sure that limitations between internal
activities and external parties, such as customers, suppliers and alliance partners are flexible. A
firm’s performance will suffer if its managers do not carefully consider both of these
organizational attributes.

Organization design is the process of aligning an organization structure with its mission and
visions. This comprise of relationship between tasks, workforce, responsibility and authority by
supporting aims of the business. Good organization design helps innovation, growth,
communication, productivity where people can work efficiently and effectively. For instance
sales and production work in different department. But both need to communicate with each
other about customers need. How the work is done, information sharing and how people are
incentivized of all these activities shows how well the firm is performing (Mind tools: Essential
skill for excellent career, organizational design, aligning organizational structure with business
goals, 2010).

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STRUCTURAL DESIGN

“Organization structure refers to the formal configuration between individuals and groups with
respect to the allocation of tasks, responsibilities and authority within organizations” (Greenberg
and baron 2008 p.584). Nowadays, managers are faced with two ongoing and vital activities in
structuring and designing their organizations. First, they must decide the most appropriate type
of organizational structure. Second, they need to assess what mechanism, process, and
techniques are most helpful in enhancing the permeability of both internal and external
boundaries. Dess notes that “Organizational structure refers to the formalized pattern of
interactions that link a firm’s tasks, people and technologies” In order to accomplish an
organization’s mission a superior structure assists to ensure that resources are used effectively, in
this regard, structure identifies the managerial, executive and administrative organization of a
business and indicates hierarchical relationships and responsibilities. In addition, it has great
impact on information flow as well as the context and nature of human interactions (Clegg,
Kornberger & Pitsis 2008). For arrangement of activity patterns, we need organizational
structure. These activities patterns cluster into levels, divisions, departments or positions.
Authority and responsibilities for particular activities become dispersed among an increasing
number of subunits, hierarchical levels and positions.
There are some organizational structures which are discussed below.

Simple Structure
The simple organizational structure is the most common and oldest form of organization. Most
organizations are very small and have a single or very narrow product line in which the top
executive (Owner-manager) makes most of decisions (Clegg, Kornberger & Pitsis 2008).

Advantages
This kind of structure is highly informal, direct supervision and accomplishes coordination of
tasks. Its characteristics include centralization of decision making, less task specialization, less
regulations and rules, reward system and informal evaluation. Sometimes owner-manager hires a
manager to supervise day-to-day operations.

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Disadvantages
Due to few regulation and rules, the organization may promote individualism and creativity.
“Informality” is another problem, employees may do not have a clear concept of their
responsibilities and tasks, which can lead to confusion and conflict. Lack of regulation may lead
to self-interest, which can wear down satisfaction and motivation, and cause misuse of
organizational resources. These organizations have a flat structure, limit opportunities and no
potential for future advancement.

Functional Structure
The growth of the small firms due to excessive demands obliges the own-manager to process and
obtain all of the information necessary to run the organization. The managers do not have enough
skills such as marketing, accounting, production, engineering and etc; therefore, manager has to
employ specialists in the various functional areas. This growth process in operation and hire of
new employees implies to functional organizational structure which refers to a form of an
organization in which the main of the business functions, such as, accounting, R&D, marketing,
sales and production are grouped internally. The coordination and integration of the functional
areas are an integral part of chief executive role.
Advantages
This kind of structure is suitable for businesses where there is high production volume, some
vertical integration and closely or single product (Clegg, Kornberger & Pitsis 2008). The
organization can improve its control and management within each of the functional area in
making decisions. This leads to economies of scale; also, professional development and career

path are facilitated in specialized areas (Raymond et al 1992).

Disadvantages
Different orientations and values among functional areas may delay coordination and
communication. Functional groups may different goals and differing meanings of words and
concepts that lead to less coordination, communication and interaction with other groups.

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Divisional Structure
This manner of organization is organized around projects, markets, or products. Functional
specialists, typically planned into divisions, include each of sections. This kind of structure
includes a set of relatively independent parts governed by a central organization office. The
divisions operations are relatively independent and consist of products and services that work
differently from each other (Clegg, Kornberger & Pitsis 2008).

Advantages
Separate divisions need to have separate strategic and operating control. In this regard,
improving operations in the product markets are facilitated by divisional managers who are
responsible, and organization’s staff can dedicate their time to overall strategic issues for the
whole organization. Organizations can enhance their abilities to respond quickly to important
and unpredictable changes by focusing on a division’s markets and products- by the manager of
divisions.
Disadvantages
This approach can be very expensive. Costs can be increased because of personnel duplication,
investment and operations since each division must staff multiple functional sectors. They can
lead to a dysfunctional competition among sectors, since each division exclusively follows its
operation and strategy. In addition, when many divisions provide different products and services,
they have different targets and goals; therefore, different quality and image may occur across
sectors.

Matrix Structure
Matrix organizational structure is one approach that tries to overcome the insufficient inherent in
the other structures, which is combination of the divisional and functional structures. It refers to
a structure which has multiple lines of authority, but some individuals have two bosses and have
to report to at least two managers (Clegg, Kornberger & Pitsis 2008).

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Advantages
Matrix structure typically optimizes the use of skill and resources, it is ideal for project-based
organizations with workloads fluctuation. In addition, it is a logical choice when two different
dimensions are equally important. Structures determine executive power and what is important;
the matrix structure works when two different dimensions ought to have equal attention.
• Improves communication, flexibility and coordination.
• Boosts professional development through a broader range of responsibility
• Increases market responsiveness through synergies and collaboration among professional
employees.
• Utilizes more efficient of resources.
(Burton et al 1998).
Disadvantages
One concern is that it increases uncertainty and goals conflict. Employees, who work at the
matrix structure, are confused with having two bosses, as a result, two sets of priorities which are
not generally aligned with each other.
• Working relationships may be more complicated and human resource duplicated.
• Decision making may hinder due to excessive reliance on teamwork and group processes.
• Increased levels of conflict due to intense power struggles.
• Dual-reporting relationships can lead to uncertainty regarding accountability.
(Burton et al 1998).

BUREAUCRAY: MAX WEBER

“A bureaucracy is a form of organizational design defined by a number of characteristics,
including a rational career structure as a set of formal relations among positions, arranged in a
hierarchy of ascending authority, with rights, responsibilities, and entitlements attached
according to the place of the position in the hierarchy”
(Clegg, Kornberger & Pitsis 2008, pp. 486).

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Bureaucracy is a rational machine that Weber defined as having fifteen key dimensions:

• Power belongs to an office and is not a function of the office holder.

• Power relations within the organization structure have a distinct authority configuration,
specified by the rules of the organization.
• Because powers are exercised in terms of the rules of office rather than the person,
organizational action is impersonal.
• Disciplinary systems of knowledge, either professionally or organizationally formulated,
rather than idiosyncratic beliefs, frame organizational action.
• The rules tend to be formally codified.
• These rules are contained in files of written documents that, based on precedent and
abstract rule, serve as standards for organizational action.
• These rules specify tasks that are specific, distinct, and done by different formal
categories of personnel who specialize in these tasks and not in others. These official
tasks would be organized on a continuous regulated basis in order to ensure the smooth
flow of work between the discontinuous elements in its organization. Thus, there is a
tendency towards specialization.
• There is a sharp boundary between bureaucratic action and particularistic action by
personnel, defining the limits of legitimacy.
• The functional separation of tasks means that personnel must have authority and sanction
available to them commensurate with their duties. Thus, organizations exhibit an
authority structure.
• Because tasks are functionally separated, and because the personnel charged with each
function have precisely delegated powers, there is a tendency toward hierarchy.

• The delegation of powers is expressed in terms of duties, rights, obligations and

responsibilities. Thus, organizational relationships tend to have precise contract basis.

• Qualities required for organization positions are increasingly measured in terms of formal
credentials.

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 • Because different positions in the hierarchy of offices require different credentials for
admission, there is a career structure in which promotion is possible either by seniority or
by merit of service by individuals with similar credentials.

• Different positions in the hierarchy are differentially paid and otherwise stratified.

• Communication, coordination and control are centralized in the organization

(Clegg, Kornberger & Pitsis 2008, pp.489)

Bureaucracy is a form of organizational structure that cannot be overridden. The above

mentioned points enumerate the concepts that Weber contributed to organizational design.

Advantages of Weber’s Theory

• Based on Logic.

• Based on Rationality.

• Supported by trained and qualified specialist.

• Offers a stable model for Organizational effectiveness.

• Top to bottom hierarchical approach can be beneficial if structured well.

Disadvantages of Weber’s Theory

• Based on roles and responsibilities rather than task and duties.

• Lack of flexibility.

• Low responsiveness to changes in the business environment.

(Maureen Cutajar)

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ORGANIZATIONAL RATIONALITY

An organizational design is the plan of an organization’s rationally designed structure and mode
of operation. The formal structure of an organization is its framework of roles and procedures.
An organizational design creates a rational model of formal organization. The study of
organizational design is often the study of things that do not happen - but which should,
according to the rational model. (Clegg, Kornberger & Pitsis 2008)

Rationality is a very important element for the efficient working of any organization. The motive
behind rationality is based on that managers of every company should answer properly to the
environment by assessing known facts estimating possible outcomes and judging those outcomes
with respective costs. Rational behaviour would help to assist a culture of rational thought that
establishes set of laws and principles of behaviour for organizations. It helps us to know what
marketing, finance, R & D, H R departments and employees are supposed to do and what are the
expectations they need to fulfil for the efficiency of our organisation.

ORGANIZATIONAL CHARACTERISTICS

Organization will have the following characteristics, according to rational views of them.

• Purposes, Objectives and Goals.

• The action that occurs within the organization will be oriented to achieve these purposes,
objectives and goals.

• These actions will be consciously shaped through the organization’s design.

• Key aspects of design will involve practices related to structure, communication,

culture, HR practices, etc. (multiple frames)

• Changes occurring to organization’s with passing of time and experience.

• Organizations will be future oriented as the members act to achieve desired and planned
future.
• Future oriented action will be systematically arranged in hierarchy of actions,
contributing towards the achievement of something bigger.
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 • Actions assigned to roles; responsibilities defined for roles; and revised in the light of
experience.
• The preferential weighting of these actions, roles, and responsibilities will be
systematically revised.
• Organizational are built on rules. Rules provide for rationality. A rule tells us how things
have been done in the past and how they should be done in the future. If we follow rules
we will surely succeed in not being responsible for errors. Rules protect us; they ensure
rationality. (Clegg, Kornberger & Pitsis 2008 p. 10)

ORGANIZATIONAL STRATEGY

“The most important decisions managers make are those that structure the future strategy of the
organization” (Clegg, Kornberger & Pitsis 2008)

Organization strategy includes 3 broad areas.

• Vision, Mission and Competitive Advantage

• External Assessment

• Internal Assessment.

First strategy explains current and long term objectives and how to differentiate from
competitors and short term vision and mission. Mission is always to be profitable by fulfilling
shareholders, customers, government and suppliers requirement.

External assessment strategy involves defining clearly why customers will buy your product, by
assessing their bargaining power that benefits which a customer seeks. Industry and competitive
analysis is very important component of organizational strategy to be at advantage an
organization needs to examine direct and indirect competitor’s strength, weakness and strategies
by analysing current ongoing market circumstances.

Internal assessment evaluates management process and how efficiently it will use value chain
analysis approach. For marketing department have branding of products, marketing plan with set
of vision and mission, proper data to track customer and market information and efficient
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product and service management. For finance department, utilizing appropriate pricing models
for products, performing within financial goals and aiming of effective financial plan. For R & D
department, integrating with other department and creating innovative products by using latest
technology.

ETHICAL POSTURE

“Business ethics refers to the study of people’s tendencies to behave in morally appropriate ways
in organizations” (Greenberg & Baron 2008, p.54)

An organization should give importance on ethics that it is an essential part of every

organization. It ensures ethical standards by following laws and upheld responsibility of business
leaders. Company should follow two strict principles of ethics which would promote sound
business for long term profitability and being ethical it assist to follow current legal regulations
(Greenberg & Baron 2008). Policy specifies that no false, artificial, intentionally misleading or
incomplete entry shall be made or data established for any reason or no employee shall engage in
any arrangements that results in creation of such entry. (Greenberg & Baron 2008, p.62)

Factors influencing ethics of an organization are family influences, life experiences, peer
influences, personal values and morale and finally situational factors. (Davidson et al 2009). An
organization should follow three principle of ethics firstly by showing respect for core human
values by providing them better and safe working conditions, treating equally with respect and
dignity, promoting healthy workplace and refusing doing business with unethical suppliers or
companies. Secondly, demonstrating sensitivity to host country tradition where it can accept the
culture and working standards which are considered ethical. Finally, being ethical requires taking
under consideration the nature of adjustment in which act occurs. (Greenberg & Baron 2008, p.
64)

Some of ethical practise which a organization emphasis are avoiding conflicts of interest
between employee and employer, avoiding the use of insider information by employees for
undue benefit, accuracy of accounting records, avoiding misuse of company assets, fraud and
deception, the needs and right of suppliers, protecting environment, avoiding discrimination

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against and harassment of minority group, duties to local communities and society, safety for
employee and customers and fair remuneration. (Linstead, Fulop & Lilley 2009, pp 393-394)

Components of Ethics programme.

• Code of ethics – Code of ethics is general document stating general and specific rules of
what organization stands for. Codes cover all employees from lower to higher authority.
Although codes differ i.e. responsibilities for employee include quality of goods and
services to be produced, protecting environment, duties and responsibilities. Relationship
with people and restriction towards working with inappropriate behaviour.

• Ethics training – Provide training programmes to employees that inculcate the company
ethical standards and values. It includes imparting training through lecture, surveys, case
studies, videos, simulation and analysing past experience.

• Establishing ethics committee –An ethics committee which comprise of senior level
managers from various areas which evaluate company ethics policies that are called
ethics officer who are responsible to provide strategies in order to ensure smooth working
throughout organization. This committee monitors, investigate, clears, identify and
analyse the corporate code of ethics and investigate its problem.

• Ethics help lines – An organization should have special phone lines number which gives
right to employee to ask question related to ethical behaviour and they can also report any
unethical acts which they may observe within organization and serious action to be taken
if found on the wrong side of the law.

• Ethics audit –An ethics audit whereby behaviour of employee is investigated which are
further then discussed to avoid in future. Audit supervises employee behaviour which
detects ethical and unethical acts and finally a straightforward policy for disciplining rule
violators. (Greenberg and Baron 2008, pp 68-71)

• Develop meaningful code of ethics – Ethics could be formulated and implement

successfully if ethics are distributed to each employee, supported by top management and
ethics are evenly enforced with rewards for compliance and strict actions for
noncompliance.(Kreitner & Kinichi 2008, p.26)
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CONSIDERATION OF SUSTAINABILITY

Sustainability development is defined as “a process of change in which the exploitation of

resources, directions of investments, orientation of technological development and institutional
change are made consistent with future as well as present needs” (Linstead, Fulop and Lilley
2009, p.263) An organization must adopt sustainability which is business process that creates
shareholder values by looking for opportunity and managing risks existing from internal as well
as external environment.

• Strategy- An organization puts together long term economic and social aspect in business
strategy while maintaining global reputation. Strategy is adopted by analysing internal
and external environment which helps to gain profit by maintaining sustainability.

• Governance and Stakeholders- Organization should follow corporate governance and

involvement of stakeholders by strictly following company code of ethics and principles
which are realistic.

• Financial- Organization should adopt appropriate measures in order to provide financial

statements and details to public through various sources of information which reflects
image and reputation.

• Customer and product – Providing customer satisfaction by investing in customer

relationship management and producing product and service which are innovative as per
the growing demands of market which focuses on technology in an efficient and
productive ways.

CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility is defined as” the notion that corporations have an
obligation to constituent groups in society other than stockholders and beyond that
prescribed by law or union contract” (Kreitner & Kinichi 2008 p. 21)

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 Pyramid of Social Responsibility

T
Carrol global corporate social responsibilities pyramid (Kreitner & Kinichi 2008, p.21)

1. Philanthropic responsibilities: - they are all about being a good citizen. Such
as contributing resources to the community and improving the quality of life.

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 2. Ethical responsibilities: - it is about being ethical. Obligation to do what is
right, just and fair. Avoiding harm.

3. Legal responsibilities: - it is all about obeying the law. Law’s are society’s
codification of what is right and what is wrong. Play by the Rules.

4. Economic responsibilities: - it is about being profitable. The foundation up

on which all others rest.

CONCLUSION

Hence, it can be safely concluded that organizational design and structure form the backbone of
any organization without which sustainability and long term effectiveness could become matters
of concern. No report on this topic can be completed without an in-depth understanding of Max
Weber’s Bureaucratic theory. His insights into the world of organization design have largely
been questioned over the years. But, what needs to be recognized here is that his theory forms an
invaluable part of modern day organizational design and analysis. It is very hard for any existing
organization to claim that they perform in a non Bureaucratic manner. Irrespective of how hard
someone may try, it is almost impossible for any multi-dimensional organization to survive
without the influence of bureaucracy within its frame work.

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BIBLIOGRAPHY

ACCSR: Australian centre for corporate social responsibility, online resources, defining
corporate social responsibility, viewed 5 September 2010.
<http://www.accsr.com.au/html/definecsr.html>

Burton, Richard M. & Obel.B. 1998, Strategic Organizational Diagnosis and Design,
Kluwer Academic Publishers, Boston.

Jerald Greenberg & Robert A. Baron. 2008, Behaviour in Organizations,9th edition,

Pearson education Inc, New Jersey.

Mind tools essential skill for excellent career, Organizational design, Aligning
organizational structure with business goals, viewed 3 September 2010
<http://www.mindtools.com/pages/article/newPPM_95.htm>

Paul Davidson, Alan Simon, Peter woods and Ricky W.Griffin, 2009, Management –
Australasia management, 4th Edition, John Wiley & Sons, Australia.

Raymond E. Miles.E.M, Snow.C.C. 1992, Causes of Failure in Network Organizations,

California Management Review, California, Berkeley, viewed 3 September 2010,
<http://www.unioviedo.es/egarcia/milesysnow.pdf>

Robert Kreitner and Angelo Kinicki, 2008, Organizational Behavior, 8th edition, The
McGraw-hill Companies Inc, New York.

Stewart Clegg, Martin Kornberger and Tyrone Pitsis, 2008, Managing & Organizations:
An introduction to theory & practice, 2nd edition, Sage publication ltd, London

Stephen Linstead, Liz Fulop and Simon Lilley. 2009, Management and organization: A
Critical Text, 2nd edition, Palgrave Macmillan, New York.

Maureen Cutajar, 2010, Max Weber Bureaucracy Theory, Suite101, viewed 5

September 2010,
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< http://www.suite101.com/content/max-weber-bureaucracy-theory-
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