Organizational Structure and Design

Although relationships and contacts operate within the formally established structure, the prevalence of an informal organization (numerous informal contacts) must be accepted as a necessary complement to the formal structure. When firms were classified in accordance with the different systems of production technology, a strong relationship was found between organizational structure and success within each category. In other words, successful firms within a particular production system shared common organizational characteristics. Organizations design structures to protect their dominant technology. For example, a warehousing facility permits the build-up of manufacturing output and allows the production technology system to operate at a steady state at a time when demand for the product is seasonal or cyclical. The twin cores of process re-engineering are the radical redesign of business processes and their operation by cross-functional teams. Production systems change frequently in response to alterations in the design of products and changes in the quantities produced.