(Solved Homework): Consider your self the CEO of a medium sized company, what factors would influence you in…

Consider your self the CEO of a medium sized company, what factors would influence you in deciding on an organizational design?

Expert Answer

Organizational structure refers to the structure that coordinates and motivates employees to work together in meeting organizational goal. It helps in deciding about the reporting relationship and the tasks performed by each.

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The organization structure depends on factors like size of the company, diversity of operations and the environment in which the organization operates. The external environment is one of the important factor for organizational structure. These aspects include uncertain conditions, external resources and competitors. Also, it focus on the formal reporting relationships that consists of hierarchial levels, span of control, decision-making responsibilities, etc.

The factors that influence the decision of CEO on an organizational design are: –

  • Size of the company – Large business require intense framework of their organizational structure and small business require simple structure as business owner perform all the tasks. Medium sized company require structure where work can be dividing among the employees and clear line of authority is maintained.
  • Life cycle of the company plays important role in developing the organizational structure. Companies are expanded and organizational structure is developed as per the business mission and goals. Companies with high performance will be more mechanical in their organizational structure because the chain of command will increase. Companies who are mature will focus on developing organizational structure which can improve efficiency and profitability.
  • Strategy – is nothing but the plan of action made to meet the overall goal of an organization Strategy provides proper direction to business in meeting the goals. Companies with high growth maintain simpler organizational structure so that they can react to changing business environment effectively. Small businesses focus on setting business strategies and odoes not focus more on developing oganizational structure.
  • External business environment plays important role because it is dynamic and keeps on changing based on customers needs and preferences. So, in order to meet consumer demand companies decide on their organizational design accordingly.

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