LITERATURE REVIEWIn simplest terms, an organization is the grouping together of individuals in order to accomplish a given task. Once the demands of completing the task are such that the work must be divided between two or more groups (subgroups/units), interdependence between groups is created. Once interdependence is created, coordination is needed to see that the tasks of different groups are completed in manner consistent with organizational goals. Structure can be described as the way in which the organization: divides its labor into distinct task; and then achieves coordination among them (Mintzberg, 1979).
An organizational structure is a formal framework by which job tasks are divided, grouped and coordinated (Robbins & Coulter, 2007). When managers change or develop the organization structure they are involved in organizational design. This process involves six key elements: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization. The right organizational structure would allow their employees to accomplish organizational goals effectively and efficiently.
The environment in which an organization operates holds significant bearing on its structure. Keep in mind that organizational structure only provides a fundamental framework. Consequently, organizational structure cannot guarantee the achievement of corporate objectives. However, it is essential to understand that a poorly structured organization could seriously hinder the achievement of the set goals of that organization (Badawy, 1995, p.108). As firms face a changing and competitive environment, organization design is of critical importance. A firm cannot ignore the need to make adjustments/changes in organization if it hopes to survive and grow. These changes generally mean a redesign of an existing organization.
OBJECTIVEThis paper is based on the simple idea that formal organizations with bureaucratic organizational structure may benefit by adopting a more flexible organizational structure.
The organization to be examined is Caterpillar Inc., the world's largest...