Information technology and its effect on organizational structure

Essay by rapist815University, Bachelor's January 2005

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Information technology and its effect on organizational structure


Organizations are in the midst of transformation. In many industries, mass production by large, vertically integrated, hierarchically organized firms is giving way to more flexible forms of both internal organization and industrial structure. Work is increasingly accomplished through networks of smaller, more focused groups. The resulting structure of sub-organizations is redefining the boundaries of both firms and industries.

A case in point is the computer industry. In the past, large, vertically integrated firms such as IBM dominated the industry, which created products and services throughout the value chain -- from the microprocessor level all the way up to the provision of solutions.

The vertical structure is now being replaced by a series of layers, each of which is, in effect, a separate industry. Value is generated by coalitions, where each member of a coalition specializes in its area of core competence and enhances it through the use of tactical or strategic partnerships.

Internally, team structures are replacing the traditional hierarchical form. Incentives are increasingly based on performance, and achievements.

In sum, modern enterprise is undergoing major restructuring and information technology IT is an important driver of this transformation. "A fundamental change is taking place in the nature and application of technology in business. This change has profound and far-reaching implications for organizations and for you...the information age is evolving into a second era. Organizations that do not make this transition will fail. They will become irrelevant or cease to exit."


Definition of Terms ¨ Information Technology: Technology is usually referred to as the production process of a society or an industry. But, with the advent of computers, such assumption is no longer valid. We are now living in a new era of Information, and a new definition is born:...