- When there is a change in external factors (market conditions, technology advancements, or changes in legislation), businesses may need to reassess their current structure
- An adaptive organisation will be able to change their structure in response to external factors, or build an organisational structure which is easily able to handle external changes
Evaluating Organisational Structures in the face of Uncertainty
External Factor
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Explanation
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Market Uncertainty
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- If the external market becomes highly volatile or uncertain, a business may benefit from a more flexible structure
- Project-based structures can help a business to respond quickly to changing market conditions than highly-structured hierarchies as they allow for collaboration across functional areas and resources can be shared
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Rapid Technological Advancements
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- When technological change significantly impact an industry a business may require a structure that allows for innovation, agility and quick decision-making
- Flat structures can be suitable as they encourage information sharing, collaboration and empowerment of employees at all levels
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Global Expansion
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- For businesses expanding into international markets a regional organisational structure may be appropriate
- It enables coordination and control of operations across different countries taking into account local market dynamics, laws and cultural differences
- It supports centralised decision-making while allowing subsidiaries to adapt to specific regional needs
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Competitive Pressures
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- Intense competition may call for a structure that enables speed, efficiency and customer responsiveness
- Decentralised structures empower teams to make faster decisions and respond directly to customer demands
- This promotes speed and encourages a customer-focused approach that may provide a much-needed competitive edge
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- The appropriateness of an organisational structure depends on the context and unique characteristics of each business
- Factors such as organisational culture, leadership style and employee capabilities should also be taken into account when selecting and implementing a new organisational structure
