Organizational and Governance structures

This essay exploits the key factors affecting today’s businesses. The context of modern business needs essential attention to issues of business environment, organization structure, and governance, business models, the functionality of business departments. Understanding the business context is key to sound managerial decision making. As business becomes complex, only organizations that adapt to changing models in businesses thrives.

1.2 Contextual factors affecting business decision making.

1.2.1 Organizational and Governance structures

According to Rusu and Avasilcal (2015), organizational structure and governance of a firm is a key to successful implementation of the firm’s plans and strategies. Firm value and creation of wealth to the shareholders entirely depends on good corporate governance and organization structure. According to Baesu and Bejinaru (2013),

organizational resources and capabilities improve the processes and operations that a firm is geared towards achieving. Firms adopt different organizational structure and governance regarding their strategic objectives. According to Alberts, (2007) firms, corporate design affects their overall agility as well as their effectiveness and ef?ciency. Moreover, organization design assists in the role of enabling control and coordination which concerns the need for value creation of a particular business model by a firm.

Harvey and Jones (2013) underlined the significant organization structure that exists in firms as functional, divisional, matrix, process, client-centric structure, and a network structure. He recognizes that different organizational structures are adopted by organizations as long as they are coordinated differently using various methods and dominated by significant parts of the organization. Other definitions of organization structure as discussed by other scholars identified structures as either Mechanistic or Organic.  A Mechanistic structure is defined as being highly formalized, standardized and centralized versus an Organic structure that is low on formalization, standardization, and centralization (Sat?, 2010). The Organic organizational structures have been adopted successfully by Japanese electronics.

1.2.2 The impact of environmental forces on organizations.

Strugar-Jela?a (2016) argues that to craft a good strategy, it’s important to look for opportunities for doing new things or the existing but in a better way. Organizations formulating strategies to compete effectively in the business need to be aware of the operating environment (Slagmulder and Devoldere 2018). The management ought to scan both the internal and external environment to identify the best business strategies to adopt in their operations. The most popular methods of environmental scanning are the use of PESTLE and SWOT analysis.

These methods enable the firms to adequately understand their internal and external environment which strengthen their positioning and competitive advantage. PESTLE analysis allows the organizations to create a solid understanding of the Political, Economic, Socio-cultural, Technological, Legal and Environmental factors that affect their business operations (E. Dobbs 2014).

The impact of environmental forces on organizations

On the other hand, SWOT analysis assists firms to create a clear understanding of the critical factors that affect the organization such as their internal Strengths and Weaknesses and their Opportunities and Threats that defines the external environment. According to Tapera (2014), a clear understanding of both the internal and external environments enables organizations to effectively adopt strategies that would allow organizations to gain competitive advantage and influence market operations.

According to Armstrong and Taylor (2014), the internal environment of the organization includes factors which directly influences employees’ behaviors and attitudes such as the organizational culture, technology, employees relations, and the people which interact within the organization. Consequently, the external environment considers the external pressures, the globalization, and changes in the legal and political forces

1.2.3 Risks confronting the firm

Organizations are fast experiencing the need for transformation to the dynamic environment, characterized by advanced technologies, consumer’s behavior and regulation (Slagmulder and Devoldere 2018). According to Williamson, Williamson et al. (2013) organization’s pliability and dexterity in the current dynamic environment necessitates a more strategic tactic to risk management.

Strategic risk management involves executing on the processes, people, and practices towards categorizing, evaluating, and responding to strategic risks with the definitive goal of defending and creating shareholder value. Strategic risk management treats organizations risk management as both a compliance issue as well as the complementary strategy of predicting risks. Strategic risk management integrates a company’s strategic functions concerning both shortcoming risks and unexploited opportunities for shareholder wealth creation (Di Serio, de Oliveira et al. 2011).

1.2.4 Organizational and Business Practices

In today’s business, Human Resource Management practices is a crucial function to successful operations of companies in the global environment. The core unit of HRM is the strategic human resource management which oversees the implementation of HR policies effectively to meet the requirement of employees. High-Performance Work Practices (HPWPs) are practices linked to human resources management in a company(Russell, Steffensen et al. 2018). These practices are aimed at motivating the employees towards excellent performance in their jobs. HRM has given a positive influence that high-performance work practices have on organizations performance. Furthermore, most scholars have observed that even though HRM departments develop and adopt HPWPs, the actual implementation is carried out by line managers within the organization (Strugar-Jela?a 2016).

1.2.5 The Functions of a Diverse Range of Firms

Business model is a concept useful to managers in planning to adjust and execute their strategies.  It states the importance of business initiative thinking as a arrangement other than a aggregation of the whole part (Tapera 2014). One of the function is operational dimensions which refers to how an organization conducts its business. Firms targets on the customers satisfaction which is possible through organized functionality among the various departments of the organization. The choice of the management to maintain the customers favourite products and services depends on the control and coordination of its activities. (Zott and Amit 2010)

Risks confronting the firm

As firms expand to global markets and complex business environments, there is a need for firms to adopt feasible business model. Firms that adopt business models that embraces innovation encourages the firm to produce new goods and services that will improve competitive advantage. Learning firms embrace innovation and creativity that seeks to align various business model elements in a given environment. Firms operating in complicated and dynamic environments need rapid and continuous adaptation. These models, therefore, quickly outspread across organization margins, and any alteration may affect all the network the ?rm is surrounded within. Research on these models and their associated organizational designs requires to be beyond the ?rm level to the ecosystems in which ?rms are embedded(Williamson, Williamson et al. 2013).

Conclusion

The business context in today’s world is rapidly changing. Following the discussions in this essay, it is evident that the organizational structure of a firm impacts its performance: the decision making and managerial choices that firms undertake depend on the organization structure and governance. The type organization hierarchy, the characteristics of the board of management are some of the salient features affecting business decision making. The essay also discussed the impact of environmental forces on business models.

 Using the SWOT and PESTEL analysis firm learns the pertinent issues affecting businesses such as globalization, change in technology, workplace diversity, legal and economic factors. All these prompt businesses to adapt to innovations such as e-commerce, value chain, and another business model to remain relevant in their companies. Moreover, the operations management functions of an organization assist organizations to thrive in their performance. The main operations such as finance, human resource, and production are the core parts that are vital to an organization. This essay, therefore, is relevant to understanding the business context and contemporary business world and how firms can operate in the dynamic environment.

References 

Baesu, C. and R. Bejinaru (2013). “Perspectives Regarding Strategic Dynamics In Modern Organizations.” Anuarul Institutului de Cercetari Economice” Gheorghe Zane”-Iasi 22(1): 63.

This paper sections refer to different aspects that have strong correlation with the main subject which is –organizational change. The first section debates the specifics and importance of organizational change within the present business context. Second section discusses managerial strategies to approach change in the organization environment. The next section of the paper argues the role of the leader and the appropriateness of leadership styles to each change process. The goal of the paper is to integrate key aspects in order to bring more comprehension to the approached subject – organizational change within modern companies.

Organizational and Business Practices

Di Serio, L. C., et al. (2011). “Organizational Risk Management: A Case Study in Companies that have won the Brazilian Quatity Award Prize.” Journal of technology management & innovation 6(2): 230-243.

Supply chain optimization, company interdependency and the establishment of global operating networks have all made companies more susceptible to uncertainty and risk. Literature on the subject lacks analysis of how companies have implemented these systems and what the results have been. This paper describes the implementation of Enterprise Risk Management (ERM) in three Brazilian world-class companies and evaluates the hindrances and facilitating factors. It also considers the results achieved in performance and company culture. Finally, we propose a model associating the benefits of risk management to the level of organizational transformation.

1. Dobbs, M. (2014). “Guidelines for applying Porter’s five forces framework: a set of industry analysis templates.” Competitiveness Review24(1): 32-45.

The purpose of this paper is to provide practitioners and students a practical yet comprehensive set of templates for applying Michael Porter’s five forces framework for industry analysis. Based on experiences with practicing managers, small business owners, industry analysts, academics, and students, a set of industry analysis templates that systematically guides an analyst through a comprehensive assessment of the five forces.

Harvey, C. and G. Jones (2013). Organisational Capability and Competitive Advantage, Taylor & Francis.

Based on this theoretical framework, this article analyzes the relationship between organizational capabilities, business strategy, and profitability in the Portuguese textile industry. The strong relationship between these variables suggests that the organizational capabilities and the choice of business strategy may be the key to increase the profitability in this study context. So, the ability of the Portuguese textile organizations to change their business strategy based on their organizational capabilities affects profitability in a number of ways.The article concludes with a number of managerial implications and directions for future research.

Russell, Z. A., et al. (2018). “High performance work practice implementation and employee impressions of line manager leadership.” Human Resource Management Review 28(3): 258-270.

Human resource management (HRM) research has documented the importance of high performance work practices (HPWPs) to organizations, and recent efforts have argued for increasing attention to the role of line manager implementation of HPWPs. In this article, we use theory on impression formation to describe the perceptual process through which line manager implementation of HPWPs facilitates the formation of different employee impressions of manager leadership styles. We argue that this process is contingent upon employee attributions of implementation intent, which are influenced by the interaction of employee affective and attributional tendencies with line manager implementation style (i.e., political skill).

The Functions of a Diverse Range of Firms

Rusu, G. and S. Avasilcal (2015). “ORGANIZATIONAL CONTEXT–RELATIONSHIPS WITH HUMAN RESOURCES MOTIVATION AND WORK PERFORMANCE.” Journal of Inventics 18: 88.

Recent  studies  regarding  human  resources  motivation  and  human  resources  performance  management  emphasized  the  role  of  the organizational context in the current dynamic business environment affecting the employees’ work in organizations. Thus, the current study highlights the  relationships  of  outmost  importance  between  contextual  factors  influencing  employees’  motivation,  which  foster  job  performance.  The  current paper  aims  to  develop  a  research  framework,  focusing  on  identifying  the  most  important  categories  of  contextual  variables  which  influence employees’  engagement  at  work  and  their  work  performance.

Slagmulder, R. and B. Devoldere (2018). “Transforming under deep uncertainty: A strategic perspective on risk management (Accepted).”

Companies increasingly face the need for transformation in today’s rapidly changing business environment, characterized by major shifts in technology, regulation, and customer behavior. A lack of strategic risk insight and foresight leaves many incumbents insufficiently prepared in the face of such deep uncertainty.

We argue that traditional risk management falls short because it predominantly focuses on strategy execution while leaving strategy formulation largely untouched. This research shows how leading companies develop a strategic risk management (SRM) capability to increase their resilience and agility in response to deep uncertainty. SRM takes a strategic, forward-looking perspective and focuses on strengthening processes, people, and practices for purposefully integrating risk into the strategy formulation process.

Strugar-Jela?a, M. (2016). “The role of management practice and business environment in promoting firm innovativeness.” Industrija 44(4): 119-140.

The central research objective of the paper is to establish the role of new management practices as a type of management innovation and dynamic business environment in promoting higher firm innovativeness. New management practices were observed from the angle of innovative management functions and managerial roles in large organizational systems. The authors’ intention was to provide an answer to the question: How and in what way do innovative management functions and managerial roles, together with the dynamic business environment, affect innovativeness in large organizational systems. 

Tapera, J. (2014). “The Importance of strategic management to business organizations.”

           This paper presents strategic management as an important business management concept. It defines strategy and explains the key concepts in strategic management; strategic vision, objectives, strategy formulation, strategy implementation, evaluation and initiating corrective action. The research also focuses on the corporate governance aspect of strategic management; role of the board of directors in crafting and executing strategy.

The different levels of pitching strategy are also discussed in this paper; corporate, business, functional and operational. All these concepts are examined with a view to highlight their importance in the effective and efficient management of business organizations. In an operating environment that is dynamic and highly competitive, business organizations need to appreciate the importance of crafting and effectively executing strategies that can help them create sustainable competitive advantage.

Williamson, D., et al. (2013). Strategic Management and Business Analysis, Taylor & Francis.

How can managers analyze their current and future business strategies? This textbook introduces the fields of business analysis and strategic management to provide students with an understanding of the key questions that need to be asked to understand an organization’s options. The second part of the book provides tools and techniques to help organize and improve corporate strategy. Uniquely, the authors provide resources to assess aspects of strategic goals which are sometimes overlooked such as financial performance, ethical and environmental considerations and business models. They cover a diverse range of companies from Supermarkets like Aldi and Tesco to Caermory Whiskey and Chinese manufacturing.

Zott, C. and R. Amit (2010). “Business model design: an activity system perspective.” Long range planning 43(2-3): 216-226.

This paper discuss on business model research which continues to be plagued with problems. Those problems hinder theory development and make it difficult for managers to use research findings in their decision-making. This article makes three contributions. First, clarify the theoretical foundations of the business model concept and relate them to the five elements of a business model: customers, value propositions, product/service offerings, value creation mechanisms, and value appropriation mechanisms.

A clear definition of a business model enables theory to develop systematically and provides coherent guidance to managers. Second, suggest that value configuration is a contingency variable that should be included in future theorizing and model building.