Discussion - Module 10

Organizational Structure and Culture Report

The current organizational structure, which is divisional, has supported the business objectives and strategic plans. This structure connects with traditional corporate systems employed in the country's businesses. This structure has helped in enhancing the effectiveness of the company in sustaining a substantial market presence worldwide. Primarily, the structure has defined the patterns in the company's resources and processes and facilitated the firm's effective and efficient business management.

The Current Organizational Structure's Impact On Innovation

Since this divisional organizational structure relies on formal control, it has a significant impact on innovation. Through this structure, the company can improve innovative achievement by facilitating coordination among the organization's various functional units, increasing cost-effectiveness while reducing uncertainty and production errors. According to Kalay & Lynn (2016), a divisional structure makes cross-functional knowledge and resource sharing attainable. Thus, the structure tends to be a crucial aspect for the company in facilitating strategic decision-making, resolving disputes, and the active and effective coordination of innovation.

The divisional organizational structure influences innovation within the organization by leading to positive stiff competition between its established sub-sections, promoting innovation in the entire organization. Thus, the divisional structures possess better control over their sub-units than functional structures, giving the company's top management a higher level of control over its workforce and its tasks. The sub-divisions foster innovation activities since they operate independently under a divisional manager (Aksoy, 2017). This unit manager reports to the main office and delegates the decision-making power on production, promotion, and marketing functions.

This reporting enables the managers to make decisions on their respective units in time. As a result of timely reporting, the model facilitates the sub-sections to focus on consumer interests, inspire innovative competition among these divisions and improve regulation since the sub-unit operates as an individual profit center (Choi, 2021). Similarly, since the divisional structure leads to duplication of roles, it becomes easy to develop mastery skills that play a critical role in enhancing creativity leading to innovation.

Furthermore, the divisional organizational structure improves organizational success by supporting the production process innovation. As a result of this support means that the company's structure promotes knowledge development via formal research based on practice, experience, and inter-divisional interactions. This interconnectedness leverage the innovative capacity of the company (Garza & Lopez, 2020). Overall, in terms of impacting innovation, the organizational structure enables organization configuration. It prepares to handle new events requiring innovative techniques to cope with certainties and their occurrence chances.

The divisional organizational structure aspect of "adhocracy" is firmly linked to the promotion of innovation. Therefore, the structure is not influenced by classical principles and is precisely distant from the ideas of unified command, high behavioral formalization, and planning and control systems. Instead, this structure enhances innovation by ensuring mutual adjustment between the established departmental teams without guaranteeing formal coordination of roles (Kovaçi et al. 2021). Maintaining the organizational configuration that allows for innovative knowledge based on practical experience and interaction among workers becomes achievable. This interaction promotes an adhocratic structure incorporated in the general divisional structure. It promotes interdisciplinary teams and cooperation among sub-units that boost innovation by generating and diffusing ideas.

The current divisional structure has remained effective in addressing the market demand changes by empowering the establishment of various divisions such as marketing and research and development to correspond and respond to changes in market demand witnessed for some products or in different geographies. The sub-units or divisions have worked together in solving common changes in the market demand, which cuts across all established sub-sections (Kovaçi et al. 2021). Thus, the divisional structure tends to be crucial in handling changes since the failure of one of the sub-division units cannot directly undermine the operations of other divisions.

Further, the divisional structure has organized business operations into market groups such as customer groups and geographical locations. As a result of this grouping, the entire company has identified the critical changes in the market demand, which can positively or negatively influence performance. For instance, as the price of pneumatic tires had fallen in previous years, the quantity demanded in different markets raised because people bought more at low cost than previous (Kalay & Lynn, 2016). However, the company relied on its various sub-units within the production line to develop tubeless tires to compete with cheap selling ones.

The firm used the marketing department to market and promote the newly innovated tires to counter market demand changes. Since it was a new product, its demand was high irrespective of being high prices. Therefore, the organization has relied on its current structure to create more individual sections and distribution functions between its main offices and its branches located in different places.

Recommended Changes To The Current Organizational Structure

The proposed change should be improving this divisional structure by incorporating a multidivisional form ("M-form"). This integrated legal structure will enable the parent company to establish subsidiaries in different markets. The new branches need to use the parent company's brand and name to gain a competitive advantage. If the change gets successfully initiated and implemented, the company's current divisional organizational structure effectively organizes the company activities around the geographical, market, or product teams (Kalay & Lynn, 2016). Thus, a company to create more green widget groups to serve Japanese or European markets will arise. All the divisions need to comprise the complete set of functions and independently handle their accounting activities, sales, marketing, engineering, and production.

The recommended multidivisional form will support innovation by ensuring accuracy in making clustered decisions at the division level. This clustering process will get followed by opening many branches in various markets and regions with rich skills even if it is likely to incur increased costs. Once the innovative decisions get integrated into all levels, the company will experience minimized disputes and fiefdoms that do not necessarily work together for the success of the whole entity in terms of innovation.

This recommended change makes the company more responsive to market change by promoting product and geographic departmentalization. A divisional structure built by aspects of the multidivisional form implies that one manager's authority controls different activities related to the product (Garza & Lopez, 2020). For instance, if the division produces tubeless tires, the concerned division will have its sales, engineering, and marketing departments that differ from those within the tire-making section or unit.

Similarly, the geographic departmentalization resulting from M-form will revolve around categorizing activities depending on geographical location, such as an African or Asian division, to respond to the market change needs. Primarily, geographic departmentalization is crucial if tastes and brand responses resulting from market demand differ across geographic areas, enabling flexibility in product offerings and marketing strategies (localization). However, this change in divisional organizational structure means that the autonomous divisions will be making the decisions. Therefore, the company structure will make the company conduct its business activities globally.

A multidivisional change structure will align a company with the individual units based on geographic regions, products, or services. For instance, a moving company might create a geographic-divisional structure, including the Chicago and Miami divisions. Alternatively, since the firm is a manufacturing enterprise, it can implement a product-based divisional system, including product engineering divisions (Kuznetsova & Karpenko, 2018). In contrast, a professional services company might organize around service lines, such as the personal and business services divisions.

How Organizational Changes Support Innovation Culture

The integration of "M-Form" with the divisional organization structure as a new change will help support the company's innovation culture by utilizing both scientific management and bureaucratic controls. This favorable combination will improve the firm's efficiency and profits. The combination is necessary since the company is big because it has many workers who are not limited in resources. Thus, every employee gets an opportunity to specialize while the firm remains organized in a strict hierarchy.

Further, M-form will enable the comp to quickly notice where production is lacking and how evaluability of each division. This identification will provide a better platform to create incentives for employees, which increase production. Since the company's central auditing unit evaluates every division using the M-form using the same accounting techniques, the company will easily predict the efficient units (Kuznetsova & Karpenko, 2018). As a result of this prediction, this prediction becomes crucial to understand which products to produce and the best practices that are helping the company grow.

In general, M-form supports the culture of innovation by creating a shared understanding of innovation. A company looks at how and why to invent and how the newly innovated item looks different from its substitutes. Since the innovation tends to be contextual, a company may understand its significance but need to establish common knowledge around what it is and what it will do for the company (Kuznetsova & Karpenko, 2018). Therefore, forming a particular innovation mission implies the company has well-structured outlines for daily activities for spearheading the innovation process.

However, the current ways, such as the leadership team not taking the lead by establishing its intention and communicating it to the entire organization, will make the current culture work against the innovation. This failure undermines the leadership from illustrating its efforts to innovation culture via leadership behaviors and engagement in attaining innovation. Primarily, commitment lack of leadership implies miscalculated intention for enhancing the innovation culture (Garza & Lopez, 2020). Thus, the company cannot develop and implement innovative techniques to layout the innovation culture in the operational context and answer the concerns regarding who, what, where, when, why, and how it will innovate.

Conclusively, the company's utilization of the new organizational structure that is hybrid will help achieve the set goals and objectives. Through the divisional structure, innovation opportunities are available since every sub-unit has its unique, innovative skills. Generally, culture and innovation remain as core apsects for organizational success since they cover multiple elements needed for creating independent divisions in varying geographic markets.

References

Aksoy, H. (2017). How do innovation culture, marketing innovation and product innovation affect the market performance of small and medium-sized enterprises (SMEs). Technology in Society, 51(4), 133-141.

Choi, K. (2021). Delegation in multiproduct downstream firms with heterogeneous channels. Journal of Economics, 1-28.

Garza, R., & Lopez, A. (2020). Measuring Innovation Culture: A Synthesis of the Innovation Culture Construct and Identification of its Research Clusters. Multidisciplinary Business Review, 13(1), 42-55.

Kalay, F., & Lynn, G. S. (2016). The impact of organizational structure on management innovation: an empirical research in Turkey. Journal of Business Economics and Finance, 5(1), 125-137.

Kovaçi, I., Tahiri, A., Bushi, F., & Zhubi, M. (2021). Organization as a Function of Management and the Types of Organizational Structures that Apply in SMEs in Kosovo. Calitatea, 22(181), 3-6.

Kuznetsova, I., & Karpenko, Y. (2018). The technology of budgeting enterprises with the divisional structure. Innovative Technologies and Scientific Solutions for Industries, (1 (3)), 96-102.