Running Head: ORGANIZATIONAL STRUCTURE c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c 1
Organizational Structure and Culture Report
MBA 580
December 11,2021
ORGANIZATIONAL STRUCTURE c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c 2
Executive summary
Organizational structure and culture are integral elements that have the potential to
influence the ability of a business to operate innovatively. In the case of the luxury automobile
business, there is an opportunity to make changes in its structure and culture so that it can be more
conducive to innovation. c Sine the business entity intends to integrate the Internet of Things (IoT)
concept into its automobiles, it is imperative to accelerate innovation. It can act as the critical
pathway and help the company to adapt to the competitive and ever-changing business landscape.
The purpose of the report is to recommend changes that can be made to the current structure of the
entity so that it can support a culture of innovation. Thus, by making the recommended change, it
will be possible for the organization to effectively implement IoT into its product line and deliver
better value to its customers.
Introduction
Organization structure refers to the hierarchy that is followed throughout a firm that
influences its performance, operations, and overall workflow. It is the manner in which
organizational activities and functions are fragmented, arranged, and coordinated (Ahmady et al.,
2016). It has a significant impact on the ability of an entity to carry out its business operations and
progress towards its goals and objectives. Organizational culture can be defined as the set of
beliefs, values, and attitudes that give a unique identity to an entity. It sets the overall context of
an entity and influences the manner in which the workforce behaves within the organization
(SHRM, 2021). Albashiti has stated that organizational culture is one of the key factors that
impact innovation. In order to help the business integrate connectivity capability into its product
line, its structure and culture have been examined, and necessary changes have been
recommended that can foster innovation.
ORGANIZATIONAL STRUCTURE c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c 3
In the report, the automobile company’s current organizational structure and culture and
their impact on innovation have been examined. Based on the evaluation of its key organizational
attributes, recommendations have been designed to make changes to its current organizational
structure. c The manner in which the new structure and culture can support and nurture innovation
has been discussed.
Impact of current organizational structure on innovation
The current structure that exists in the luxury automobile company is highly complex. The
high complexity is due to the fact that it is challenging to accurately keep a tab on the levels of
hierarchy. The tall matrixed structure design is the reason for the existence of several levels of
hierarchy. When an organization has such a structure, there exist numerous managers who are
responsible for managing and controlling a particular section of the organization. McPhail has
argued that such an organizational structure limits the establishment of solid networks within the
organizational setting (Johnson, 2016). It increases the overall distance between the management
and the staff members and can increase the level of complexity by hampering the decision-making
process and restricting the level of progress.
The tall matrixed structure of the automobile entity hampers innovation because of the
presence of a lengthy chain of command and limited communication and collaboration among the
workforce. For example, due to the existence of several levels, new and creative ideas may never
reach the top management, and such ideas might never be implemented. By restricting flexibility,
the generation of innovative ideas and creative thinking is curtailed (Rishipal, 2014). In the
automobile company, the tall structure acts as a major hurdle that increases the gap between the
decision-makers and the customers. The slow communication between the different functions
ORGANIZATIONAL STRUCTURE c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c 4
within the entity diminishes cross-functional coordination, giving rise to the issue of poor
connectivity.
The current structure of the organization is not effective when it comes to addressing
changes in market demand. The standardized and centralized approach that is followed in the
business undertaking does not allow the business to function in a flexible manner. As enterprise-
wide decisions are made at the top of the hierarchy, the efficiency of the process declines, and it
does not enable the organization or its functions to adapt to the evolving business climate in a
timely and efficient manner. While working on new projects, even though the project manager is
responsible for supervising the project, the main authority resides with the Vice President (VP).
The manner in which power is distributed among the employees affects the ability of the entire
organization to take timely decisions and actions to adapt to the evolving business climate due to
the change in market demand.
Changes needed in current organizational structure
As the current organizational structure of the luxury automobile business hampers the
progress of innovation, there is scope to make changes to its current organizational structure. In
order to facilitate innovation, a flat organizational structure can be introduced where the level of
hierarchies will be few. A flat structure can be defined as the organizational structure in which
there exist a few layers of management. The short chain of command positively influences
communication throughout the organization and increases the overall efficiency of the decision-
making process (BBC, 2021). The current tall structure must be replaced with a different structure
where the number of hierarchies is limited so that the gap between the decision-makers and
customers can be limited. It can help to strengthen the existing communication process by
increasing its speed and efficiency. The new structure will support innovation by improving the
ORGANIZATIONAL STRUCTURE c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c 5
level of communication and coordination so that creative and new ideas can be generated.
According to Kalay and Lynn (2016), a flat structure supports innovation because the decision-
making process is carried out in a centralized manner, and employees get the opportunity to act in
a multifunctional manner and engage with diverse employees, fostering the generation of
innovative ideas (Kalay & Lynn, 2016, p. 3).
The recommended change will enable the company to act in a more responsive way to
market demand by simplifying the communication process and increasing the efficiency of the
decision-making approach. The existence of fewer levels of hierarchies in the organization can
support better coordination among the personnel that can help to give rise to new and innovative
ideas. Similarly, the decentralized decision-making process can make sure that timely decisions
are made and implemented by the business entity to meet the evolving market demands.
According to Palepu et al. (2020), maintaining a flat organizational structure can lead to continued
growth as well as success (Palepu et al., 2020). The new structure will empower the automobile
business to adapt to the market demand by leveraging a highly interconnected system that can
allow everyone to contribute to incremental improvement. George (2016) has argued in his study
that one of the main advantages of creating a flat organizational structure is that it allows a
company to be adaptable to change while maintaining a transparent environment (George, 2016,
p. 8). The change to the current organizational structure will help the business to operate in a more
flexible and decentralized manner and influence its ability to react to the evolving market
variables such as demand.
Organizational changes for creating an innovative culture
The changes that are made in an organization have the potential to support a culture of
innovation. Innovative culture can be defined as the work climate that is created by leaders for the
ORGANIZATIONAL STRUCTURE c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c 6
purpose of nurturing unique and unorthodox thinking and applying the thinking in the real-life
setting. At present, the culture of the organization works against innovation. It increases the level
of complexity throughout the entity and makes the entire process cumbersome and lengthy. For
instance, the tall structure increases the duration to share new ideas with the management.
Similarly, it also slows down and limits the overall efficiency of the decision-making process.
According to Jantz (2015), the rise in the number of hierarchies in a business entity negatively
affects innovation (Jantz, 2015, p .3). It limits the generation as well as the growth of creative and
innovative ideas in the organizational context. In the automobile business, the centralization of
resources leads to the existence of inflexible processes that hinders innovation and creativity. It
restricts the scope and ability of the organizational personnel to adopt a different path while
performing their respective roles and responsibilities. Similarly, the lack of independence and
autonomy in the organization hampers the optimum use of specialization to foster innovation. c
For creating a culture of innovation in an organizational setting, some of the key elements
that must be focused upon include philosophy, core capabilities, organizational objectives,
structure, accountability, etc. The existence of a large number of hierarchies can act as one of the
main deterrents of innovation. So, it is necessary to bust hierarchies that can limit the progress of
innovation. The change in the organizational structure from tall to flat can help to cut down the
high levels of hierarchies that increase the overall complexity in the organizational setting. It can
create a culture of innovation by facilitating better communication and interaction, sharing new
ideas with the management, and adoptive a collaborative approach. Innovation can be nurtured
and supported in the organization with a flat structure as it can increase the level of independence
and autonomy in the organizational setting. Thus, it can promote flexibility and enable the firm to
adopt a connected approach.
ORGANIZATIONAL STRUCTURE c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c 7
Since the automobile business entity intends to integrate the Internet of Things (IoT)
technology into its product line, there is a need to change its organizational structure and culture.
The new flat structure that has been proposed will help to address the gaps of the tall structure and
facilitate innovation. The elimination of a large number of hierarchies can increase the level of
flexibility, autonomy, and independence in the work setting. It can serve as the pathway that can
enable the organization to make the optimum use of the specializations and create a culture of
innovation.
Conclusion
The current organizational structure and culture of the luxury automobile business have
been examined. The tall structure that exists in the entity acts as a major bottleneck that restricts
innovation. It hampers flexibility, independence, autonomy and limits the ability of the
professionals to make productive use of their specializations. In order to help the organization
move towards the path of innovation and creativity, it has been recommended that it must replace
its tall organizational structure with a flat structure. The new structure can help to support
innovation and enable the company to adapt to the evolving business climate. By creating and
maintaining a flat structure, the decision-making process can be made more efficient in nature,
and the employees will be able to operate in a coordinated manner. It can facilitate innovation by
boosting the level of interconnectedness throughout the organization and ensuring that individuals
operate in a multifunctional manner. As the business entity intends to incorporate IoT technology
into its automobiles, the change in its organizational structure is a necessity to create a culture of
innovation. It will be able to effectively adapt to the evolving business landscape.
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