The structure and design of an organization is related to the size of the organization. Of course, the size of an organization also in�uences many other things such as the organization’s goals, use of technology, and market, but there are advantages and disadvantages to size. Organizations have always worked hard to grow. The motive for pro�t is a primary driver not only of growth but also of reducing costs, increasing market size, improving customer service, and many other things related to what organizations do to compete.
At the same time, there are pressures to grow. Owners and entrepreneurs of business want to grow fast and grow large. The pressure is for economic gain, prestige, or personal ful�llment. Global competition is another driver of growth. Smaller companies cannot compete with global �rms; so the pressure is there to grow to compete. At the same time, many smaller companies are gobbled up by the larger companies for reasons already discussed. All of these factors together increase the pressure on owners to grow or face stagnation or eventual annihilation. Business is a dog-eat-dog world, and in order to not get eaten, organizations seek (or are sometimes forced) to grow, even if it means a reduced return on investment.
Business owners and managers, therefore, need to adopt the right structure to support the growth and maintain a competitive advantage. This is true, whether the organization has decided on maintaining a small size or has decided on needing to get to a large size. Organizations that decide on a small size may do so to serve a niche market with more �exibility and nimbleness. Small organizations are closer to local markets and can adapt to changes in customer preferences or other market dynamics. Larger organizations are generally focused on economies of scale and scope to compete globally.
Additional Materials
From your course textbook Organization Theory and Design, read the following chapter:
Organization Size, Life Cycle, and Decline
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