Question

Enumerate five factors, which should be taken into consid-eration in the design of an organizational structure

Answer 1

The 5 factors which must be taken into consideration while deciding the organization structure of the organization, are as follows:

· Size of the organization: The size of the organization is the biggest determinant of its organization structure. If the organization is spread globally, a product based or geography based structure can be quite relevant.

· Life cycle of the organization: The lifecycle stage of the organization also influences its organization structure. If the company is in growing stage, then a functional or matrix structure can be quite relevant.

· Business environment: The market factors and market stability also defines the way, the organization structure gets decided upon

· Business strategy: If the business strategy is about being flexible and adapting to market needs, a flat structure can be quite relevant. If the company plans to specialize in a product, then product based structure will be quite effective.

· Technology: Advancement in technology can be quite suitable for a flat organization where the company is striving for innovation and out of box thinking approach.

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