Every small or large business requires a structure to grow successfully and in return be profitable. This structure is what defines the way a company and its employees work together to support their common vision. There are different types of organizational structures depending on the type of business (Burke & Litwin, 2002). The main ones that are related to this study are hierarchy, cross-functional and matrix. Costco Wholesale Corporation is the main focus of this research paper. It was founded in Seattle, WA in 1983 but has the headquarters in Issaquah, WA. It was founded by James Sinegal and Jeffery Brotman. Costco operates 698 warehouses in ten countries, Puerto Rico been the recent one. The company also operates an online website as well as receiving revenue from the membership fees. It earns about 3% of its revenue from the e-commerce website, about 2% through membership fees and generates approximately 95% from their in-store sales. It employees about 200,000 full time and part-time staff worldwide. The recent figure of annual revenues $116.2 billion …show more content…
The main body provides in depth study into the comparisons of the three types of organizational structures. Costco Wholesale Corporation has its headquarters in Issaquah, Washington, United States. Considering the sales volume of Costco, it is the second largest membership warehouse club chain in the world according to the reports from 2014 (nrf.com, 2016). Further this paper analyses the organizational designs and gives recommendations on the best suited structure for Costco wholesale to be more progressive in this expanding wholesale market of Canada. In addition, it also explains the effect of an organizational structure on the role of managers and explores the effects of management behavior on the
As an organization develops, it establishes among many things a sense of structure. In this; depending on its purpose of existence and how it carries out processes to meets its goals, it attempts to structure its staff and departments to optimize resource usage and maximize profits. Simply put, it is the way the company is organized to perform work. However as a generally noticeable trend, businesses are changing over the years and as Craig A. Stevens (1995) sites, "There may not even be one right organizational structure in any one company. Chances are, if all your divisions look the same on the organizational chart you have a problem.”
Cost leadership is a low cost, competitive strategy that aims at the broad mass market and requires “aggressive construction of efficient scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost minimization in areas like R&D, service, sales force, advertising, and so on (Hunger, Wheelen, 2011). Some examples of companies that utilize overall cost leadership are: McDonald’s, Wal-Mart, and Aldi grocery stores. Wal-Mart uses everyday low prices to attract customers, McDonald’s utilizes basic fast food meals at low prices and Aldi grocery stores employ a division of labor strategy and fewer managers to keep labor costs low, thus allowing them to sell their products for less. These businesses are located in close proximity to large population centers, sell the most popular products at all of their locations, and apply standardized pricing throughout their franchises. The application of an overall cost leadership strategy by McDonald’s, Wal-Mart, and Aldi grocery stores results in above average returns on investment (Hunger, Wheelen,
A matrix structure is what crowns Wal-Mart divisional organization structure. Granting that there are some disadvantages of forming teams nonetheless, it has been proving repeatedly that the use of teamwork has more advantages. Market managers run each district and are responsible for a larger number of stores, allowing Wal-Mart to work towards increasing the merchandise poser of the individual markers, which are now based more on the economic landscape of an area, less on the physical
Organizational structure, along with the different elements it encompasses, is a significant factor in the overall design of any business. Establishing a clear picture of what a department’s responsibilities are, classifying job roles and functions, and defining where people fit into the chain of command, can make everyday tasks and decisions easier for both employees and managers alike. In addition, astute planning and organization can also have a large impact on a company’s bottom line, with an effectively organized company saving money by reducing redundancies and improving processes and work flow. By outlining and analyzing the general organizational structure that is present at the Dakkota Integrated Systems Windsor Plant, one can identify both its strengths and weaknesses.
The ongoing case study presented by Microsoft and the scrutiny of the Justice Department and Congress serves as an excellent departure point to establish the nature and premises of organizational theory and design since it allows for examination from both the viewpoint of the public and the economic aspects of the situation in which Microsoft finds itself. While issues of organizational structure and corporate policies as related to costs, revenue, profit and market structure are inherent in the study of any company or organization, it is important to recognize the unique aspects of Microsoft.
Gareth Morgan, Fredrick Taylor and Mary Parker Follett are three individuals whose ideas have contributed to organization theory. Some of their methods are very different, and some of their methods are similar to each other. Many of the methods discussed in this paper are still used in businesses today.
Organizational structure within an organization is a critical component of the day to day operations of a business. An organization benefits from organizational structure as a result of all it encompasses. It is used to define how tasks are divided, grouped and coordinated. Six elements should be addressed during the design of the organization’s structure: work specialization, departmentalization, chain of command, spans of control, centralization and decentralization. These components are a direct reflection of the organization’s culture, power and politics.
Organizational structure refers to the levels of management in a company. It mainly defines how job tasks are formerly divided, grouped and co-ordinated. The organizational structure of a company reflects its culture, management style and leader attitude which is adopted with the addition of the environment around in which it operates. It also determines how the roles, power and responsibilities are assigned, controlled and co-ordinated respectively, in-order to realize the flow of information between the different managerial levels. An organizational structure is important because it determines how the organization will be run in order to meet its aims and objectives, (Cunnee, 2008). He defines an organizational structure as the number of ways used in a business to set up division and specialization of labour focusing on maintaining co-ordination to achieve the same targets. An organisational structure may be flat or high and centralized or decentralized. In a centralized or small organization, the top layer of management has the power to make decisions for the company and has a tight control over the below divisions. In a decentralized or large organization, the decision making power is distributed to extent of the company and greater workload is divided and delegated downward. Some of the key elements which are required to design organizational structure are:
The structure of a company should enhance and expedite the attainment of the company goals (Robbins, et al., 2013). . When companies are new and young, the structure can be organic to enable a small organization to make quick decisions. As companies grow in size, more rules must be put into place to control costs and regulations. When a company is around 2,000 employees, it has probably already become mechanistic. Technology plays a role in this as well. When a company is using ordinary technology, they have a tendency to become mechanistic as they grow. In opposition, companies wi...
In order for one to evaluate and identify with the diverse business structures, he/she must be aware of the meaning and standards that makes that structure. Various businesses functions in different ways as the world is full of technology and new structures, company cultures and new ways in which companies are run. In order to fully grasp the concepts of Organizational structure and culture in the movies, I will use the Movie Up in the Air and The Devil Wear Prada movies to analyze a business scenario from them.
Organizational structure is the way that an organization arranges people and jobs so that work can be performed and goals can be achieved. Good organizational design helps communications, productivity, and innovation. Many organization structures have been created based on organizational strategy, size, technology, and environment. Robbins and Judge (2011, p. 504) listed three common structures: simple, bureaucracy, and matrix. In this post the author will describe the matrix structure, and discuss its advantages and disadvantages.
Organizations determine their structure by the various goals the organization wants to achieve; however, organizational structure can facilitate or deter the organizations advancement with regard to the accomplishment of these goals. Both small and larger organizations can attain increased sales and added profits in appropriately matching their structure with their needs to function. The three organizational structure types are, functional, divisional and matrix.
So, organizational structures should be shaped and implemented for the main purpose of facilitating the achievement of organizational goals. Tom Burns and G. M. Stalker identified two basic forms of organizational structure: mechanistic and organic structures. The mechanistic is also known as a bureaucratic structure that can be characterized as hierarchical, clear area of responsibilities, centralized and commands. Companies in a mechanistic structure typically hold strict control, over processes and employees. Rules are implemented and rarely deviated; there is also a very clear chain of conduction to delegate responsibilities and power throughout the organization. It can be observed that the mechanistic structure is best suitable for companies that operate in a stable and certain environment. In short, this structure is no difficult to maintain and rarely needs to be changed when the company has a stable external environment. The mechanistic structure can be reflected in the functional structure and the divisional structure. For example, in a functional structure, there are many separate functions, such as accounting, marketing and HR. Each department is autonomous and has a divisional manager who reports to the company CEO. It is beneficial to be efficiency and emphasize the significance of
Business structure is a critical factor to determine a company 's success or failure. Generally, larger organization has a more complex organizational structure. In the case of H&M, they had adopted matrix structure, one of the traditional organizational structure, into their business. As shown in figure 1, range of functional groups is listed horizontally across the table and on the other is product/task with a manager taking control of each. The functional structure is divided
Organizations must operate within structures that allow them to perform at their best within their given environments. According to theorists T. Burns and G.M Stalker (1961), organizations require structures that will allow them to adapt and react to changes in the environment (Mechanistic vs Organic Structures, 2009). Toyota Company’s corporate structure is spelt out as one where the management team and employees conduct operations and make decisions through a system of checks and balances.