Management and Organization in Global Environment

This essay discusses the key elements of organization structure and the contingencies used to define the organizational environment. It explores departmentalization, span of control, degree of formalization, work specialization, decentralization and centralization, and chain of command. The essay also provides insights into the organizational structure of Apple Inc. and its environment.

Management and Organization in Global Environment1
Management and Organization in Global Environment
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Management and Organization in Global Environment2
Executive Summary
The organization is an essential concept in the field of business, especially in business
management. The organization structure of every organization is described by six essential
elements namely departmentalization, chain of command, the span of control, centralization or
decentralization, work specialization and degree of formalization. There four commonly used
contingencies used to describe the organizational environment are a strategy, size of the
organization, technology, and environment. I chose Apple Inc. which is a large international
organization to discuss its organization based on the six organizational elements and the
contingency in its environment.
Table of Contents

Management and Organization in Global Environment3
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................3
Six Key Elements of an Organization Structure..........................................................................................4
Departmentalization................................................................................................................................5
Span of Control.......................................................................................................................................6
Degree of formalization...........................................................................................................................7
Work Specialization................................................................................................................................9
Decentralization and Centralization.........................................................................................................9
Chain of Command................................................................................................................................10
Contingencies Used To Define the Organizational Environment..............................................................11
The Six Organizational Structure Elements in Apple Inc..........................................................................12
The Four Basic Contingency Variables in Apple Inc.................................................................................13
References.................................................................................................................................................14
Management and Organization in Global Environment
Introduction
In the contemporary business world, globalization has been embraced by so many states bringing
with it opportunities as well as challenges. Management and Organization in Global

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Environment involve the technics and mechanisms to deal with the rapid changes brought by
globalization which include economic, socio-political and technological perspectives. The ability
to adapt very fast to the global challenges is very crucial in creating and sustaining the
competitive advantage necessary for the survival and development of any business organization-
small, medium and large organizations. The organizational structure of any business organization
highly contributes to its success as well as its failures thus rethinking the organizational
structure, and environment frequently is essential for the sustainability of the organization.
Top managers and policy makers in all business sectors are faced with several challenges such as
funding falloffs, competition for the limited available resources, escalating cost as well as
demand for high-quality products and services among many more, (Zhang, Bhuiyan and Kong,
2018, pp. 731). This essay is about the critical elements used to define the structure of an
organization, and it also discusses the contingencies used in identifying the organizational
environment in any organization. Creating a good organization culture helps an organization to
carry out its operations smoothly.
Six Key Elements of an Organization Structure
A well designed and implemented organizational structure plays a crucial role in the effective
and efficient operation of any organization. A poor organizational structure can bring so many
challenges to an organization such as high employee turnover, low revenues, weak brand loyalty
as well as low productivity among many more. The six elements of an Organizational structure
are used as a basis by many management experts to formulate an appropriate organizational
structure for any organization.
An organizational structure that is successful in one organization will not necessarily be
successful is adopted in different organization. Every organization has a unique organizational

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environment, and thus a comprehensive analysis should be carried out before settling for the
most appropriate organizational structure, (Röglinger, Schwindenhammer, and Stelzl, 2018,
pp.201). The critical elements of an organizational structure are departmentalization, degree of
formalization, work specialization, decentralization or centralization, the span of control and
chain of command. Every aspect contributes to how workers relate to each other as well as how
they carry out their routine activities to achieve collective organizational goals and objectives.
Departmentalization
Departmentalization can be defined as the way the organizational structure groups the teams,
offices, and functions of the organization or company. It is how the organization is divided into
departments for the smooth operation of the organization. Departmentalization is not a new
concept since it can be traced back to the Aristotle where responsibility, authority, and work
were distributed in political setup for coordination of activities (Politics, Book IV, Chap. 15).
Gulick and Urwick (1937) are recognized in modern times as the management theorists who
introduced the departmentalization concept. The two introduced two departmentalization
strategies namely departmentalization by process and departmentalization by purpose. The idea
of departmentalization has advanced with continuous research from scholars and researchers
who have come up with the popular types of departmentalization used today.
The popular types of departmentalization include functional departmentalization, product
departmentalization, divisional departmentalization, process departmentalization, geographic
departmentalization, and customer departmentalization. Functional departmentalization is the
most common type of departmentalization, and it involves grouping the organizational activities
based on the functions performed. Therefore in such departmentalization, you will find

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employees with shared knowledge and skills put together into departments such as Engineering,
IT, Logistics, manufacturing, accounting, and human resource. Most of the modern business and
non-profitable organizations have the departments as mentioned earlier in their organizational
structure imply that they utilize functional departmentalization.
Span of Control
The span of control is a common concept in business especial under human resource
management. Span control is a term used to refer to the number of subordinates under a
supervisor. This concept has been in the management field for so long dating back to 1933 when
V.A Graicunas developed a set of practical heuristics using attention span and mental capacity.
Some other theorists such as Lyndall Urwick (1956) and Elliot Jaques (1988) have given their
perspectives on the topic. There is no definite theory yet on the span of control since there are so
many variables that determine the optimum span of controls. The variables determining the span
of control for any organization include organizational structure, the competence of the staff and
the manager, the function being performed, the available technology among many more.
The span of control as a management concept is not explicitly defined using a single theory or
formulae. They are several factors affecting the span of power such as geographical dispersion,
the capacity of workers, required administrative tasks, the volume of other tasks, the similarity of
a job, value add of the boss as well as capability of the boss. If an organization has branches that
are widely spread let us say across cities or countries, then the span of control will be small since
it will difficult for a supervisor to supervise all these branches. Also in a scenario where the
workers are skilled and experienced the span of control will be wider since such employees take
the initiative to work and are self-motivated. Furthermore, a boss with a good relationship with

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his or her subordinates, good workers knowledge and experience can supervise many people
very well. A boss who adds value to the workers through training, skill development and
motivation will require a narrow span of control compared to a boss who is entirely concerned on
performance management. The span of power should be as small as possible whenever the
organizational operations are running smoothly, efficiently and effectively.
Degree of formalization
Degree of formalization is a common phrase in business management, and it is used to refer to
the extent to which roles are outlined in an organization and how procedures and regulations
regulate employee activities. Formalization is a very crucial aspect of any organization since it
creates processes, operating procedures as well as relationships within an organization.
Formalization outlines the roles and responsibilities of the individual employees and departments
in an organization. The concept of formalization is attributed to H. Fayol who introduced the
organization theory in management. Formalization involves the development of several
organizational documents such as an organizational chart, circular letters, commands, orders,
corporate statement, process descriptions, operating procedures, and job description among many
more.

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Figure 1: A sample Organization Chat
Formalization is a process that generally occurs in three stages. The first stage is creating legal
documents of the organization to outline the principles of operation, course of action, mission,
vision and goals of the company. This stage results in the formulation of the organizational chart,
procedures and the statute. The second stage is the development of a detailed description of units
to outline the decision rules and behavioral patterns expected in specific organizational
scenarios. The final step is the continuous improvement of the organizational documents.
Organizations operate in a dynamic environment and to survive and grow they have to adapt
very fast to the changing external and external factors. Formalization occurs in all organization,
but the degree of formalization varies from one organization to another. Finding the optimum
degree of formalization is the goal of every management and when it is not achieved the
organization will suffer from either under-formalization or over-formalization. Under-
formalization occurs when there are very few rules and documents in an organization; thus
employees have freedom of action resulting in chaos, confusion, and inefficiency. Over-

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formalization occurs when there are too many rules in an organization and this result in reduced
flexibility and low creativity levels in employees. Therefore, the management should always
strive to attain the maximum degree of formalization for smooth operations of any organization.
Work Specialization
Work specialization is a crucial organization element also referred to as the division of labor.
Work specialization enables managers to breakdown complex tasks into precise tasks that can be
handled by an individual and be completed well. Work specialization involves training every
worker or group on how to handle one specific task correctly. The concept of division of labor
and work specialization can be traced back to the ancient Sumerian culture where some cities
specialized in particular jobs. Adam Smith (1776) is known as the theorist who introduced the
concept of division of labor and cited how it increases the general productivity of workers.
Work specialization in an organization implies to how an organization divides individual tasks
into separate jobs. Work specialization has several advantages to an organization, (Stevens,
2017). Work specialization enables each employee to become an expert top some extent, it leads
to high productivity, increased speed and efficiency, reduces quality control cost, and it also
gives employees a sense of job security. Work specialization is also associated with some
disadvantages such as limiting the multi-tasking ability of employees, isolation of employees,
limited communication and cooperation among many more. It is the duties of the management to
determine the optimum work specialization levels appropriate for their organizations.
Decentralization and Centralization
Centralization refers to the process of concentrating organization activities within a particular
geographical location especially the events regarding policies, framing strategies, and decision
making. Centralization aims at moving planning and decision making powers towards the center

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of an organization, (Burton, Obel, and Håkonsson, 2015). Decentralization on the other sides
refers to the process in which the top management disseminates authority to low-level and
middle-level management. All levels of management are given the powers to make individual
decisions concerning the organization. The location of the decision making authority as well as
the freedom to make decisions at low management levels can be used to determine whether an
organization is centralized or decentralized.
Decentralization and centralization are two opposite sides of a coin. The communication flow in
centralized organizations is vertical while in a decentralized organization it is open and free.
Decision making in a centralized organization is slow compared to decentralized organizations
since all decisions must come from the top management. These two elements of an organization
structure have their respective advantages and disadvantages, and it is the responsibility of the
administration to determine which style best fits the subject organization, (Rosemann, and vom
Brooke, 2015, pp. 110). Centralization is mostly applied when there is inadequate control of the
organization and decentralization is most favored in scenarios where the management has
considerable power. The size of the organization also determines whether an organization will be
centralized or decentralized. Centralization is more appropriate for a small and medium
organization while large organizations will operate well if they adopt decentralization.
Chain of Command
Chain command is a popular management concept that has existed for so long. The idea was
first introduced by Henri Fayol who created the basis for the modern theory of management and
organization. The chain of command in organizations is used to refer to the hierarchy of
reporting relationships, (Child, 2015). The chain of command is the basis of developing any

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organizational structure. It not only establishes a sense of accountability in an organization but it
also outlines the decision making powers and the line of authority within any organization. It is
the responsibility of the top management to come up with a proper chain of command in an
organization to ensure that there is always an individual taking responsibility for every
department, job position and task.
Chain of command is usually created systematically in the process of formulating the
organization structure. Once the organization structure is expressed, and departmentalization has
occurred positions are built to take responsibility and authority for the department and the tasks
under each department, (Daft, 2015). This creates relationships among potions and the
communication channels thus coming up with a chain of command in the organization. The
reporting relationship in most organizations flows typically from bottom to the top with decision-
making powers and authority flowing from top to bottom.
Contingencies Used To Define the Organizational Environment
Chain command is a popular management concept that has existed for so long. The idea was
first introduced by Henri Fayol who created the basis for the modern theory of management and
organization. The chain of command in organizations is used to refer to the hierarchy of
reporting relationships, (Child, 2015). The chain of command is the basis of developing any
organizational structure. It not only establishes a sense of accountability in an organization but it
also outlines the decision making powers and the line of authority within any organization. It is
the responsibility of the top management to come up with a proper chain of command in an
organization to ensure that there is always an individual taking responsibility for every
department, job position and task.

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Chain of command is usually created systematically in the process of formulating the
organization structure. Once the organization structure is expressed, and departmentalization has
occurred positions are built to take responsibility and authority for the department and the tasks
under each department, (Daft, 2015). This creates relationships among potions and the
communication channels thus coming up with a chain of command in the organization. The
reporting relationship in most organizations flows typically from bottom to the top with decision-
making powers and authority flowing from top to bottom.
The Six Organizational Structure Elements in Apple Inc
Apple Inc is among the top organizations in the modern business world making huge revenues
annually and having its operations spread across all corners of the world. Let us now look at
Apple Inc organizational structure in terms of the six elements of a corporate structure. Apple's
mechanistic organization structure combines all the six elements of organizational structure
discussed above. Apple has adapted work specialization as its activities are broken down into
separate tasks to be handled by individuals leading to some level of specialization, (Piao and
Kleiner, 2015). For example, the IOS Software vice president is only responsible for the
development of the most efficient software and is not concerned with the production of the
hardware components. The company also demonstrates departmentalization specifically
geographical departmentalization since the operations of the company are grouped based on the
geographical distribution- United States, Europe, Japan and other countries across the world.
Also, the company has aspects of functional departmentalization since departments are divided
based on their functions such as the finance department, software department and many more.
Like any organization, there is a chain of command in Apple Inc. with authority flowing from the
top management levels to the lower management as seen in its organizational structure, (Booth,

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2015). The company can be said to have a wide span of control. The CEO of the Company, Tim
Cook, is above the 13 departments each having a head and having several employees in every
department. The company is centralized which critical decisions being made by the top
management and this has been its key to success. The company is highly formalized with a well-
developed organization structure and well laid down rules that govern decision making among
employees.
The Four Basic Contingency Variables in Apple Inc
Apple is a company that understands its organizational environment very well, and this has
enabled it to overcome the challenges and tribulations in the business sector to become a
renowned organization. Based on the four essential contingency factors, the company uses a
differentiation strategy to create a competitive advantage over its competitors such as Google,
Samsung, and Motorola. The differentiation is achieved by the company having the iOS and OS
X operating system which is unique. Secondly, Apple's massive size has enabled it to benefit
from specialization. According to statistic, the company has more than 2000 employees working
in different departments.
The third contingency variable is technology. There is three core manufacturing technology used
namely continuous process production, mass production, and small-batch production,
(Alexander, 2017, pp. 45). Apple uses the mass production technology which also promotes
specialization, departmentalization, productivity, and the company can enjoy the advantage of
scale. The last variable is the environment. Apple competes in three media markets- mobile
communication devices, personal computers and services such as iTunes. The market
environment it operates in is highly dynamic; thus Apple is continuously updating its technology
to meet the industry demands and expectations and always be ahead of its competitors.

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Zhang, D., Bhuiyan, N. and Kong, L., 2018. An Analysis of Organizational Structure in Process
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