Capella University BUS-FP4013: Organizational Design and Performance

This report delves into the realm of organizational design, exploring various structures and their impact on business performance. The report begins by defining organizational design as a methodology used by firms to manage workflows, drive procurements, and align structures with business goals. It emphasizes the importance of understanding both technical and human aspects for high-performance cultures. The core of the report examines four key organizational designs: functional, matrix, network, and virtual. The matrix design, known for its complexity, involves multiple reporting lines and potential conflicts but also offers flexibility and technological advantages. Network designs coordinate actions through contracts, with a central firm leading the network. Virtual organizations, relying on information technology, connect independent companies, suppliers, and customers, promoting autonomy and faster decision-making. Functional organizations, characterized by vertical structures and specialized units, focus on systematic organization and goal attainment. The report highlights the advantages and disadvantages of each design, emphasizing the importance of selecting the right structure to achieve high performance. The report also references various academic sources to support its claims.

Running head: ORGANIZATIONAL DESIGN
ORGANIZATIONAL DESIGN
Name of the Student
Name of the University
Author Note

Introduction
The organizational design can be described as a methodology which is usually used by
the various firms to ensure that the dysfunctional aspects of the work flow can be managed
accordingly along with driving considerate procurements and the structures as well as the
systems (Aubry & Lavoie-Tremblay, 2018). In association with this, it is effective to mention
that realigning the fit to the current business goals and realities along with development of the
responding plans is the key to the overall success. In association with this, it is effective to state
that when a firm aims to engage in long term goals, it is effective to understand the technical as
well as the people side of the operations (Bowditch & Buono, 2001). For the different
companies who aim to engage in a high performance culture, it can be effectively mentioned
that, the employees are required to be motivated in a manner such that they are empowered and
committed to the business. The main reason why the organizational design is critical ca be
mentioned to be as follows:
 It helps in gaining customer excellence
 It assists in ensuring that the firm can achieve its targets regularly
 It helps in seeing to it that the firm is being able to engage in reduced operating costs and
lastly, it assists in seeing to it that the overall company culture can be uplifted
accordingly.
The organizational design refers to the core business procedures and in association with
this, a well-designed and defined system needs to be operated so that the collective initiatives of
the individuals can be built accordingly (Burton & Obel , 2018). Hence, this report is aimed at
understanding the different organizational designs which are applicable to the firm and in

association with this; it also aims to understand the manner in which the right kind of
organizational design can be implemented accordingly.
Organizational designs
The organizational designs can be adequately defined as the way in which the enterprise
is divided accordingly and the way in which the structures are based on accordingly (Burton,
Obel & Håkonsson, 2015). In association with this, it can be stated that various types of
organizational designs which are prevalent in an enterprise can be understood to be as follows:
 Functional organization.
 Matrix organization.
 Networked organization.
 Virtual organization.
Matrix Design
The matrix design can be adequately described as the most complex type which tends to
ensure that a department is divided into various complex organizational design types and in
association with this, their performance is subject to variance (Capra, 1997). A single individual
working in an enterprise tends to export to two different bosses and hence, the roles may not be
defined adequately. In relation to this, the managers of two different departments may share
adequate subordinates and may be required to see to it that they have to divide the work
accordingly. Moreover, another aspect which is present in this domain can be referred as to the
fact that, the manager has a key role to play in managing the different disputes and ensure that
the operations take place accordingly (Carayannis, Sindakis & Walter, 2015).

A key aspect about the line of command in this type of a structure can be mentioned to be
the fact that the line of command tends to flow vertically as well as horizontally.
In consideration with this, it is effective to mention that the matrix design is also known
multiple command system. In association with this, the design although very complex in nature,
has a line of advantages also which facilitate the learning procedure and assists in ensuring long
term enterprise success (Chokheli, 2015). In association with this, it can be considered effective
to note that, the reason why this matrix design is considered to be very flexible in nature is that,
the design is quite flexible in nature and capable of making quick adjustments as well. These
adjustments may pertain accordingly with the changing customer needs itself. In association with
this, the matrix designs also tend to facilitate the technological advancements and the interactions
which tend to take place can be stated to be much systematized in nature (Chouikha, 2016).
Another reason why these work out well can be contributed to the fact that the employees are
generally skilled individuals and ensure that they are being able to work accordingly well and are
being able to engage in sufficient operations. In consideration with this, it is essential to note that
it helps in saving the costs of the enterprise and in ensuring that, the employees are motivated to
perform well and the attention can be adequately focused towards the completion of a project
(Colombo, Rossi-Lamastra & Matassini, 2016).
However, it needs to be agreed to it that this system as a whole has a certain set of
drawbacks as well. In association with this, it can be effectively stated that the biggest
disadvantage that the enterprise tends to suffer from can be agreed to be the power struggle (Daft
& Steers, 1986).

In this kind of an organizational struggle, it is generally highlighted that, the people may
feel a sense of insecurity, conflicts may take place and the excessive overheads due to the dual
staffing may also lead to increased costs and related associations (Davenport & Prusak, 1998).
The performance evaluation also needs to be matched with accordingly. Moreover, the problems
also arise between the different bosses who share the employees.
Network Design
Another kind of a network design which tends to take place can be described as the
network design whereby there are a combination of different organizational types whose actions
are coordinated and implemented by a set of contracts as well as the agreements rather than any
hierarchy of associated operations (de Geus, 1997). . However, in this network design, it has to
be understood that only a single firm leads the associated network. An organization is at the
center of the network and the other associated satellite networks or firms tend to revolve around
it.
In the case of the network organization, the firm tends to operate at the center and the
network procedures and provides the services to various specialized areas such as the marketing
and the overall product development. The network designs can accommodate strategic alliances
accordingly and hence be competitive in the long run (Foss, Lyngsie & Zahra 2015). As the
decision making may be very efficient in this type of an organization, it is necessary to note that
the responses to the external threats as well as the opportunities may be fairly accurate in nature.
This kind of an organizational design may go a long way in ensuring that the firm is being able
to perform well and that the decision making can be carried out effectively (Galbraith, 2002).

Virtual Organizations
Another popular organizational design can be mentioned to be the virtual organizational
designs. In the organizational design, the concept which connects the departments and the
enterprise are very new and recent (Greiner & Metes, 1995). The virtual organizations can be
described to be through a networked organizations and the linking and overall conversations
between the departments which tend to take place are done so virtually over a stimulated
network.
The virtual network can be described as a network of independent companies as well as
the suppliers, customers and the existing rivals are just linked by the information technology.
These individuals tend to share skills, costs and have a greater access to one another`s markets
effectively. In line with this, it is effective to mention that, the office will not have any central
office or associated organization chart (Gurianova & Mechtcheriakova, 2015). There shall take
place no hierarchy systems and no vertical integration.
This type of an organizational design has become fairly popular as it tends to promote the
manner in which the operations are carried out effectively by the different enterprises and how
the different firms tend to engage in a successful relationship (Ikuhiro & Hirotaka 1995). All the
employees as present in the virtual corporation are given the opportunity to perform adequately
without any pressure.
This kind of an organizational design tends to promote operations with autonomy
decision making and assists in ensuring that, the firm will be able to enable faster decision
making (Konno & Nonaka, 1998). However, the virtual designs in an enterprise are generally
promoted with the assistance of a temporary network of independent firms who are working

together to achieve the overall organizational aims and associated objectives. This can be
applicable to a project management settlement accurately.
According to Kotter & Heskett (1997), it is effective and critical to consider that, for an
enterprise to perform adequately in the long run, adequate initiatives are required to be undertake
which help in setting up the temporary network of various independent companies, the
customers, the suppliers and other parties. In association with this, it is integral to mention that
the skills, the costs and access to one another`s markets can be shared accordingly in this
manner.
Very often the virtual organization also acts as a temporary alliance between the different
parties whereby, resources are shared adequately by the different enterprises and associated
initiatives are undertaken to ensure successful achievement of organizational goals and
associated objectives (Lawler, 1996). The synergies are often put in place together to see to it
that the synergized efforts are able to integrate adequate operations and all the goals can be
achieved successfully.
According to Leih, Linden & Teece (2015) , it needs to be adequately mentioned that,
very companies often perform considerably well in certain areas and very poorly in other areas,
however, it is effective to note that, in such a scenario, the performance of the enterprise
becomes integral if the companies are being able to join the related efforts, the outputs of the
activities may be achieved easily.
Hence, it can be considerably mentioned that although there may exist a clash of interests
amongst the different organizations, it has to be agreed to it that, there might be certain failures
as well as a result of these operation (Santos, Pache & Birkholz, 2015). These failures may be

considered to be the Intel. The enterprises in the United States of America and the Japanese
organizations often get together to see to it that they are being able to ensure better operations
adequately.
Functional organizations
Another key type of an organizational design can be mentioned to be the Functional
organizational design. In the functional organizational design, it can be mentioned that all the
firms would be required to see to it that they are being able to maintain sound operations and
organizing the different workers in a systematic manner (Snyder, & Wenger, 2000). The
different members as present in the workplace are grouped accordingly to see to it that all the
organizational goals can be achieved successfully and the firm is being able to engage in
considerate operations. The structures which are followed by the enterprise tend to relate to the
vertical structure whereby the departments vary from one to another such as the finance, sales,
operations, customer service and the human resource. In association with this, it is effective to
note that the functional organizations have a specialized unit system as well whereby they are
required reporting only to the top management (Tracey & Wiersma, 1995). In such a kind of an
organizational structure, it is effective to state that the firm tends to ensure that it is being able to
manage the associations in a manner such that, they communicate with one another effectively
through a stable organizational system and in consideration of this, they are also being able to
ensure the effectiveness of the associated operations adequately. It has to be understood by the
business that here all efforts and initiatives of the organizations are put together to see to it that
the different goals and initiatives can be attained in an effective manner (Wheatley, 1996). In
assertion with this, it can be rightfully stated that, the primary aim of the functional departments
is to ensure that their department is being able to earn considerate profits.

Advantages of a Functional Structure
One of the biggest advantages of the functional structures and organizations can be stated
to be the fact that when the different individuals of a department tend to perform together then in
such a scenario, it is effective and essential to state that it allows effective and efficient results
which assist in seeing to it that the business is being able to run adequately and that the confusion
is reduced amongst the different employees thereafter (Wheatley, 2001). These initiatives
increase the morale, the workplace ethics and associated aspects related to the overall
functioning.
Another key advantage is that it provides a stable environment pf the learning procedure
as well. It can be adequately mentioned that, for an enterprise to attain success in the long run,
learning is essential and all enterprises need to undertake the learning procedure seriously so as
to see to it that they are being able to perform the operations adequately well.
Disadvantages of the Functional Organizational Structure
Although it may seem advantageous, there are several disadvantages as well. In
association with this, it can be mentioned that, the employees may find it odd to be working and
repeating the same task all over again. In association with this, it can be effectively stated that
there may arise considerate problems which may then have a considerate influence on the
operational efficiency (Woodward, 1965). In association with this, it can also be mentioned that
there might take poor communications which may then influence the operations effectively.
Lastly, this kind of s structure is quite rigid and in consideration with this may have a
negative influence on the associated operations and in case a product fails to perform well, all the
functions of the enterprise may fail as well.

Comparison of the four types of designs
Design Structure Strategy Challenges
Virtual Organic Transformational
strategies
The dependence on
the technological
advancements can be
agreed to be very high
Network Organic Transformational
strategies
Here if the main
source of network
stops working then
the whole
organization will fail
to perform well.
Functional Mechanistic Rigid strategies with
low chances of
success
In the functional
matrix design the
challenges may be the
fact that each matrix
works at a different
pace and then the
departments are
difficult to manage,
Matrix Mechanistic Rigid and complex
strategies
Here the reporting to
different bosses may

become conflicting.
Choosing one organizational design and description of it can be used to create a new
structure
Therefore, after the analysis of the different organizations and their associated aspects
were critically discussed, it can be agreed to it that the enterprise design which can be chosen is
the Virtual design. As the virtual business concept has soared up, it is effective to state that all
businesses would be required to ensure that they are being able to manage their operations
adequately (Leih, Linden & Teece, 2015). In consideration with this, it can be effectively
mentioned that, by using the virtual design, the organic organizational structure can be
implemented accordingly the organic organizational structure tends to call out for a systematic
design and in association with this, it is effective to mention that the implementation of a virtual
design and an organic structure will assist in engaging in a new kind of a structure which will
enable the integration of ideas but along with this a control of the operations will also be
facilitated.

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