Organization Of Literature Review

Organizations according to Daft (2007) are considered social entities that are goal-directed, designed as deliberately structured and coordinated activity systems and linked to the external environment.

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An organization exists when people interact with one another to perform essential functions that help attain goals (Daft 2007).

Organizational structure refers to how an organization is put together.

There are two general theories of organizational design: the universalistic approach (the standard hierarchical design) and the contingency approach, which has no identified form.

The universalistic approach is based on the premise that there is one "best" way to structure an organization regardless of the situation and is based on a set of principles that guide the design process.

These factors are the organization’s strategy, its external environment, its technical process, and its size.

Each factor alone can affect design decisions, or they can collectively constrain or drive design choices. Strategy Many of top management’s strategic choices affect organization design decisions.As organizations increase in size, the rules and procedures become formal.Large organization have more management levels and more structured work activities than small organizations and used decentralized form.Augier and Teece (2006) argue that know-how, internal structure and human behavior affect the capability of the organization.Organizational capabilities affect strategies which in turn have implications on organizational structure. External Environment An organization’s environment is composed of those institutions or forces that are outside the organization and potentially affect the organization’s performance.An organization’s strategy describes the organization’s long-term goals and the way it plans to reach those goals.Strategies also specifies how managers should allocate resources to reach the long-term goals of their organization (Sims 2002).Under cost leadership, an organization provides the same services or products as its competitors, but produces them at a lower cost.An organization that chooses this strategy seeks to gain a significant cost advantage over other competitors and pass the savings on to consumers in order to gain a large market chare.Structure reflects some of the underlying ways that people interact with one another in and across jobs or departments (Sims 2002).Organizational structure refers to how job tasks are formally divided, groped, and coordinated.

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