Discuss Organizational Structure (Wipro) where you describe the organizational structure of the company. Use
1. Mintzberg's Determinants, chapter 13, p. 364-369. Use either the contingency approach or the configuration approach to organizational design (only one approach, do not use both)
2. Analyze the control and coordination operations of the company.
1) Does the company have an effective organization according to it control and coordination operations?
2) What design changes to this organization's structure would you propose in order for it to have a more effective control or coordination operation?
3. Is there an "optimal" organization structure that would permit this company to maximize its control and coordination operations? Please explain rationale.
Refer to Mintzberg's Determinants below from the chapter pages as indicated above.
Determinants of organizational structure
According to Mintzberg (1979; Mintzberg et al., 1998) there are two basicapproaches to the formation of organizational structure, the contingency approach and the configuration approach.
According to the contingency approach, the structure of an organization will depend on factors like the nature of its business and its strategy, its size, the geographical span of its activities, its age and history and the nature of its environment. Mintzberg argued that, rather than adopting a contingency approach, it is sometimes better to base structure on a configuration approach. Factors like spans of control, the need for formalization, centralization or decentralization, and planning systems should be logically configured into internally consistent groupings.
Peters and Waterman (1982) argued that 'excellent' organizational performance depends on strategy, systems, culture (shared values), skills, leadership, staff and structure (drawing on what has become known as
the McKinsey 7S framework). As these organizational features are interdependent, each was thought to play an important part in determining the others, so that structure will be affected by strategy, systems, culture,
etc. Equally, structure will help to shape strategy, culture and systems. It is therefore evident that there are many complex factors shaping the structure of organizations.
The contingency approach
Contingency theory (as it relates to organizational structure) suggests that the most important determinants of organizational structure will include a number of factors. The key point with contingency theory is that the
structure adopted will depend. This is in contrast to the configuration approach which seeks to proactively determine.
The structure that an organization adopts (which may be a domestic or internationalized business) will depend on several determining factors:
. the nature of the business;
. the environment of the organization;
. the global strategy of the business;
. the age and history of the organization;
. the size of business and limitations of span of control;
. the level of technology in the organization;
. the geographical span of activities;
. the culture of the organization;
. leadership and leadership style.
We will briefly consider each of these determining factors in turn.
The nature of the business
Businesses whose value-adding activities are largely repetitive, and which may be centered on a production line, are likely to adopt hierarchical structures with centralized decision making. Hierarchical structures are
better suited to standardization of procedures. Organizations whose activities are diverse, creative or innovative are more likely to be based on flatter structures that encourage horizontal communication and devolve
The environment of the organization
The more dynamic, turbulent and complex the environment the more adaptable the organization will usually need to be. In these circumstances, decision making is likely to be decentralized so as to increase responsiveness.
On the other hand, Mintzberg (1979) argued that organizations will tend to centralize decision making under conditions of extreme environmental hostility. In the international environment, a market that is globally homogeneous will permit greater centralization of authority while diversity of market conditions will increase the need for local responsiveness and will require decentralized decision making.
The global strategy of the business
When a business has a globally standardized strategy its structure will tend to concentrate power at the centre as this facilitates global co-ordination and integration of activities. A strategy that is centred on local responsiveness will require devolution of power to local managers. A transnational strategy, combining global co-ordination with local responsiveness, will require a complex structure allowing a degree of global control to be combined with the ability to respond locally.Developmen ts in information and communications technology have made possible new organizational structures designed to achieve these dual, but somewhat conflicting, objectives (see Chapter 10).
The age and history of the organization
Mintzberg (1979) found that older organizations and businesses in mature industries tended to have more formalized structures. Few structures are designed 'from scratch' and, consequently, most structures evolve alongside the business itself. Accordingly, a small, new organization will have little need for a formal or complex structure, but, as an organization grows, the need for formalization and the observance of hierarchy increases.
The size of business and limitations of span of control
Larger organizations have more formalized and complex structures with
greater specialization of tasks and clearly defined methods of communication. Tasks will be clustered into related groupings and the relationships between these groupings will be well established. The size of any cluster of activities will be dictated by the limitations of a manager's effective span of control (i.e., the number of subordinates he or she can directly control). Activities are often typically grouped by functional area, so that marketing and sales-related activities will be grouped together, and activities like recruitment, training and payroll are often grouped under the banner of human resources management.
The level of technology in the organization
Information and communications technology (ICT) has widened the potential
span of control of an individual manager, making possible flatter organizational structures. Similarly, ICT makes it possible to centrally co-ordinate activities while simultaneously allowing decentralization of decision making, assisting local responsiveness. Before the advent of ICT, most international businesses operated on a multinational basis - allowing considerable autonomy to national subsidiaries because it was almost
impossible to co-ordinate activities across boundaries with such constraints on effective communication.
The geographical span of activities
The greater the geographical span of an organization's activities the greater the need for formalization and complexity of structure. Again, ICT has increased the ability of organizations to increase the geographical span of
their activities. Developments in telecommunications, like satellite and cable technology, have been critical in allowing businesses to integrate and manage their activities on a worldwide basis.
The culture of the organization
The values, attitudes and beliefs of the members of the organization willplay an important part in moulding organizational structure. Thus a creative organization like a software house or an advertising agency will often have a flexible structure (less observance of hierarchy), whereas a production based manufacturing company is likely to have much more precisely defined and formalized groupings of activities with a much firmer observance of hierarchy. Organizational culture also often has its origins in the national culture of the country of origin of the business. The organizational culture of many Japanese businesses, for example, is often strongly influenced by values, attitudes and beliefs like loyalty and obedience which are prominent features of traditional Japanese society.
Leadership and leadership style
Larger organizations with strong leadership will tend to adopt structures that concentrate power at the centre of the organization. Smaller organizations have structures that spread from the leader at the centre. There will
also be a close relationship between leadership style and organizational culture.
The configuration approach to organizational design
Although the factors discussed in the previous section contribute to understanding of how organization structures evolve, Mintzberg (1979; Mintzberg et al., 1998) proposed a 'configuration approach' to organizational design. The configuration of an organization (according to Mintzberg) must take account of the following design parameters:
1. job specialization - to logically divide up the tasks of the organization;
2. behaviour formalization - standardization of work processes;
3. training - instructional programmes to provide employees with the
skills and knowledge to do their jobs;
4. indoctrination - to inculcate organizational norms in workers;
5. unit grouping - according to (i) business function (e.g., marketing,
finance, production, etc.) and (ii) market served (these may conflict
with each other as grouping by business function centres on the efficiency
of the processes of the organization, while grouping by market
increases organizational flexibility but encourages duplication, in turn
6. unit size - the number of positions contained in a single unit of the
7. planning and control systems - used to plan and control the activities
of the organization;
8. liaison and integrating devices - devices like task forces and committees
can integrate the units of the business (the logical conclusion of
such devices is a matrix structure);
9. the need for centralization or decentralization - the extent to which it
is necessary or desirable to diffuse decision-making power.
In addition, it is important to consider both the horizontal and vertical communication requirements and systems within the organization. In an international business unit grouping, particular importance is attached to
planning and control systems, integrating devices, the need for centralization or decentralization, and indoctrination. The way in which units are grouped is one of the most significant decisions to be made in the design
of international organizations. It is not simply a decision between grouping by functional area or by market, but rather how to integrate the two. The structures of global organizations must also take account of the need to coordinate and integrate geographically dispersed activities, at the same time as making possible local responsiveness where and when it is required. The matrix and the transnational (Bartlett and Ghoshal, 1987) are alternative forms of organization which attempt to resolve these conflicting
There is no ideal organizational structure. There are several commonly found types of structure which incorporate the parameters above and which reflect the range of internal and external factors that influence the
evolution of organizational structure.
Organization Structure of Wipro Limited
According to Mintzberg, an organization has various sub-parts which are designed to perform different functions. An organization has five parts which may vary in size and importance depending on organization's environment, technology, and other factors. For Wipro Limited, factors which determine the structure of the organization are:
• The Nature of the Business: Wipro was started as a company which used to sell cooking oil but now the company develops most sophisticated software applications, design semiconductors, and manage back-office solutions for giant companies across the world. The company has a history of innovation and intrapreneurship. Hence, we can confer that an innovative company like Wipro is based on a flatter structure that encourages horizontal communication and devolve decision-making powers.
• Environment: Wipro operates in an environment that is rapidly changing mainly due to advancement of technologies, increased competition, globalization, and increased exposure of companies to rest of the world. To be able to survive in this dynamic environment, Wipro has to act promptly to any change. This explains the decentralized decision making at the company to increase responsiveness. The company also demonstrates flexibility of adaptation by addressing local needs to its customers which is possible due to rapid and decentralized decision making.
• Global Strategy: Wipro has a global strategy to have direct presence in the global markets. It proposes to set up local subsidiaries in different nations. For catering to the global customers, Wipro has an "act local" strategy. Thus for each of its global locations, there is a different set of strategy to carry out operations as per the requirement of the local client, though the basic principles and philosophies of the company remain the same throughout the global arena.
• Age and History: Wipro was initially set up in 1945 with the main product as vegetable oil. During 1970s and 1980s it began to shift the focus to business opportunities in IT. Wipro was the first company which marketed its first indigenous homemade PC from India in 1975 (What is the..., n.d). Wipro's entry into the InfoTech area was a success with its R&D efforts. However, when the Indian economy opened, Wipro's hardware and software were no longer considered good enough to ...
The solution discusses the organizational structure of Wipro.