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The Organizational Structure Nature McDonalds

Essay by   •  May 3, 2012  •  Case Study  •  506 Words (3 Pages)  •  3,422 Views

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The organizational structure nature

Through framing the several members of the company in different positions and with every kind of interconnected responsibilities, it became possible to McDonald's to integrate global efforts and to apply the strategic orientations previously defined.

Therefore, after strategic formulation it's necessary to conceive organizational structures that have the best fit in the company goals.

And in order to make a correct analysis of the structure of any organization we need to analyze three factors:

Formalization: explicit procedures of the company and relevance of the rules

Centralization: level of decision-making

Complexity: Characteristics of spatial dispersion, horizontal and vertical integration of the company

All this elements can be related with the competitive advantage that the company wants to reach in the market. Exhibits

Formalization Explicit procedures of the company and relevance of the rules. The process of formalization contributes to minimize the uncertainty in the organization, through well-defined authority and each responsible area of each operational unit (which is considered to be positive to the company). But on the other hand, it contributes to restrictiveness of personal initiative, risk taking and innovative spirit in the company. Usually the higher the role or position in the organization the smaller is the level of formalization, because people in higher positions are supposed to have initiative, be innovative, and to contribute to the growth of the organization. And this is how McDonald's operates - higher managers have less control so they can explore and innovate the system.

Centralization Level of decision-making. An organization is as more centralized as the hierarchic level on decision-making increases. Centralization facilitates the control and the coordination of the company activities, but it can lead to higher response time to market demand and consequently have a negative impact regarding motivation on the people working on inferior levels of the organization.

In practice the higher the level of decentralization in the company activities the higher the weight that should be given to the control and coordinator functions. But in reverse the higher is the level of centralization more resources should be allocated to the operational units, since they have to implement the decisions.

Therefore is extremely important to have a dynamic balance between the executive responsibilities and the coordination and control activities inside the organization, this is the only way to obtain a good development in the long term.

Complexity The level of complexity



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