Technological Change

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ORGANISATION STRUCTURE AND STRATEGY

A change in technology has had a major impact on the structure and strategy of organisations.

This has encouraged the flattening of organisational hierarchies and offering a wider span of control.

More and more companies are “empowering” employees or outsourcing, cutting out the need for middle management

  • DOWNSIZING

    • Downsizing is the term used to refer to a situation when a company is reducing the number of employees without necessarily reducing the work or output.

  • DELAYERING

    • Many organizations have recently been delayering. Middle line jobs are reducing.

    • Organizations are increasing the average span of control, reducing management levels and becoming flatter. Why?

    • Information technology reduces the need for middle managers to process information.

    • Empowerment - Many organisations, especially service businesses, are keen to delegate authority down the line to the lowest possible level. 

      Front line workers are allowed to take decisions, which is often the best way to stay flexible and responsive to customer demands.

  • OUTSOURCING

    • Outsourcing has to do with contracting out specific operations or services to an external vendor.  Outsourcing can help remove the uncertainty of costs and replace it with a fixed price. 

      It encourages planning as many of the outsourced contracts are long-term. It also can benefit from economies of scale. 

      An outsourcing organisation can also share staff and expertise between clients. It also gives both companies lots of flexibility. 

      Outsourcing can work on a project basis, for example a marketing company or PR organisation helping to launch a particular product.

      There are however, certain drawbacks of outsourcing that have to be measured against the potential gains:

      • Confidentially of information or techniques

      • Competitive advantage

      • Locked into an unsatisfactory contract

      • Lethargy (not very productive) towards cost implications

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