Environment has three dimensions Stability-Dynamism Simple-complex Abundant and scarce

Dynamic environment means rate at which environment is changing is high i.e. volatility is high

Environment capacity means if resources available in environment are scare or abundant

Complexity: Degree of heterogeneity in the elements of environment

More the dynamism of environment lesser the formalization, centralization and complexity (by virtue of division of labor) as more of cross functional team work would be required.

Social complexity could be high depending upon nature of business

More the complexity of environment lesser the formalization, centralization and complexity

However, more the capacity of environment more the formalization, centralization and complexity (by virtue of division of labor)

Elements of organizational configuration

Operating core: Employees who perform basic work related to production

Strategic Apex: Top level managers who are charged with overall responsibility of organization

Middle line: Managers who connect operating core to strategic apex

Techno structure: Analysts who have responsibility of effecting certain forms of standardization in the organization

Support staff: People who fill the staff units who provide indirect support services for the organization

Simple structure

Informal power: strategic apex Formalization: low Size: small Centralization: high Complexity: low (no need of division of

labor) Example: small retail outlet

Machine bureaucracy

Size : large Formalization: high Centralization: high Informal power/ key part of design:

Technostructure Techno structure is responsible for

bringing in standardization of jobs like preparation of job description, time and motion study engineers etc.

Most suitable in stable and simple environment and where technology can be standardized

Mass production firms like steel and energy firms follow machine bureaucracy

Professional bureaucracy

Combines standardization with decentralization

Centralization: Low Formalization: Low (it is actually

internalized by virtue of professional degree)

Complexity: high (by virtue of social complexity)

Example: hospitals, universities, engineering design firms

Informal power: rests with operating core as they have critical skills that organizations needs

Most appropriate in stable and complex organization and technology is engineering type

Divisional structure

Each division set of autonomous units having machine bureaucracy configuration

Informal and formal power: with middle management

Central headquarter provides support services like taxation, legal

Divisional Structure

Should be used when strategy opted is of diversification

Environment is simple and stable Standardization: high Formalization: high Centralization: moderate (operational

decentralization, strategic centralization)

Adhocracy

Formalization: low Centralization: low (mostly

decentralization) complexity: Low (by virtue of division of

labor as one has to work in team) high in terms of social complexity

Informal power: All experts Environment: Dynamic and complex