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About the Company
For the purpose of this paper, we have created a hypothetical IT services company that provides consulting services to companies with information technology needs. This includes; project management, system development, implementation, networking, hosting, training and maintenance. This company is an established company in the Chicago area, which is currently grossing $5 million per year. The mission statement for our hypothetical company is to provide cost-effective, high quality IT services to small and medium size companies that cannot afford to maintain and train an internal IT department and staff. The organizational structure described in this paper was developed from a strategic plan that our team had previously designed for this company.
Organizational Structure
The organizational structure for this company is a functional departmentalization with a small hybrid of divisional at the project management level. As this is still small company the organizational structure is made up of less than 0 employees and is still very much controlled by the CEO/owner. Our strategic plan is set for a high rate of growth of the next five years. Small companies at this stage, meaning set for rapid growth and expansion, will place a huge strain on the organization's structure. Having a structure that can support the rapid growth may be the defining factor of whether the organization will succeed or fail. To ensure that our structure will be able to handle the planned growth of 100% over the next 5 years, we have designed a predicted organizational structure. The future organizational structure, takes into account the move to add remote sales areas, as well as to ensure that the support functions for predicted growth will be in place. With the focus on sales and marketing, the proposed organizational structure has added the support functions of a customer service representative, a sales administrative assistant, and new project managers and technicians to handle the workload.
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Current Organizational Chart
Proposed Future Organizational Chart
The organizational structure of functional departmentalization has advantages and disadvantages. One of the advantages is at the structure creates a simple organizational plan that is adequate and efficient for small company with few products and services. The structure reduces the chance of a duplication of efforts. One article, ("Organizational Structure, p.) states that functional departmentation will respond best to price and quality performance pressures. A single office with only one sales department and one operational manager ensures that the division assigned to the function is completing each of the organizational functions. Functional departments allow employees to specialize, in doing this they become more efficient at what they do. Managers also become specialized, in small companies they also have working knowledge of everything that is going on the department, this allows for more informed decisions. One of the disadvantages of functional departmentalization is that the departments depend on a specific manager to lead. There is little cross management and if the manager is unable to continue his position their more resources in training required to cover his responsibilities. Another disadvantage of this type of organizational structure is that is as difficult for specialized managers to be promoted. The managers not cross trained with other functions of the Company and the organization will be limited in changing his organizational structure to corporate divisional managers or another type of organizational structure.
This structure allows employees to specialize in their respective departments. The close proximity, (single office space), allows them to work closely when needed, yet autonomously when necessary. The satellite sales force is close enough to come to company meetings and functions, yet flexible enough to be able to make sales all over the state. The executives work along side the employees. This allows for corporate objectives to be known to all relatively quickly. Also, employees are able to report obstacles to executives immediately without bureaucratic intervention. This company is lean and specialized with no expensive inventories to keep track of, no heavy machinery to finance and the services are able to improve as technology does, instead of becoming the obsolete.
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Allocation of Resources
One of the biggest struggles this company will face over the next five years is how to grow rapidly and how to finance that growth. When small companies reach the stage where rapid growth occurs it is important from a financial standpoint to ensure that theres enough cash to sustain the growth. To incorporate both the strategic and management plan the budget has placed a large portion of the cash resources into hiring an external marketing company and financing an aggressive marketing plan. There be some people and time allocated to searching for an appropriate external marketing company. Also be a significant amount of resources but forced to ensure that the marketing campaign will be successful and encourage the predicted growth. As per the strategic plan the company will be hiring two new sales reps. The management plan was to encourage the existing sales reps to create satellite offices with new sales reps to gain a larger geographic area of customers. There will be a small outline of capital to assist the sales reps in creating telecommuting home offices as well as the increase in the payroll for the new sales reps. To assist with all the sales activity the Company has committed to allocate the resources to hire a sales assistant. With the predicted growth rate will be imperative to the Company to ensure that it has enough project managers and technicians to carry out the work generated by the new sales force. The company will outlay resources as needed to the operations department to hire new technicians and project managers where and when VP of operations deems appropriate to the increase in workload. The company also predict sometime in the future to customer service representative to help manage influx of new customers.
The hypothetical organization that we have created is at a crucial time in its growth. As a sustainable small company, it has reached the point where is time for the owner to decide whether to continue as a sustainable company or consolidate the company and marshal resources for growth. The ability of our company to manage this growth and meet its strategic objectives is imperative as this is a stage when many small companies go under.
References
Jensen, Michael C. and Meckling, William H. , Specific and General Knowledge and Organizational Structure (Sep 01, 15). Michael C. Jensen, FOUNDATIONS OF ORGANIZATIONAL STRATEGY, Harvard University Press, 18; Journal Of Applied Corporate Finance, Fall 15 http//ssrn.com/abstract=6658
Organizational Structure. Retrieved July 1,00 from http//www.cba.uri.edu/Scholl/Notes/Organizational_Structure.htm
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