THE ESTABLISHMENT AND IMPROVEMENT OF THE ORGANIZATIONAL STRUCTURE

THE ESTABLISHMENT AND IMPROVEMENT OF THE ORGANIZATIONAL STRUCTURE

Phuoc D. Nguyen

Many authors have noted the impact of factors and elements on organizational structures: decentralization of decision-making, customer interaction, the value of innovation, marketing considerations, intensifying competition, and liberalization of the economy. (Tran and Tian, 2013). Some factors affect the organizational structure including the state and level of development of the production technology, categories of products, and production scale. These factors affect the composition and content of management functions and through them directly affect the organizational structure. Additionally, factors of ownership relationships exist within the organization; the level of specialization and centralization of management activities; the scale of management; knowledge, skills, and good experience of leaders and managers, and their leadership and management effectiveness. Furthermore, factors of incentives, organizational design, control, and corporate strategy also affect the organizational structure.

Bălcescu and Blaga (2016) propose that “Organizational development is the road to take when approaching organizational change because it plays an important role in organization self-assessment, as well as in assessing the external environment, the development of new strategies and the design of new organizational structures, generally in increasing economic efficiency.” (p. 143). The establishment and improvement of the organizational structure require the establishment of optimality between the processes and levels of management which have rational connections with the number of minimum management levels. Thus, organizational structure is highly dynamic. Moreover, the organizational structure is flexible to respond to any situation within the organization as well as outside environment.

Kalowski (2015) suggests “Organizational structure must have a high level of flexibility in order to seamlessly adapt to changes in the environment or take a part in determining them. In addition, the more the environment affects the structure of the organization, the more complex and dynamic it becomes.” (p. 209). The organizational structure ensures the accuracy of all information used through communication channels and ensures the coordination of all activities and tasks of all departments, processes, divisions, and business units. Additionally, an appropriate organizational structure saves activities costs and expenses.