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Organizational Composition and Competitive Advantage

Keywords: hansa flex research study, hansa flex competitive advantage

In our fast-paced, ever-changing world, organizations are constantly seeking ways to get and sustain performance. Though there is no single thing that makes an organization successful - no magic formula ingredient - some principles do universally apply. One important is to create a right organizational composition for success by guaranteeing alignment in company dynamic in accordance with main purposes, strategy, and culture.

Organisational structure refers to the way responsibilities are divided up, the way the work moves, how this move is coordinated and the causes and mechanisms that allow this coordination to occur. It creates the platform within which organizations operate. It is the skeleton and later on becomes the engine motor of the business. Therefore a business with a composition which will not fit into monetary and business environment, differentiated from its center purposes cannot are present for a long period.

The aim of this newspaper is to examine an organizational structure as a competitive advantage. The objectives would be the guiding tour to achieve the goal:

  • Review existing organizational set ups and their respective
  • Analyse romance between organizational structure and strategy
  • Define which organizational composition is relatively better for exporting companies

As a research study, organizational composition of Hansa Flex was explored, and subject in question was applied to it to compare organizational theory in real business life.

The paper starts formulating a unified theoretical platform by explaining what the business is, and explaining relationship in a firm. Then it defines common types of organizational framework, discusses their function key points, later investigates organizational efficiency and romantic relationship between organizational framework and strategy. To describe what sort of company can gain a competitive gain relying on this relationship, and also to compare theoretical framework with real business life, by the end, organizational structure of Hansa Flex was studied and finish about comparability is defined.

Some have identified organizational composition as a formal construction of jobs and methods, the prescribed construction of the business. Others have explained composition as the patterned regularities and functions of interaction. Framework is important in organizations since it reduces ambiguity and clarifies responsibilities, targets and goal. Bartol, Martin, Tein and Matthews (2001, p. 267) identify organizational composition as "the formal pattern of relationships and coordination that managers design to web page link the tasks of people and groups to accomplish organizational goals".

Different sources give different contingencies which define organizational structure. These contingencies change through the time due to monetary and business environment, technology, advancement as well as designs of organizational buildings. The elements which were main standards for selecting organizational structure 20 years previously aren't reliable nowadays. Contingencies like size of corporation, role clarity, specialty area and control, for example, have been substituted by speed, versatility, integration and innovation (Ashkenas et al. , 1995, p. 7).

Methodology

Before undertaking the research, it is acceptable to analyse particular method for a given review. You can find two main points that the research procedure for the paper goes through, as the study is done to enlighten development of organizational constructions and review organizational structures as a competitive benefits:

Defining the reference for research of theoretical framework

Applying the idea on particular research study (Hansa-Flex)

Starting a fresh research paper is like starting a fresh task - you have a good idea of what you would like to do, but aren't sure how to begin. Many authors, like many project planners and professionals, discover that outlining is frequently the simplest way to begin writing (Keene, 1987, p. 2). So having this notion at heart, we started to draw a step-by-step strategy of the research. Following are the stages that newspaper went through.

Formulating the study aim (Initiation). This is actually the first stage in our research process, and the purpose of this level is for all of us to decide whatever we are authoring, therefore following this stage you'll be able to know which will be the other levels that are necessary for the fulfilment of the paper. Since it was mentioned, the aim of the paper is to examine organizational structure as a competitive benefit. We want to analyse perspectives of modern organizational buildings and find out whether there may be one best structure that exporting companies may use.

Developing the objectives. Once the research aim is determined, the next level of our research is to build up the aims:

  • Review existing organizational constructions and their respective
  • Analyse relationship between organizational framework and strategy
  • Define which organizational framework is relatively better for exporting companies

These objectives will keep the research analysis occurring towards the aim of the newspaper.

Resource selection. Having adopted all the prior levels then is the next stage; regulate how and where you can collect the info that is vital to draw inferences and conclusions for the study.

Primary Data Extra data

Collection Purpose For the situation accessible For other problems

Collection process Very included Super fast & easy

Collection cost High Relatively low

Collection Time Long Short

Table 1. A Comparison of Major and Supplementary data

Source. Malhotra (1996, p. 117)

According to a source comparison desk of Malhotra (1996, p. 117), credited to lack of research budget and small amount of time, extra data was chosen to be relative as source. It was decided to use, for this area of study, the following options:

Books

Records

Journals

Newspapers

Internet articles

Academic Papers

Published censuses or other statistical data

Company Hansa-Flex (interviews with representatives)

Unfortunately, there were some troubles using all the resources above. Because the research occurred in Bremen, small town in North Germany, it was not no problem finding physical books, journals or newspapers in English. Therefore, to help this situation, electronic editions of some of the literature were downloaded from the Hochschule Bremen's internet network. Also, not having the ability to produce an interview with Hansa-Flex's agent had negative impact on the case study part of the research.

Literature Review. After collecting necessary information, this stage can be an integral area of the research methodology, because it makes important contribution to all or any the next levels of the strategy. This stage helps to understand the topic area as well as the study aim specifically and clearly. Although the secondary resources created a platform for the analysis, censuses and annual reports published by Hansa-Flex didn't help a lot to analyse the organizational framework of the business and examine it as a competitive advantages. The company demonstration of Hansa-Flex given at the Hochschule Bremen by the company's Development Supervisor was used to load this absence.

Interpretation. After collecting and examining the info, and also subsequent to the clarifying of the doubtful points, the next stage for the study will be interpretation in which the uncooked data, clean of "mistakes", will be employed to the study aim. In this case it'll be related to the case study, which is organizational framework of Hansa-Flex.

Results and formal write of conclusions reached. The last level is writing the survey, where all the previous stages come together as one research study and with the rule of enlighten the reader what all the study is about and everything the results achieved attracted from what all the prior stages have done. It will help finally come with the result, if the research purpose was achieved or not.

Organization and organizational structure. Definitions

As it was discussed earlier, the goal of this paper is to clarify the relationship between organizational framework and strategy, and identify organizational structure as a competitive benefits. However, the purpose of this section, as a starting place, is to present some common view about a business and organizational composition.

What can be an Organization?

Organizations around the globe talk about the same characteristics; they may be cultural entities that are goal-directed, were created as deliberately set up and coordinated activity systems and are linked to the external environment. Not absolutely all organizations will be the same, some are large, multinational companies, others are small, family held business, some produce products, others provide services. One key element of an organization is the fact that indeed the business will can be found when people interact with one another to perform essential functions that will assist the achievement of goals. One organization cannot exist with no interaction with customers, suppliers, rivals, plus some other components of the exterior environment like the government etc (Daft, 2007, p. 10-11).

Definitions of organizational structure

Having defined the organization, it is next sensible to establish organizational structure. The Morris explains organizational composition as "the platform around, and the systems that support, the work being done within an organization". Walton (1986) records structure as the foundation for organizing, to include hierarchical levels and spans of responsibility, roles and positions, and mechanisms for integration and problem fixing. The similar description is given in the Dictionary-Organizational Tendencies (2003) as: "the founded pattern of human relationships among the the different parts of parts of a company; the way a company is set-up; the formally defined framework of the organization's task and authority relationship. " (p. 2)

The organizational framework is mirrored in the organization chart (Daft, 2007, p. 190). It's the visible representation of the whole organization and its own processes. The organization chart enables to see employees heading about their duties, performing different duties, and working in several locations. The business chart is very helpful in the understanding how an organization works.

In general, it refers to the way an organization arranges people and their careers so that the work can be done and its goals can be achieved. If the size of a work corporation is not big and communication can be produced in person, formal composition may be not essential, however in a large-scale business the messengers have to be approved about the delegation of various tasks. Then, framework is set up that distribute responsibilities for various functions. It really is these decisions that determine the organizational framework.

Organizational composition and effectiveness

Having a typical view in what a business is, and saying that organizational composition refers to the way in which that an firm arranges people and their jobs, it is time to take into account the impact of the framework on organizational success.

Organizational structure and organizational effectiveness are interrelated, because organizational composition impacts organizational effectiveness based on firm creativity. Woodman clarifies that: "in standard, adaptive organizational varieties (e. g. matrix, sites, guarantee or parallel set ups) raise the odds for creativity. Bureaucratic, mechanistic, or rigid constructions decrease the probability of organizational creativeness. " (Morris, 1995, p. 64)

Peguin (2003) remarks that "organizational performance and its regards to structure are dependant on a fit between information control requirements so folks have either too little or too much irrelevant information" (para. 3). Andrews (1995) supports his idea and notes "without clearly defined roles and responsibilities of getting information, any company structure becomes dysfunctional. " (p. 1)

In analyzing the difficulties of recognizing the organizational success, on the one palm, Bedeian (1986) says, "Although effectiveness is a central theme in the study of organizations, it remains one of the most frequently cited yet least known concepts in corporation theory. " (p. 186). He continues to argue that "failing woefully to consider organizations goals, characteristics, and constituents lead to fault assumptions of performance. " (p. 190). He also is convinced that the relationship and effects between organizational design and framework choice. "Organizations are incredibly complex. They are really molded by more and more liquid and disorderly environmental pushes that constantly threaten their rationally bought structures and explained goals. " (p. 198)

On the other side, he stresses the possible consequence of wrong structure choice. "Declining organizations face many problems. One of the most serious of the is the lack of versatility at time when adaptiveness and agility are specially needed. On the list of attributes most commonly affected are a business leadership, innovative procedures, work-force composition, and interactions with interest groupings. " (p. 197).

Relation between organizational composition and strategy

This chapter is divided in two parts, while first part identifies how organizational framework and strategy are related via environmental conditions; second part points out developing proper organizational framework that facilitates strategy and identifies the authority for every manager.

Nearly always, development of commercial strategy starts by analyzing the industry in which it functions and environmental conditions. Then having industry and competitive analyses, through research and benchmarking the strengths and weaknesses of competitors, executives set out to carve a unique strategic position where they can outperform their competitors because they build a competitive gain. To obtain such advantage, a firm chooses a framework, which is supposed to group people because of the duties, jobs and duties as well as hierarchy of decision making (Mouborgne, et al. , 2009). Growing an organizational framework that helps the strategy is not easy, because of doubt in the global economy's rapidly changing and vibrant competitive environments. When a structure's elements, such as confirming relationships, types of procedures, etc. , are properly aligned with one another the structure helps effective use of the strategy (Hitt, et al. , 2009, p. 309).

Choosing the most likely organizational framework that facilitates the strategy will not ensure a business from future mismatches. As previous chapters identifies organizations must change and choose to development and changing environment, and as organization's strategy needs to change with changing external environment, so must a composition change for proper strategy execution.

In other side company's proper options are bounded by the surroundings. In other words, structure forms strategy (Mouborgne, et al. , 2009). So organizational structure and strategy are like two different edges of the same coin.

In framework strategy romantic relationship, organizations must be wide awake in their attempts to verify that the framework demands work to be completed remains regular with implementation requirement of chosen strategy. There is no perfect or ideal organizational composition that lasts permanently. The strategy must be reinforced by the structure that delivers the stability had a need to use current competitive advantage as well as versatility necessary to develop future advantages. Therefore, properly coordinating organizational structure and strategy can create competitive advantages (Hitt, et al. , 2009).

Characteristics of organizational structures

After the impact of organizational structure on organizational performance and strategy was defined, based on the literature review of this is and characteristics of organizational framework above, this part explores the types of organizational structure. There will vary approaches to design the organization's activity. In the other phrase, that differs types of organizational structure.

Common types of organizational structure

Numerous international scholars are working on determining the types of organizational framework. Thus, various literatures identify several dominating organizational structure types from different perspective. Matching to traditional organizational kind of bureaucratic and other new forms, dominant organizational composition types include useful structure, divisional framework and matrix composition. The descriptions below are summarized and supported by mention of current books.

Functional framework. It identifies "a set of folks who interact and perform the same types of tasks or hold similar positions in an corporation" (Ledbetter, 2003, p. 13). Organizations that increase too complex to be administered through a straightforward structure usually choose the functional composition as a means of coping with the increased needs of differentiation (Hatch, 1997, p. 183). As Raymond mentions also "a functional organization is best suited as a producer of standardized goods and services most importantly volume and low priced. Coordination and field of expertise of responsibilities are centralized in a functional structure, making producing a limited amount of products or services productive and predictable. Moreover, efficiencies can further be came to the realization as practical organizations combine their activities vertically so that products can be purchased and allocated quickly with low cost. "

Divisional composition. It refers to "an organizational structure that is divided along some conditions, & most commonly it is geographic location, but there can also be product, efficient, or tactical divisions. " (Ledbetter, 2003, p. 13)

Matrix composition. It refers to "simultaneously categories people in two ways: by the function which they are an associate and by the product team which they are currently working. " (Ledbetter, 2003, p. 13) Regarding to Hatch's business theory, the matrix structure was developed with the objective of providing the best of both the efficient and multi-divisional alternatives.

The sad truth is all these constructions have their drawbacks parallel with their advantages. If one of the set ups did not have any disadvantage, it might be automatically accepted without any need to consider the professionals.

Pros and Negatives of every structure

Which structure results efficiency most and works best for a business can be quite complicated due to character of different organizations themselves. Every way of planning a business has benefits and drawbacks. However, this section details some general advantages and disadvantages of every organizational structure. This will help us to analyze the case study in the next chapter to see whether a company may use its framework as an advantage.

Functional structure. In the functional structure, as it was recently referred to, the employees are allocated in departments based on their skills and what they do. Common efficient departments are purchasing, accounting, production, sales and marketing, recruiting. Each department works as its entity and they're centered on activity performance somewhat than final result. It leads to centralization of particular employees, equipment and facilities, and results high development of skills, however, this major advantage can be a major pain for the communication with other departments. In processing companies, for example, weakened communication within departments may impact the grade of final product. In addition, it does not allow for flexibility because of the centralization.

Divisional structure. As Rao (2003) mentions, the primary benefit this structure provides arise from, appositely from functional structure, from the actual fact that this kind of structure tends to be more result oriented than activity focused. Each section in this structure contains all the required resources and functions within it. The employees of every division find out about the specific needs of the division, and are participating actively to achieve the goal. This composition creates an atmosphere of specific commitment and inspiration.

Divisional structure has its disadvantages. Since it is decentralized, it results duplication of facilities, equipment, and personnel usually causes more costly processing. Even though employees are aware of specific needs of the department, they could not know organization's overall needs. As useful structure divisional structure also may lead to a fragile communication between divisions. The lack of cooperation reduces improvement of techniques.

Matrix structure. This type of structure tries to receive the benefits of practical framework and of divisional structure, reducing their negatives. One of the benefits is resources can be used from all over the organization. Another advantage, as Rainey (2009) underlines, is " the advantage of the capability to share or shift personnel or other resources swiftly across product lines". However, it is not easy to apply this structure due to dual authority. Having two bosses may sometimes mistake the employees. But this truth can also have an optimistic impact, as two professionals share duties. Matrix structure requires heavy investment in coordination. Because such framework often produce advanced of stress and issue that must be resolved.

It is important to remember that each managerial decision has its pros and cons. When making an organizational structure management should take necessary activities to diminish the drawbacks of the chosen structure. Nowadays, many companies derive from mixture of these constructions. Whatever framework is chosen, management has to be sure that it helps organization's strategy and can be used as competitive benefits.

Case review. Hansa-Flex

As past chapters suggest, when establishing an organizational framework a firm has to ensure the structure supports company's strategy and fits into its culture. Having done this, an organization can create ecological source of information for a competitive edge.

This chapter explains how Hansa-Flex, provider of hydraulic hose, applies the idea of organizational structure to its business to accomplish a competitive benefits over its competitors.

Hansa-Flex. Company overview

Since it was initiated in 1962 in the storage area of the company's founder Joachim Armerding, Hansa-Flex Hydraulics has been Europe's leading privately had provider of hydraulic hose, couplings, accessories, adapters and hydraulic accessories.

Hansa-Flex offers substitute of free parts scheduled to customers require even at short notice. This is done very proficiently as Hansa-Flex keeps over 82, 000 different parts completely in its stock. Using the expertise of determined workforce and give attention to service Hansa-Flex provides fast, qualified assist in any situation.

Hansa-Flex equips more than 300, 000 customers in various industries with hydraulic and metallic tubes and components. As yet, they have more than 350 branch office buildings in 33 countries worldwide procedures, has an gross annual turnover of 165 million in yr 2009 (Hansa-Flex Annual Report 2009).

Furthermore, Hansa-Flex has a person service fleet of 225 vehicles worldwide, which 100 are in Germany on the highway (Hansa-Flex Annual statement 2009). The staff and training service in the fleet take FLEXXPRESS Services throughout the world night and day fixes and install substitution parts. For instants, faulty hydraulic tubes to forklifts and related fixtures are changed in the automobile production. In short, the motto of Hansa-Flex is 'considering globally - behaving locally', which means being positioned in Bremen with an internationally network of branch office buildings.

All of the branch offices promise great availability of their products throughout of world. For instants, by May 2010, the facility in Geisenfeld keeps about 150 branches in southern Germany (Hydraulikpresse 2010). In Oct 2010, Hansa-Flex exposed their Procedure Centre for the Asian market in Shanghai, China. This Procedure Centre provides training program in training center and central warehouse as well as developing and administrative space. Therefore, Hansa-Flex is well ranking in Asian Market to adopt good thing about future developments. That is one of the finally successes for Hansa-Flex.

Strategy of Hansa-Flex

Hansa-Flex is also very well founded through all over world. Generally, along the way of globalization the competition between the companies is more devastating. More customer fascination plus more market show are the key focuses on of companies. Quite simply, the company needs the correct strategy for the organizational framework in different environment conditions, especially an international company. Well-designed framework provides effective outcome. This is the reason why Hansa-Flex is rolling out very fast in its founding in Germany and in Europe.

Hansa-Flex feels that 'The whole entire is greater than the sum of its parts' (Aristotle). It considers that it is more than just the amount of its branches; more than the amount of its products and services. To be looked at as a whole, Hansa-Flex must include the totality of the experience and skills of each employee.

Based on this point view Hansa-Flex packages an essential and interesting Technique for the Company. It offers opened the training center for his or her employees and potential employees early on in 2001 when Hansa-Flex basically focused on local.

Besides that, as a glocal company, Hansa-Flex views customer proximity as part of its responsibility for making sure smooth functions in hydraulics. To maintain the proximity the company has chosen strategy of growth through diversification - acquisition, subsidiary, collaboration. This strategy ensures Hansa-Flex is preserving international growth while at the same time enlarging their product range.

Figure 1. Variety of branches

Source. Hansa-Flex Annual Report 2003

According to the researches which are made by the majority of international scholars we find this expansion strategy highly appropriate reflexed the next theory. The strategy must be supported by the framework that provides the stableness to current competitive edge as well as flexibility necessary to develop future advantages (Hitt, et al. , 2009).

In briefly, Hansa-Flex has a deeply understanding about how could organizational framework and strategy be related via environmental conditions and developing proper organizational composition that facilitates their technique to grow the market share and enter in a fresh market. Hansa-Flex never puts a stop to changing and always considers ahead such as their catchword 'Think internationally - work locally'.

Organizational framework of Hansa-Flex

Interesting point here is how the company control buttons such a big network of branches. How is the company organized to provide a strong communication between departments, and basically between warehouses to keep customers satisfied? This section right answers this question by studying organizational structure of Hansa-Flex, and finds out set up company uses it as a competitive advantage on the market.

Obviously, as many other starter companies, Hansa-Flex was founded predicated on simple structure. Later on, as we see on physique 1, it begins opening branches in several regions of Germany, and so created functional structure. Starting from 1992, Hansa-Flex will go international. Being international and offering products in various countries is always a big deal and takes a whole lot of research. Nowadays, Hansa-Flex has established a variety of practical and divisional structures and custom-made it by its strategy and culture. The set up is divisioned by geographic location to drive the company toward being bounderless group. Basically it includes centralized useful areas, such as purchasing, quality management, warehousing, recruiting, marketing; and decentralized sales and local marketing.

Most significant good thing about centralized purchasing is the fact that it boosts the purchasing cycle. Because of centralized purchasing Hansa-Flex can complete this technique extremely fast, sometimes even within 1 day. For the reason that purchasing data is stored and accessible via the internet. The company can access the required order information and place an order a lot more quickly.

It also saves a lot of time on conducting the relationship between dealer and Hansa-Flex. This way the company can easily forecast how it could 'suffer from' if the company will go bankrupt unexpectedly. This is easier to be achieved, because the business does not need to collect all the purchasing data from different branches.

Another benefit is centralized purchasing makes it possible for everyone who needs to track the info even across multiple branches and corporate divisions. For Hansa-Flex this implies insurance of customer closeness, and results on less time misuse between branches and subsidiaries on searching for the data. Thus, centralized warehouse again offers an advantage to Hansa-Flex to satisfy its customers faster than rivals.

Having centralized HR, first of all Hansa-Flex ensures to obtain most qualified applicants for work. Because centralized HR decision making promotes a more equitable treatment of employees, and is also political abuse. Therefore, HR experts review and list job candidates meticulously and transparent.

Using the advantage of purchasing vitality centralized marketing continue to create better still brand image among customers. The company also requires a local marketing on vacation spot point. Because local worker understands local market better than foreigners employees. Therefore, central marketing transfer knowledge to local marketing to continue the whole process of marketing.

Following the same reasoning Hansa-Flex has divisional deal force that manages sales in specific locations. This gives the company flexibility to respond and adjust to local environment changes.

Conclusion

Due to the globalization the concept of competitive advantage of something or service has recently changed. It isn't easy to support this type of edge, because of high competition and growing number of follower companies. Therefore, companies like Hansa-Flex use their organizational composition as a competitive benefits.

As the majority of economic writers and professionals say, there may be no one ideal organizational framework. Each composition has its advantages and disadvantages. It is also true that, due to its quest, organizational culture, and history, two companies in the same market can apply the same one composition, but nonetheless get completely different outcome. Inside our quickly changing world, sticking into one basic structure is insufficient. Establishing a structure needs a whole lot of creativeness, knowledge, experience, and customization of the structure to the business's 'signals'.

Following this reasoning Hansa-Flex designed a custom-made mix framework of functional and divisional buildings. It efficiently uses features of both buildings, reduces negatives. Therefore, having composition that helps strategy, Hansa-Flex can simply achieve its goals towards its quest. The model which Hansa-Flex constructs may not be applied in others; however, it offers a working experience regarding the organizational structure, which is recognized as the crucial factor for organizational success.

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