division of power reduces the situation of conflict. explain
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Answer:
Literature review
Distribution of power and responsibility is the fundamental content of organisation planning. But due to a lack of theoretical structure, difficulties exist in management practices. Huang (2003) argued that line authority should be assigned to be consistent with responsibilities and personal capabilities, and should be linked to the position holder’s own interest in order to lower agency costs. The distribution of line authority may vary, depending on the scale of enterprise, management level, capital abundance, corporate culture and personal competence.
Duan (2007) studied the major factors influencing organisational planning in insurance companies and suggested that corporate strategy, information technology, important stakeholders such as the government, the parent company and major shareholders, and other companies in the industry had a significant impact on the organisational planning of the company. Additionally, organisational planning needs to take the external environment and the nature of the organisation into consideration and find a balance between efficiency and effectiveness in decision-making (Fang and Zhou, 2000). When changes occur in either internal or external environments, organisational strategy and structure must adapt accordingly (Luo, 2008).
Chen and Wang (2007) found that functional structure is the most common structure among private technology companies in China, with the matrix structure least used. Many companies fail to put sufficient emphasis on organisation planning, resulting in inconsistency in their organisational structures and companies’ development stage and developmental pattern.
Zhu and Wang (2009) studied the relationship between organisational structure and performance in Chinese enterprises and found that the more uncertain the environment was, the less formal the structure was and the more liaison mechanisms the company needed in order to ensure its performance. The larger the enterprise is, the more significant these correlations tend to be. To the smaller enterprises, environment has a greater direct and significant impact on performance.
An opposite opinion exists between the relationship of an enterprise’s structural inertia and corporate performance. From the perspective of a resource-based view, structural inertia means good performance. From the contrary perspective, inertia theory gets an opposite conclusion. Liu et al. (2009)suggested that it was necessary for Chinese enterprises to possess inertia to some extent. However, if the inertia is very strong, blocking their development, strategic change should be carried out to motivate the enterprises. On the other hand, at the time of an enterprise’s inception or when it is faced with bankruptcy, aggressive and frequent strategic change will destroy its stability and negatively affect its performance.
Zhang et al. (2009) proposed that the more organic the organisational structure was, the more motivated the organisation members tended to be in knowledge transfer, the more rapidly they improved their capability of knowledge transfer and the more diversified the knowledge transfer channels were, all leading to the enhancement of technological innovation capacity in the organisation.
Compared to traditional hierarchical structures, companies with a strong service philosophy are very different: employee relations are like those between service-provider and customers, instead of superior and subordinates; employees are driven by the demands of the internal supply chain rather than managers. Therefore, the structural design of a service organisation should move from sales (who face customers directly) to its supporting functions in the internal supply chain and from the implementation department to management (Xiao and Liu, 2009).