In an effort to enhance institutional performance and achieve their long-term goals, some organizations seek to reorganize and engineer their commercial operations to use modern technologies that open the way for many institutional design options.
In this article from a series of articles Introduction to the business world, we will learn about the most important modern trends in institutional restructuring and re-engineering them by touching on the most prominent of them such as: companies, virtual work teams, and other modern trends that strongly prevail in today’s institutions – outsourcing, or outsourcing And managing global business ventures.
Re-engineering the institutional architecture
All companies must from time to time re-evaluate the way in which they conduct business, and this includes evaluating the effectiveness of the institutional structure, and in an attempt by companies to face the grave future challenges, they are moving an increasing trend towards the so-called re-engineering, which means a complete redesign of the organization’s structure, And its operations, with the aim of developing its work, and there is a simpler definition of re-engineering the organization’s structure, which is: “Starting over.” In fact, it seems as if the top management managers are asking the question: “If we were a new company, how would we manage this place?” The goal of re-engineering the institution is to determine the rules that are no longer valid at that time, and the basic assumptions that guide the current organization’s operations, and then abandon them. Each company has a number of formal and informal rules based on assumptions about technology, people, and institutional goals. Therefore, the goal of re-engineering the organization’s structure is to redesign its business processes to achieve progress in controlling expenditures, increase the quality of products, enhance customer service, and achieve speedy completion of all of this, and the re-engineering process should result in a more effective and efficient institutional structure, And in proportion to the current (and future) competitive climate for the business in which the organization operates.
The default company
Adapting to the technological changes – which are affecting all commercial fields today – is one of the biggest challenges facing companies today. Today, institutions are striving to create new institutional structures that help them transform technology into a competitive advantage, and from the alternatives that are increasingly prevalent. Virtual Corporations, which is a network of independent companies (suppliers, customers, and even competitors) connected to each other through information technology, with the aim of sharing skills, expenses, and access to other markets. The following is a review of the main characteristics of the hypothetical company:
Technology: Information technology helps geographically dispersed companies form alliances and work together. Seizing opportunities: Alliances are characterized by being less persistent and formal than traditional partnerships, and more seizing on available opportunities. Excellence: Each partner offers his basic skills and competencies for the benefit of the alliance that brings him together with other companies, and therefore the likelihood of establishing a higher-quality organization in every functional specialization increases and increasing competitive advantages. Trust: The network structure makes companies more dependent on each other, and pushes them – as well – to strengthen their relationships with partners. Boundless: The network architecture of the virtual company expands, the traditional boundaries of the organization.
According to the concept in its horizontal form, every company that is related to other companies in the hypothetical company is stripped of all its traditional elements, as the ideal situation for the hypothetical company assumes that it does not have a central office, no organizational scheme, no administrative hierarchy, nor a vertical merger, so the company does not participate in the alliance that brings it together With others except with her skills, competencies, or basic capabilities, what she donates in his work includes the skills and basic competencies of other companies, and entrepreneurs in that alliance, which are part of it, for example: the work of a manufacturing company is limited to manufacturing, while The task of determining what will be made is assigned to a product design firm, while a marketing firm sells the final product.
Although complete virtual institutions are still relatively rare, we find many companies that adopt many characteristics of the virtual architecture, including Cisco Systems, which uses many laboratories to manufacture their products, but does not own any of them, but rather depends in reality. Manufacturers must contract with her to provide her with all the manufacturing supplies she needs, as only less than 10% of all customers’ requests are touched by hands, and less than half of their requests are handled by one employee at that company. Cisco Systems, and their inventory systems on each other, making it look like a huge, seamless company with no breaks between them.
Virtual Work Teams
Modern technologies enable companies to create virtual work teams – as well – as geography is no longer a constraint that prevents employees from joining in one team. Virtual work teams help save time, reduce travel expenses, relocate headquarters, and relocate, and help – as well – in Take advantage of specialized skills, regardless of location of the employee.
And when managers need to form a team for a project, all they have to do is prepare a list of the required skills, and a general list of employees who have those skills, and when that pool of employees becomes known, then the manager has to choose the best group of employees, which makes up the default work team Among the special challenges associated with virtual work teams are; Keeping the members of these teams focused on their work, motivated, and positively communicated, regardless of their geographical location, and holding at least one face-to-face meeting between members of the virtual work team, during the first stage of team formation, if this is possible – would help In addressing those potential problems.
Among the recent trends that continue to affect managers these days: Outsourcing, or what is called outsourcing, and for decades, companies have been, and still are, resorting to outsourcing for many jobs, for example: jobs were, and still are, being dealt with in employee payroll by three parties, including Recording the working hours they spend, managing their dues, their wages rates, issuing checks for their salaries, but today, outsourcing includes a wide range of jobs in the business field, such as: customer service, production, engineering, information technology, sales and marketing, and others Jobs.
Historically, companies have resorted to outsourcing for two main reasons, namely: reducing costs, meeting the requirements of work, and in order to achieve the two conditions mentioned, companies often seek help from companies located in foreign countries, and in 2017, the use of outsourcing is still a basic element of many commercial operations, but it is not limited. This is supported by some insights that were highlighted in a recent study by Deloitte, called the Global Outsourcing Survey. According to those subject to that study from 280 global institutions, outsourcing is still achieving success, due to its adaptation to the changing business world environments, and according to the aforementioned study, outsourcing continues to grow through traditional functions, such as: human resources and information technology, but it did not stop at that. He has successfully moved to include non-traditional commercial functions, such as: facility management, sales operations, and real estate, and in addition to the above, some companies look to outsourcing as a way to supplement their business operations with innovation, and employ it, to maintain a competitive advantage, and not just a means to reduce costs. As companies view outsourcing as more than just plans and cost-cutting policies, they will expect their vendors to provide more with innovation and other benefits.
There is another type of outsourcing that has become prevalent over the past several years, and which is in part the result of the slow economic recovery from the global recession between 2007 and 2009. Whereas many American companies were reluctant to hire full-time workers despite their gradual growth, some of them began to offer work contracts to freelance workers who are not considered full-time employees and are eligible to benefit from the advantages offered by these companies, This approach to work, called the gig economy, has advantages and disadvantages, as some workers prefer the independence that it provides to them as independent employees, while others admit that they implement multiple small projects due to their inability to find a full-time job, such as: company employees And there is another group of people who work full-time, but they may nonetheless pursue jobs that belong to the gig economy, such as: working in driving cars for Uber and Lyft, to boost their income, and recent estimates indicate that the gig economy It may affect more than a third of the American workforce, over the next few years.
Despite the challenges, outsourcing programs can be effective, and managers must do the following to make their outsourcing effort successful:
Identifying a business problem. Taking all possible solutions into account. Deciding whether work outsourcing is the appropriate solution to the problem. Develop a long-term outsourcing partnership with vendors, and a solid framework that fosters communication and seamless collaboration. Engage with regular engagement outsourcing partners to instill trust between the two entities. Be flexible in working with suppliers, by accommodating requests, and adjusting needs when necessary in an effort to build a long-term partnership that works in the interests of both parties.
Restructuring for the purpose of global integration
Recent mergers between major companies (such as the merger between Microsoft and Linkedin, and between Amazon and Whole Foods, and between Verizon and Yahoo) raise some important questions related to the corporate structure. Among these questions:
How do managers hope to organize the global parts of these gigantic and complex new companies into a coherent, successful framework? Should decision-making authority be centralized, or decentralized? Should the company be organized on the basis of geographical markets, or product lines? How can managers integrate different cultures in the company in a separate way?
Solutions to these problems, and many more, must be found if the merger between global companies is to be successful.
Apart from designing a new institutional structure, the most difficult challenge facing the merger of two large companies is the unification of cultures and the creation of one company, and this applies to the merger that took place between the two pharmaceutical companies (Pfizer) and Pharmacia, which manufacture the drugs Dramamine and Rogaine ( Rogaine). Failure to unify merging company cultures can have dangerous consequences for corporate efficiency.
As part of its far-reaching plan for a mega-merger, the pharmaceutical company Pfizer brought together 14 groups with the mission of developing recommendations on finances, human resources, capital development, warehousing, quality control, and information technology. And she hired a consultant from outside the company to facilitate that task, and one of the first tasks that these groups had to fulfill was to deal with the trends and mentality of the acquiring company (Pfizer), as opposed to that of the acquiring company (Pharmacia), and the company’s managers wanted to ensure that all employees realized that Their ideas are valuable, and that those at the top level listen to them and pay sufficient attention to their ideas.
As more mergers are achieved, and sometimes between companies that are different from each other to the greatest extent, companies must ensure that the merger plan includes policies and assets aimed at dealing with cultural differences, establishing rational leadership structures, opening effective two-way communication channels at all levels of the organization, and re-establishing Formulating the “new” company vision, mission, values, and culture.
Translation – Acting – of the chapter (Designing Organizational Structures) from introduction to business