It refers to the organization that has departments created according to specialization & function, so that anything related to the particular department is handled by that specific department & no by any other departments. For instance, if organization follows functional structure and has divided the departments as finance, marketing, IT, HR & operations, any problem related to issues in networking or system issues will only be handled by IT department & not by any other department (Mintzberg & Waters, 2015).
- The functional organization provides opportunity for the people to learn from each other & become more productive & specialized.
- Individuals that are grouped together by common skills can manage & control the behaviour of each other.
- Individuals develop norms & values which allows them to become more effective in what they do.
- Functional organization structure leads to development of many functional groups; each function has its own hierarchy, which results that each function becomes increasingly distant from each other.
- It is difficult to obtain the information that is required to identify the profitability of any specific functional group.
- Functional organization leads to problems of location, i.e. an organization should balance the requirement for decentralized regional operations & requirement for centralized decision making.
- Management at top has to devote too much time on discovery the ways to develop coordination among different functional groups (Kaplan & Norton, 2015).
It is the type of organizational structure which groups each functional area of the organization into a division. These divisions can match to either geographies or product. Each division consists of all essential functions & resources within it to support that geography or product line. For instance, each department has its own IT, finance, HR & marketing departments.
- Among divisional & corporate managers, there is a clear division of labour which usually increases the organizational effectiveness.
- In functional organizations there is an additional control which inspires the stronger pursuit of internal competences of the organization by divisional managers.
- As each division has its own revenue centre, so it becomes easy to evaluate the individual profitability of the departments.
- It becomes difficult to manage corporate divisional relationship, i.e. it becomes difficult to have a balance between decentralization & centralization.
- This structure results that divisions start competing for resources & this rivalry prevents cooperation and there is lack of coordination between the divisions.
- It becomes quite expensive to work multidivisional structures.
- Tall hierarchies are inclined to have communication problems; the major problem that is faced is distortion of information (Burns & Stalker, 2008).
In this organizational structure brings managers & employees from different departments to work together to attain a common goal. This structure is a combination of divisional & functional structures. The former divides the department within the organization by the functions executed, whereas the latter divides them by geographic locations, customers or products (Short & Palmer, 2013).
- The usage of cross functional groups lessens the functional obstacles & subunit orientation.
- It results in open communication between various functional specialists.
- This structure empowers an organization to maximize its usage of skilled professionals that move from product to product as required.
- The product & dual functional focus endorses concerns for both quality & cost.
- This structure lacks control structure which causes employees to develop steady expectations from each other.
- There is a lack of clarity in the distinct hierarchy of authority which might result in conflicts among the products teams & functions over the usage of resources.
- There are chances that employees experience a vacuum of responsibility & authority, i.e. individuals generate their own informal organization to deliver themselves with some logic of stability & structure (Ansoff, 2007).
The term cotemporary management refer to the management tools that are practiced by business organizations & managers in today’s world. This is the topmost aspect of business organizations as well as management. The practice of contemporary management has been started from the ancient civilization. Then it invented different aspects such as scientific management, administrative management, modern management and now everywhere contemporary management is practiced. There are some elementary concerns of contemporary management such as globalization, project management, HR management, ecommerce, & TQM. Management in the changing society has developed significant to all, because of its universal application & hence, management contemporary issues provide fundamentals on the usefulness of work life of people & groups that work at diverse situations in competitive world environment (Freeman, 2014).
Trait Theory of Leadership
The trait leadership theory identifies specific traits of personality which differentiate leaders from non-leaders. They are grounded on the principal that leaders are born and they are not made, i.e. leadership is mainly inborn, instead of being developed by learning. The individuals that possess right traits & qualities are better suitable for leadership. The theory often ascertains the characteristics which are common in leaders.
It is one of the first academic leadership theories & has tried to answer why some of the individuals are good leaders & rest are not.
In fact the theory can be traced back to the 19th century; Thomas Carlyle a researcher applied such understanding to recognise the characteristics, skills & talents of people that rose to power (Wells, 2012).
This theory is grounded on the characteristics of many leaders (both unsuccessful & successful) & it is used to predict the efficiency of leadership. The subsequent lists of behaviours are then matched to those of prospective leaders to assess their likelihood of failure or success. Once found, the theory is that these natural leaders can be cultivated to develop great leaders.
Some of the key leadership characteristics identified are: Emotional intelligence, integrity & honesty, initiative, creativity, business knowledge, charisma, flexibility, emotional intelligence, tenacity, motivation to succeed & energy.
Supporters of this theory, that is now considered out dated, believe that development of leadership comprises of measuring & identifying qualities of leadership, screening potential from non-potential leaders and then training those with potential.
However, in today’s modern thinking, leadership is seen as a skill which can be mastered & hence, all the above characteristics can be enhanced. As an outcome, it is sensible to first comprehend these behaviours and then develop improvement areas, so as to become yourself a great leader (Daft, 2008).
Behavioural Theory of Leadership
As per this theory, the importance is given on the actual action & behaviour of the leader & not on his/her characteristics or traits. In simple words, this theory stresses that strong leadership is the result of effective role behaviour.
The theory reflects that leaders use 3 skills to lead their followers. These skills comprises of technical (states the knowledge of the person of the procedure of technique), human (states the ability to network with people) & conceptual (meaning the idea of the manager that allows a manager to setup models & design plans).
The theory adopts that a specific behaviour of a manger could make him a great leader whereas its opposite would abandon him as a leader. Defining goals, inspiring employees for attaining the objectives, effective ability to communicate & interact efficiently, developing team spirit are the functional behaviour of a great leader.
The theory highlights the point that the constructive behaviour of a leader offers better satisfaction to their followers & they recognize them as him/her leader. But the theory has one limitation that a particular action & behaviour of a leader might be effective & appropriate at a specific point of time whereas at other point it may not be relevant and can be ineffective. In this theory, the “time” factor which is an important component has not been considered (Grant, 2009).
It is a systematic approach of recognizing & creating the essential changes & the approach to measure the organizational performance as organization reaches closer to its vision.
Strategic Management is composed of actions, decisions & analysis a company undertakes, so that it can make & sustain its competitive advantage.
It embraces execution and identification of mission of the organization by matching its abilities with the demand of the business environment (Mintzberg, 2009).
Strategic Objectives of Amazon
The generic strategy of Amazon for competitive advantage is grounded on Michael Porter’s model, which reflects the approach which an organization adopts to progress its business among tough competition in the retail market available online. Amazon is the biggest online retailer of the world, and it always evidences to be extremely competitive, even in front of giants such as Walmart.
The intensive growth strategies of Amazon are accountable for business expansion & development. By effective application of its generic competitive strategies for growth, Amazon is able to be successful in the global e-commerce market.
The generic competitive strategy of Amazon permits the ecommerce business to offer services & goods at reasonable prices. Amazon’s intensive strategies support ongoing international growth (Harrison, 2012).
Generic Strategy of Amazon (Porter’s Model)
Cost leadership is used by Amazon as it’s a generic strategy for attaining competitive advantage. The objective of the generic competitive strategy is to minimize the operational cost. For instance, amazon applies innovative networking & computing technologies for extreme operational competence that interprets to reduced costs. Seeing the nature of ecommerce, the organization get benefits from process automation that is mostly used in scheduling, process automation & other operational processes. These advantages allow Amazon to reduce the cost of its online retail & additional services.
A strategic objective connected to cost leadership generic strategy of Amazon is to develop ecommerce competitive advantage by constant development of IT infrastructure. Moreover the cost leadership generic competitive strategies push Amazon to reduce its price levels. Amazon marketing mix is impacted by its strategic objectives. The low prices are important in appealing consumers (Jargon, 2009).
Intensive Growth Strategies of Amazon
Market development is used by Amazon as its present key strategy of growth. Growth & entry in new markets is the primary objective in this intensive strategy. New countries are added by Amazon where it offers its services. Every new country is considered a new market which generates the opportunity for the growth for the organization. Generic strategy of Amazon develops competitive advantage which enables the organization to implement this intensive strategy of market growth. A strategic objective linked to this intensive growth strategy is for Amazon is to create new online retail websites which correspond to new countries added to the global market research of the organization.
In Amazon’s online retail business, market penetration is a secondary intensive growth strategy. The objective of this intensive strategy is to make more returns from the markets where the organization presently operates. Amazon rises with increasing consumerism. For instance, as the consumers cultivate there interests in online retail the organization benefits from greater revenues from sales, particularly when considering the Amazon’s brand popularity. For having the primary swift growth of Amazon, market penetration has the major responsibility. The organization’s generic strategy generates the competitive advantage essential to penetrate markets based on low prices & costs. A strategic objective grounded on this intensive growth strategy is to implement an aggressive marketing campaign to interest additional consumers to Amazon’s ecommerce website (Miller, 2015).
It is the least important amongst intensive growth strategies of Amazon. Development based on new business is the objective in relating this intensive strategy. For instance, Amazon developed by its acquisition of Audible, which is an audio books & related products manufacturer. In regard to this, the organization partially uses acquisition to implement this strategy of intensive growth. The cost leadership generic strategy of Amazon allows the company to develop in diversification by applying the similar approaches to reduce selling prices & operating costs. A strategic objective related to this intensive strategy is to develop the ecommerce business by an aggressive acquisition strategy (Quigley, 2014).
With the help of this paper, I have enhanced my knowledge on various management topics. This paper has reflected on organizational structures, what are the various types of organizational structures, what are their advantages & disadvantages. The 3 types of organizational structures have been discussed, (i.e. functional structure, divisional structure & matrix structure) and each structure having its own advantages & disadvantages. Then we have reflected on the definition of contemporary management and the theories of leadership. Though there are number of leadership theories available in the curriculum, however in order to complete this paper I have chosen the two well-known theories of leadership that are trait leadership theory & behavioural leadership theory. Then we have focused on defining the strategic management and the next part was to discuss the strategic objectives of a start-up. So, I have chosen Amazon to discuss its strategic objectives. Amazon has been chosen because it is one of the largest start-up that has shown a tremendous growth in a short span of time and the strategic objectives set by the management of Amazon were so powerful that has led to the success of the organization. All the above topics discussed in this paper are very important and crucial for any organization and play a significant role in success of the organization.
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