#M1002610

New Organizational Forms

By

Name : Shahzad Anjum

Student ID # M1002610
Programme: MBA Feb. 2010 intake
Tutor: Steven Monks
Subject: Managing Information
Date: 07-07-2010

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Table of Contents

Serial # Page No.

1) Executive Summary ------------------------------------- 03

2) Introduction ----------------------------------------------- 04
3) New organizational forms and opportunities --------- 05
a) MIS and DSS -------------------------------------- 07
b) Virtual Organizations and Virtual Teams ------ 08
c) Improved Customer Relationship --------------- 08
d) Flexibility and innovation ------------------------ 10
4) New organizational Forms and challenges ------------ 10
a) Trust and Supervision ---------------------------- 11
b) Control --------------------------------------------- 11
c) Training and Development ---------------------- 12
d) Socio-Ethical -------------------------------------- 13
5) Conclusion ------------------------------------------------ 13
6) Bibliography ---------------------------------------------- 16

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Executive Summary:

In an era of global village, the formation and transformation of knowledge is vital. The
structure of formal organizations is changing rapidly from rigid to flexible. Its rationale is
to present an organisational solution to issues posed by increasingly intense global
competition and increasing reliance on IT. The essence of new organizational forms is
decentralisation of control, a greater empowerment of the workers, the creation of more
flexible patterns of working, the displacement of hierarchy by team working, the creation
of a greater sense of shared responsibility and the development of more mutual
relationships among co-workers. Technologies are seen as a key factor in supporting this
organisational transformation, in particular systems that help coordination and
communication, support decision making and facilitate the sharing of knowledge and
skills.

This report discuses the impact of technology on the structure of traditional organizations;
opportunities and challenges that these sorts of organizations brought with them for their
managers and employees. This is a multi-dimensional topic but we will focus only on
opportunities and challenges that are faced by managers and employees with in these new
organizational forms. The benefits includes

• Management Information Systems enable managers to make right decisions at

right time.
• Flexible working schedules are available for employees.
• Employees are more empowered with the concept of team working.
• Managers are more innovative and competent to the competitive environment.
• Relationship with customer is improved.

Managers and employees also face some challenges within these organisations, posed by
rapid changes in technologies and working environment. Some of them are

• Supervision of the working and performance of the empowered employees.

• Out sourcing could result in the loss of core competence.
• Rapid changes in technologies raise the issue of training of employees to utilise
the benefits of technological developments.
• Social contacts are being minimized with more use of technologies.
• Managing personal information and knowledge become increasingly difficult.

The need is to determine the fit between maximum use of technology to facilitate
organizational activities and minimum impact of these technologies on human side of
organization.

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Introduction:

The form of an organization can be defined as the division of departments, functions,

resources, authority within organization and the way people link together and interact with
each other. The complexity of an organization depends upon the number of peoples,
number of departments, and its geographical dispersal. In 20th century the structure of
most of the organizations was bureaucratic. At the end of 20th century due to developments
in information technology the forms of organization shifted towards more flat, network,
matrix and most recently the virtual organizations.
For the last two decades many organizations have changed their structure by transferring
authority downward i.e. by giving workers more autonomy and decision making power.
This decreased need for supervision and also reduced the level of management in
organizations. Decision making process is faster due to autonomy and availability of more
information than autocratic organizations.

This shift from autocratic to more flexible organizations is due to the technology and
information systems used by organizations. Technologies enable organizations to move
and react quickly. It allows them more flexibility, innovation and easy way of moving
forward. Technology also brings benefits for managers and stakeholders. There are many
intelligent information systems installed to help executives and managers. By using
Executive support systems executives are able to produce reports, financial analysis, and
market analysis and even can monitor competitor’s performance. For the middle
management there are decision support systems that help them to run and decide there
routine processes without consulting top management each time. This increases the
efficiency and productivity.

Today almost all organizations have some sort of information systems at some level of
management. More and more organizations are implementing management information

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systems. Some of the mostly used systems are Enterprise Systems; supply Chain
Management Systems, Customer Relationship Management System and Knowledge
management systems. These systems are transforming the structure and working of
traditional organizations and are introducing new forms of organizations from digital firms
to virtual organizations.

New Organizational Forms and Opportunities:

The essence of this shift from autocratic to more flexible and virtual organization is the
technology. Technology has changed the vary concept of organizations. In traditional
organizations the hierarchical structure was designed to administrate day to day processes
and highly complex processes. For example in automobile assembly plant the production
of vehicle was broken into a series of steps and these steps were managed by different
supervisors and these supervisors were directed by managers. To solve any problem
during production worker has to consult with supervisors and then supervisors have to
consult with manager. In this way the whole production system was controlled by
centralized managers. A typical structure of an autocratic organization is shown in fig
below.

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Where as now a days in most of the organizations these barriers has been removed.
Employees are autonomous for decision making with emphasise on services and products
rather than consulting upper management each time.

These organizations are more permeable than traditional ones. The structure and the
interface of these organizations change continuously. There relationship with suppliers
and customers also remain under continues change. Now organization may not have any
central office or building places. We can form an organization by coordinating with
suppliers at one end and customers at the other end without setting up any physical office.
This all is possible because of the use of technology. The structure of a modern
organization is shown in the following fig.

Digital technologies offer these organizations more flexibility, innovation, reliability,

efficiency, durability and fast and effective decision making. Google, Amazon and eBay
are the examples of new forms of organizations. In 2008 in America Businesses spend
$900 billions on information systems alone. Between 1980 and 2007 the investment on
information systems increased from 32% to 51% of all invested capital.

Digital firms and Virtual organizations are the concept of the modern era of technology.

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a) Management Information Systems and Decision Support

Systems:

As a manager one has to know how to invest money wisely and how to make the best
decision to outperform competitors. How to maximize the return for shareholders? By
2008 more than 80 millions business worldwide had dotcom internet site registered. In any
organization information system plays important role particularly for the managers. Latest
mobile digital plate forms like iphone, Blackberrys and ipad, online software services and
cloud computing made managers to analyse the situations in their best possible way and
make appropriate decisions. Managers use online relationships and social networking
software to improve coordination and experience sharing. Google Apps and Microsoft’s
Office Share point are used by more than 100 million professionals to support decision
making, project management, communication and online meetings. Similarly business
intelligent applications and powerful data analytic software provide real time performance
information to managers for enhance control and decision making.

With the help of decision support systems manager are able to make right decisions at
right time with right information. By using decision Support systems managers are able to
make routine decisions with out consulting top management each time. Decision support
systems gather information from ESS and TPS to make the appropriate decisions and also
generate reports for top management and instructions for the workers and supervisors. Air
Canada uses Maintenex software for scheduling and maintaining the maintenance work.

b) Virtual organizations and virtual teams:

The most important aspect of new organizational forms is Virtual organizations and
virtual teams thus provided new ways of doing business and an array of opportunities for
both businesses and managers. Virtual organizations are motivated by specific
opportunities, core competence, relationships, flexible boundaries and information
networks.

The structure of these organizations changes according to specific market opportunities.

Alliances and partnerships developed to accomplish specific task and once this specific
task is completed partners are free to move on for new partnerships and alliances. Google
is a company that operates in a rapidly changing marketplace, and much of its future
success depends on its ability to sustain innovation and update existing products on a

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regular basis. In fact, Google has adopted a strategy known as perpetual beta; updating a
product so often that is remains in a constant state of flux. Competing in such an
environment requires a radical change in organisational structure. Google is a good
example of a flat organisation. Its engineers and designers are arranged into pods of about
3-6people whereby one member is appointed project manager. The group is self directed
and has the flexibility to change direction at any stage without the approval of senior
management. Additionally, if a Google employee has an innovative idea, he is only
requiring convincing a certain number of his colleagues to join his pod. When the
threshold of engineers is reached the project is automatically approved. This results in a
highly dynamic organisation which is self propagating. Google has taken advantage of its
main asset human capital and empowered them innovate products and services at a rapid
pace.

Advances in information technology made it possible that geographically dispersed

employees can be link with one and other. They are able to setup virtual offices by using
videoconferencing and collaborative software. The ease in information flow and
communication created the concept of working together as virtual teams. Members of
virtual team perform their task across time, space and organizational boundaries connected
by information systems. The member of virtual teams are bound together only for specific
period to complete specific task. This allows them more freedom and choices about their
work and preferences. As the members of virtual team dispersed geographically this
provide opportunities for the managers to select best member with best skills thus forming
skilled team to complete a specific task.

c) Improved Customer Relationship:

The arrival of the information technology in the form of internet has shifted the power
from the seller to the buyer. Never before have consumers been so empowered when
making purchasing decisions. Price comparison sites like GoCompare.co.uk,
MoneySuperMarket.com and kayak.co.uk have enabled customer to instantly compare
prices of products and services across a wide range of industries. Creating this level of
transparency has had a deep effect on many organizations and industries.
In most, the “middle men” have suffered allot. As consumers use internet to find best
prices and deals, the wholesalers, agents and retail stores have affected most. The concept

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of middle man and broker is disappearing quickly. Now customers can order online, from
a pair of socks to multimillion holiday yacht. Due to the availability of information
customers are more rational and sophisticated.
This is beneficial for the companies and organizations in sense that they are near to their
customers. Technology has enabled these organizations to analyze and understand
customer more effectively and devise strategies according to their needs.
Both managers and employees require being aware of this tendency as it is expected to
affect the future of the organization in which they work. In particular, managers need to
make sure that the company remains part of the value chain. If the function of the
company can be easily replaced by digital technologies, then the company’s approach
needs to be revised. By analyzing there data Wal-Mart come to know that the demand for
products like first aid and emergency lights is increased in areas affected by Hurricane
without conducting any expensive research. They responded only by increasing the supply
of these products in those areas.
Online product previews and reviews also increase the level of transparency. Before the
advent of internet, buying decisions were mostly based on information from store
employees, traditional media and personal recommendations. The internet has facilitated
customers to share their views about products and services; resulting in an information
rich product review system. Statistics show that 81% of online holiday shoppers read
online customer reviews and 86% of consumers read online business reviews before
making purchasing decisions; 90% of whom say they trust this reviews.

No longer are organizations able to cover behind the corporate facade of public relations.
Customers now place more importance on customer reviews than information from media
reviews, mass marketing or in store sales teams. Companies need to focus on the impact of
negative publicity on the internet. Social networking sites such as Facebook, Twitter and
Myspace have created vast network of community which enabled the viral spreading of
purchaser sentiment.
Availability of information and technology has caused a paradigm swing in the way in
which consumers make buying choices and communicate their opinions. Managers need
to both embrace and be vigilant of this new interest group. As Nicholas Carr suggests, “the
Internet may not necessarily be a blessing”.

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d) Flexibility and Innovation:

Technological innovations have fastened up at great pace. Computer processing power

doubled every 18 months and storage capacity has increased significantly with no extra
cost. The process of product design has become increasingly complex; it is very difficult
for any one company to create all part of a product. In Dan Tapscott’s paper “Rethinking
in a Networked World”, he admitted that many blue chip organizations are no longer
manufactures, they are just systems integrators. Mercedes-Benz and IBM are not
manufacturing their own products; but rather they find specialist supplier to manufacture
their products on their behalf. The course of outsourcing is a typical double edged sword.
On one hand, the company is benefiting form the supplier’s knowledge in manufacturing,
ability to scale & their supply chain. Additionally, the suppliers can reserve themselves
from the controversial area of “sweatshop” labour in the Middle East. However, the
company is surrendering established source of competitive advantage; manufacturing. For
this purpose, they are using a new network orientated strategy.
Similarly Dell realise that there is no competitive advantage to be gained by
manufacturing their products. It is this very thinking that has changed the way in which
their products are designed, manufactured, distributed, marketed and sold. Employees
operating within these business occupations must be aware of this varying tendency.

Another most evident alteration in product development is the speed at which new
products are being released. Apple notes in it’s annual report 2008 that “because the
personal computer, consumer electronics, and mobile computing industries are
characterised by rapid technological advances, the company’s ability to compete
successfully is heavily dependent upon it’s ability to ensure a continual and timely flow of
competitive products, services and technologies to the marketplace.” This trend can be
seen across the board and is in a large part due to advancements in technology.

New organizational Forms and Challenges:

"We are surrounded by new machines, new devices, new technologies that let us - or make
us - deal with more information than ever before. We are also surrounded by new
economic and social and cultural systems which support and make possible these
machines, and which, in turn, are supported by them. Together our information culture

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and our information machines shape the way we live, work and play, and change the way
we think about the world around us. No aspect of our lives remains untouched."

[Lubar, 1993, p. 3]

a) Trust and Supervision:

As the empowerment and flexibility is the essence in new forms of the organizations, one
issue that arises is the supervision or monitoring of employees or teams and their
performances. By giving greater responsibility, these organizations focusing on the
development of the employee’s ability to analyze and make best decision. And by offering
flexibility organizations want best possible performance from employees. Nordstrom a
fashion retail company has policy manual emphasise their employees that “use your best
judgement under all situations”. Similarly VeriFone a virtual electronic company
highlighted the sharing of corporate philosophy with distant employees.

The issue here is not that organizations cannot monitor distant employees work. The
sophistication of information systems enables them to count every stroke of their key
board and monitor their working data online. However the issue is employee’s complaints
about being monitored and its stressful consequences. Thus monitoring by means of
observing every move of the employees will not produce the require results of
empowerment and flexibility which is the key objective of today’s organizations.

This situation can be best described as bringing up a child by parents. One family uses
technology like PDA, GPS or cell phone for monitoring each movement of child, or other
family simply rely on the sharing of the family values.

Again the main concern in both cases is keeping the channels of communication open for
the exchange of problems and issues related to values and believing that values are strong
enough to eliminate the need for constant monitoring and checking.

Also, given the demands of changing knowledge requirements, the managers may not be
in the best position to keep pace with the quick changes in the field and would need to
entrust the related decision-making to the employees.

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This hurdle can be easily removed by ensuring continuous communication among

employees, face to face meeting for sharing experience and ideas and also by
videoconferencing.

b) Control:

As stated earlier that in modern organizations the main emphasis is on flexibility and
maximal agility by providing anything, anyhow, anywhere and anytime. Such
organizations are utilizing maximal competencies of technology and human beings to
achieve the objectives. While technology is being used for gathering, transferring and
sharing of information, the activities of decision making are being delegated more to
workers who are more familiar with their work situation. Hence, certainly there is a power
shift in these organizations. This reduces the number of middle management layers in
these organizations. Now a typical major company may have only three layers of
management: the CEO, the secretary and associates.

Another aspect associated with flattening hierarchy is the focus of these organizations on
their core competencies. Many companies are outsourcing most operations and processes,
that they consider non-core or non-strategic to third parties. Outsourcing of such activities
is raising the issue about loss of control. The increasing emphasis of such inter firm
association is more and more on relationship building and relying on an electronic
handshake than on going through the traditional protracted legal paperwork.

c) Training and Development:

The situation is quite unclear on this matter. Companies are investing in the new
technology and IT infrastructures. The more important issue is the development of a
culture and shared values that can assist the adoption of such technologies and
environment. Investment in advanced technologies may not necessarily result in improved
communication by, and between, the employees.

It is also essential for the managers to understand how to combine the technology based
communications with occasional face-to-face contacts with the employees. Often the top
managers and the developers of technology, such as the information technology experts,
assume too much about the expected use of the technology by the employees. The crucial
point is to realize that employees may need support in the beginning for realizing the

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benefits of technology. For most employees, communicating via mediating technologies

may be totally new and may affect the performance and evaluation. Such issues need to be
resolved before introducing new technologies.

Training of the employees for using new technologies is another most important issue.
Introducing and implementing new technology is not a big issue as compared to training
and development to use these technologies. This is what happened with RBS in 1997
when they introduced completely new IT system by replacing old one. The project fails at
the end. Shortage of skilled worker and lack of training was the one of causes of failure.

Several companies are developing storeroom of company information that are accessible
to employees through easy to understand user interfaces on intranets and the Internet.
Again employee involvement is necessary while implementing new technologies.
Appropriate courses and workshops should be conducted after implementation.

d) Social and Ethics:

This is a critical issue that most companies are trying to deal with. Research and case
studies point out that those employees who are working in social work settings face
anxiety and tension when they work from home office or alone. Similarly the feeling of
being monitored also result in burnout and stress.

The loss of human contact can be balanced by maintaining continuous communication as

well as by holding occasional face to face meetings for support and sharing of ideas and
information. Alternative means of communicating by face to face with human beings
should be provided like in the fields of sales and marketing, human contact at the
workplace can be replaced with increased contact with clients and customers.

Conclusion:
At the end of 20th century due to developments in information technology the forms of
organization shifted towards more flat, network, matrix and most recently the virtual
organizations.
This shift from autocratic to more flexible organizations is due to the technology and
information systems used by organizations. Technologies enable organizations to move
and react quickly. Technology also brings benefits for managers and stakeholders. There

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are many intelligent information systems installed to help executives and managers. Today
almost all organizations have some sort of information systems at some level of
management. More and more organizations are implementing management information
systems. Some of the mostly used systems are Enterprise Systems, supply Chain
Management Systems, customer Relationship Management System and Knowledge
management systems. These systems are transforming the structure and working of
traditional organizations and are introducing new forms of organizations from digital firms
to virtual organizations.
The essence of this shift from autocratic to more flexible and virtual organization is the
technology. Technology has changed the vary concept of organizations. In traditional
organizations the hierarchical structure was designed to administrate day to day processes
and highly complex processes controlled by centralized managers. Now employees are
autonomous in decision making with emphasise on services and products rather than
consulting upper management each time.

These organizations are more permeable than traditional ones. The structure and the
interface of these organizations change continuously. There relationship with suppliers
and customers also remain under continues change. Now organization may not have any
central office or building places. Digital technologies offer these organizations more
flexibility, innovation, reliability, efficiency, durability and fast and effective decision
making. Google, Amazon and eBay are the examples of new forms of organizations. In
2008 alone in America Businesses spend $900 billions on information systems. Digital
firms and Virtual organizations are the concept of the modern era of technology.

With the help of decision support systems manager are able to make right decisions at
right time with right information. By using decision systems managers are able to make
routine decisions with out consulting top management each time. Decision support
systems gather information from ESS and TPS to make the appropriate decisions and also
generate reports for top management and instructions for the workers and supervisors.

Advances in information technology made it possible that geographically dispersed

employees can be link with one and other. The ease in information flow and
communication created the concept of working together as virtual teams. Members of
virtual team perform their task across time, space and organizational boundaries connected
by information systems.

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Technology has enabled these organizations to analyze and understand customer more
effectively and devise strategies according to their needs. Both managers and employees
require being aware of this tendency as it is expected to affect the future of the
organization in which they work. If the function of the company can be easily replaced by
digital technologies, then the company’s approach needs to be revised.
By giving greater responsibility, these organizations focusing on the development of the
employee’s ability to analyze and make best decision. And by offering flexibility
organizations want best possible performance from employees.
The rapid changes in technology and new organizational forms have brought many
challenges for managers in organizations. The empowerment and flexibility is the essence
in new forms of the organizations, one issue that arises is the supervision or monitoring of
employees and their performances. The issue here is not that organizations cannot monitor
distant employees work. The issue is at what extent organizations can supervise one’s
personal life.

Training of the employees for using new technologies is another most important issue.
Introducing and implementing new technology is not a big issue as compared to training
and development to use these technologies. Several companies are developing storeroom
of company information that are accessible to employees through easy to understand user
interfaces on intranets and the Internet. Again employee involvement is necessary while
implementing new technologies.

New organizational forms bring new kind of social, legal and ethical issues with them.
Data protection, plagiarism, digital surveillance and loss of human contact are the fore
most issues of technological era.

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Bibliography:

Books

Management Information Systems: Global Edition by Ken Laudon and Jane

Laudon (Paperback - 5 Jan 2009)
Management Information Systems: Managing the Digital Firm by Jane P. Laudon and
Kenneth C. Laudon (Paperback - 1 Dec 2006)
Management Information Systems by T. Lucey (Paperback - 25 Jan 2001)

Turban, Efraim, Ephraim McLean, and James Wetherbe. Information Technology for
Management: Making Connections for Strategic Advantage. 2nd ed. New York: John
Wiley & Sons, 1999.

Class notes:

Steven Monks

Web:

"AboutInternet2," www.internet2.edu/html/about.html
Battista,John,"PuttingVirtualOrganizationstoWork," www.ics.org/MemOnly/senn/s4_10/F
EATURE.htm
Collaborative Virtual Workspace Overview, MITRE
Corporation, cvw.sourceforge.net/cvw/info/CVWOverview.php3

ManagementinformationSystems http://www.referenceforbusiness.com/encyclopedia/Ma
n-Mix/Management-Information-Systems.html#ixzz0rX3DUBSO

www.computersinpersonnelhr.com
http://arjournals.annualreviews.org
http://www.jstor.org/
www.google.com
www.itworld.com
www.times100.com
www.economist.com/specialreports
www.financialtimes.com
www.mbaworld.com
www.brint.com
www.londonstockexchange.com
www.intute.ac.uk

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