Kroon, J. This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here! C) vertical differentiation, horizontal differentiation, integrating mechanisms. A vertical organization structure is one that relies on managers to command and control their employees' work. Thus, for example, in the companies, which develop consumer products, such as food and beverages, competition is very high, while the change in customer preferences occurs very fast. WowEssays. 1. Don't waste time. Of the combination of structural variables, organic or mechanistic form is created.In organic structure we have: x Less horizontal differentiation x High collaboration and participation (both horizontal and vertical). The horizont… We use cookies to enhance our website for you. Essay, Topic: Since hierarchy in mechanistic organizations acts as the main driver for integrating of functions, vertical organizational structure should be most emphasized in such companies. Therefore, companies stress the importance of horizontal dimension of organizational structure as the cornerstone of effective operations and one of the key elements of company co9mpetitiveness (Right, 2011). Discuss the roles of vertical and horizontal differentiation as they relate to organizational structure.In your opinion, which of these concepts is most important for an effective organizational structure? Organizational purpose is usually defined by the environment the company is operating in. However, following the general trend it is important to remember that the structure should help the organization to achieve its intended purpose, therefore, only careful consideration of the individual objectives and market position of the company may suggest the right way to organize it both horizontally and vertically. It is training which involves listening to experts, and training seminars that are content-heavy. A company with a horizontal structure is called a flat company. By "structure" I mean things like degree and type of horizontal differentiation, vertical differentiation, mechanisms of coordination and control, formalization, and centralization of power. Financial idea tells us that organizations who market the identical product to the market will eventually end up in “fantastic levels of competition” and each make zero income. A business owner is typically at the top of a vertical chain of command. Right, J. The Fed’s move will soak up liquidity from the market that it had released in 2009/2010 as part of quantum easing. Upper Saddle River, NJ: Prentice Hall Vertical differentiation occurs when the company develops a chain of command. Therefore, they need to integrate both horizontal and vertical dimensions into their structure. Horizontal differentiation - the formal division of the organization into sub-units 3. Organizational purpose can be generally defined as its reason for being, which is usually reflected in its mission (Daft, Murphy & Willmott, 2010). Organizational structures can be roughly divided into mechanistic and organic. There are advantages and disadvantages to a vertical structure. In this case authority decentralization, flexible task definition and responsiveness to the global environmental changes are essential for company survival. The vertical and horizontal differentiation of task management in the firm. 2019. However, their real value lies in the, Manufacturing Brigham, E., & Houston, J. Horizontal development is identified as an approach that is most useful in solving problems. VERTICAL DIFFERENTIATIONVERTICAL DIFFERENTIATION Difference in authority and responsibility in organizational hierarchy Tall, narrow organizations-greater vertical differentiation Flat, wide organizations-less vertical differentiation Tall structures have many levels of authority relative to the organization’s size. firms are located at the endpoints of the market segment (maximum horizontal differentiation) and (ii) firms are located together at the market center (minimum horizontal differentiation). Centralization is … Clear statement of the purpose leads to the development of realistic objectives, strategies and tasks, which eventually help to build company success and to create value. Organization Theory and Design - Chapter 6, DaftHow to set up a horizontal structure in your organization. According to the contingency theory the most appropriate structure should be developed to respond to the sources of uncertainties in the market environment. Horizontal differentiation in organizational structure meaning - 10028431 1. This paper attempts to explore the effect of the vertical and the horizontal structures within an organization on its intended purpose and the way the choice of one or the other structure influences organizational functioning (Jones, 2009). It is most commonly done through a matrix structure, which combines the traditional hierarchical vertical chain of command with the horizontal integration across divisions. Available from: https://www.wowessays.com/free-samples/the-vertical-and-the-horizontal-structure-of-an-organization-essay-examples/, "The Vertical And The Horizontal Structure Of An Organization Essay Examples." Government, Environment, Management, Marketing, Company, Development, Organizational Structure, Organization. If a product line is differentiated by the number of features, that is vertical differentiation, as the presence of greater functionality implies that some products are superior to others. Ask your question. The third layers are team members supervised by the managers or team leaders in the second layer. An example of such companies can be found in aerospace or nuclear energy industries. Instead of the individual specialization, people are responsible for their performance jointly, and the authority is often given to staff specialists (staff authority), thus promoting flexibility and decentralization. The vertical structure begins with the CEO or president at the head of the company, and below him sits top-level management, which includes vice presidents and executive managers. Strong emphasis on the product or task, rather than formal responsibilities, gives the need to develop flat organizational structures and to focus on the horizontal dimension of the organizational structure (Jones, 2009). It is the number of hierarchical levels in the organisation. This problem has been solved! This strategy can be played but lowering the cost of the products, therefore it will encourage to attract the customers to buy it. Product Differentiation Varieties – Horizontal Vs Vertical Product Differentiation Sorts – Horizontal Vs Vertical. (2011). and skills, the more complex that organisation. Vertical differentiation, which refers to the location of decision-making responsibilities within a structure (that is, centralization or decentralization) and also to the number of layers in a hierarchy (that is, whether the organizational structure is tall or flat). The horizontal development calls for improving skills, abilities, and behaviors. https://www.wowessays.com/free-samples/the-vertical-and-the-horizontal-structure-of-an-organization-essay-examples/. (1995). (In a vertical hierarchy), employees are required to follow orders and guidance from their upper level in order to complete the tasks. Retrieved from http://www.ehow.com/about_6561176_vertical-horizontal-organizational-structure.html General management. The balance between vertical and horizontal differentiation represents one of the main challenges for organizational design, which defines mechanisms of control, decision-making and activity coordination that are essential for organizational goal achievement (Jones, 2009). See handouts page for more information on organizational structure. Instead of a single person taking orders online and shipping them out, the company now has salespeople who answer to floor managers who answer to department heads who answer to the owner. Its consequence you have been told could be modelled by Monopolistic Competition. Daft. The width and height of the hierarchy. Spatial differentiation refers to the degree to which the High degree of environmental uncertainty requires more flexibility and adaptability. Communication in a horizontal organization tends to be more organic and easily flows from one work group to the next. It requires highly centralized decision-making with the clearly defined chain of command and formal authority lines. x Flexible tasks x The works are not formal and the communications are informal. In order to determine the most optimal way of developing horizontal and vertical functional dimensions, any business should consider the desired structural outcomes in terms of the elements of the organizational structure, such as the chain of command, specialization, authority distribution, span of management, centralisation and formalisation. Binghampton, NY: Best Business Book. Horizontal communication is when information flows between persons holding the same position in an organization. Organizational theory, design, and change. Published Dec 07, 2019. Plunkett, W. R., Attner, R. F., & Allen, G. S. (2008). Financial statement analysis helps companies gain an understanding of the financial position of the company, results of their operation, and cash flow of their company, which is also the main purpose of financial statements. Business Management General Business Administration Business Development Management. However, if the structure is selected ineffectively and it does not fit the intended purpose of the organization, it may hamper future development of the company and nullify even the strongest advantages, which an organization possesses in the market. Question: Discuss The Roles Of Vertical And Horizontal Differentiation As They Relate To Organizational Structure. This type of analysis is the financial statements of a company of successive years, of financial data, along with other pertinent information, to assist in investment and financial decision-making. In the structure, each person is supervised by the one directly above him. After filling out the order form, you will be directed to payment via Credit Card or another preferred method. As the risk of unforeseen circumstances for such companies is quite low, there is little need for high flexibility, adaptability and responsiveness. If you are having troubles with your research paper, I might have a solution for you. 1. Reporting to the top level is the middle management team, which includes more managers and maybe department heads. Financial analysis also helps in future forecasting. Task distribution occurs from top to bottom in a formalized process, which implies that every person is individually specialized and responsible for the assigned responsibilities. Secondary School. (9 ed.).      Littleton Manufacturing facilitates poor upward and downward communication throughout all levels of the organization. Horizontal Differentiation in Organizational Structure In contrast, horizontal differentiation is concerned with how to divide the organization into subunits. The vertical organizational structure is a strict hierarchical structure with power emanating from the top to the bottom. ", "The Vertical And The Horizontal Structure Of An Organization Essay Examples,". Both horizontal and vertical integrations are likely to continue over the next several years. Therefore, organizations tend to be less formalized, while emphasizing decentralization, task flexibility and horizontal differentiation. Coordination in such organizations usually represents a more complex system, which is not based on the formal hierarchy levels, but on the mutual adjustment, compromise and informal networks (Plunkett, Attner & Allen, 2008). Organizational complexity: a property or characteristic of the organizational structure. How the firm’s configuration is broken down into its several subunits. WowEssays, 07 Dec. 2019, https://www.wowessays.com/free-samples/the-vertical-and-the-horizontal-structure-of-an-organization-essay-examples/. Join now. Your financial data is encrypted, safe, and will remain strictly confidential - this is our unbreakable WOW! However, matrix structures can never reflect both dimensions equally, and the dominance of one or the other side of the matrix is defined by the organizational strategic direction and external environment (Kroon, 1995). (2019, December, 07) The Vertical And The Horizontal Structure Of An Organization Essay Examples. It doesn’t have many chains of command. Vertical Organization Structure. Communication The rigid structure of a vertical organization tends to slow communication between departments and from management to employees. Horizontal differentiation is based on the idea of the division of labour, which leads to specialization, thus enhancing productivity and leading to additional value creation. Moreover, more and more companies establish operations in several locations and even in multiple countries, which makes centralized coordination and communication more complex. Management is elaborated as an individual or a group of people that can take and follow the responsibilities to run a business or an organization in order to achieve the objectives and goals, Differences Between Horizontal & Vertical Organizations Essay, Differences Between Horizontal & Vertical Organizations. If you’ve just started your business, or you’re struggling with your current marketing strategy, it’s time to take a look at the two distinct marketing systems available: Vertical and horizontal. Because employees in a horizontal organization are empowered to make their own decisions, collaboration tends to happen more organically. 254243271, Well-researched, fact-checked, and accurate, Eloquently written and immaculately formatted. Industrial Organization-Matilde Machado Product differentiation 4 4.1. The degree of complexity, formalization and centralization in the organization. Financial analysis has three sub-divisions: vertical analysis, horizontal analysis and financial ratios. (2007), “Financial statements report both a firm’s position at a point in time and its operations over some past period. They are divided into linear structure or differentiation and horizontal structure or differentiation . As we have seen, vertical differentiation is concerned with the location of decision-makingresponsibilities within an organization. Business continuity will become a bigger issue as the Fed continues to increase interest rates and developed countries focus on protecting of jobs. Moreover, it is also the process of identifying financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. (9th ed.). ID Accessed 26 January 2021. The choice of a structure has a significant impact on the organizational performance, its objectives and culture. Organizations with more organic structures usually aim to promote flexibility and adaptability. According to Taylor, Fayol, Weber and other classical theorists, there is a single best way for organization to be structured. Organizational structure refers to the formal system of authority and task distribution, which is established within the organization to control its activities and to allocate scarce resources. The Vertical And The Horizontal Structure Of An Organization Essay Examples. Unlike vertical and matrix organizational structures, a horizontal organizational structure has fewer layers, normally two or three. What Are The Dimensions Of Organizational Structure? It also promotes mutual understanding and ensures cross-functional coordination. Key challenges to note are low employee morale, low level of unity within the organization, poorly designed organizational structure and confusion in interpreting procedures and rules. For instance, carrying out a financial analysis of a company is to know its current financial position and its returns compared to risks. Please note that we cannot guarantee that unsubstantiated claims will be satisfied. People are expected to make changes and to show their initiative and creativity. Horizontal communication helps to share ideas, wishes, information and attitude between peers and colleagues. F. Ostroff in his book “Horizontal Organization: What the Organization of the Future Actually Looks Like and How it Delivers Value to Customers" suggests that information age dictates the need to emphasize horizontal structure, which allows decentralization thus leveraging the widespread access to information. VERTICAL AND HORIZONTAL ORGANISATION, GUFFO.IN NOTES, vertical and horizontal differentiation in organizational structure , horizontal organizational structure examples, horizontal organizational structure advantages ,vertical organizational structure advantages, vertical organizational structure … x Decision making system is not centralized. If the structure is chosen correctly, it may become an important source of competitive advantage and ease the achievement of organizational aims. 10). Join now. Log in. Structure 1. (3rd ed.). Free Essay Examples - WowEssays.com. Thus, on a nuclear power plant following highly formalized requirements is extremely important, and employees are expected to respect the rules very carefully, since the consequences of non-compliance with the regulations can be disastrous (Jones, 2009). The vertical and the horizontal structure of an organisation should be carefully designed by organisations to serve the intended purposes. Vertical structure links subunits and organizational roles, thus establishing control over the activities and supports value creation. Horizontal differentiation occurs when the company develops separate positions for separate tasks, such as hiring people to … Example: Consider the accessories of the Apple products like cases and chargers which are considered to be expensive while other companies offer the same products with lower cost which will attract the customers. (2nd ed.). Multiple levels along the vertical dimension allow higher degree of managerial control and easier standardization. Note: this Mason, OH: Thomson South Western Cengage Learning. Vertical dimension defines the way reporting relationships are created and authority lines are designed. Although the choice of the vertical or horizontal focus in the organization is solely determined by its purpose and market environment, today the general trend is shifted to adopting more horizontal structure. Jones, G. R., (2009). Accessed January 26, 2021. https://www.wowessays.com/free-samples/the-vertical-and-the-horizontal-structure-of-an-organization-essay-examples/, WowEssays. In order to support their purpose, organizations pay careful attention to developing their structures (Stevens, Loudon, Wrenn & Mansfield, 2006). Organizational structure has three dimensions: 1. Flat structures have few levels but wide spans of control. Vertical organizational structure means a strict top down or bottom up structure. This means that there are no middle managers. Stay with us and we will tell you everything related to this. Acid Rain: the Southern Company (a) Case Analysis Essay example, Cause and Effects of Parenting Essay examples. Vertical differentiation refers to the depth in the structure. The Organizational System Organizational Structure Organizational Designs 2. Organization structure can be thought of in terms of three dimensions: Vertical Differentiation in Organizational Structure. [Internet]. I'm fine with missing my deadline, WowEssays. In a vertical company—which was most the most common business model in organizations for the much of the mid- to late-20th century—lines of authority branch outward from the top down like a tree’s roots. Key challenges to note are low employee morale, low level of unity within the organization, poorly designed organizational structure and confusion in interpreting procedures and rules. Modern organization design draws on ideas from many fields to … Based on different strategic roles and organizational specifics, the knowledge transfer includes two types, which are vertical and horizontal way. Vertical structure links subunits and organizational roles, thus establishing control over the activities and supports value creation. Situations arise, and techniques are learned, reviewing and analyzing a company’s or organizations financial statements such as their balance sheets, income statements, and statement of cash flows. Vertical orientation should be further embedded into the employee appraisal programs, which should highlight promotion opportunities based on performance and meeting objectives, rather than creativity and risky behaviour (Plunkett, Attner & Allen, 2008). Management, meeting and exceeding customer expectations. December 2019. Proceed if you agree to this policy or learn more about it. Individual vice-presidents direct the activities of the staff below them according to specific lines of business. Non-standard behaviour in mechanistic organizations is usually discouraged or prohibited, that is why there is little room for innovation and risk-taking. Employees have open contact with each other and are more available to create collaborative solutions. By considering both horizontal and vertical dimensions the company develops higher flexibility and cooperation, while maintaining relatively high level of coordination and centralized integration. Since strict adherence to rules and formal requirements is essential in such organizations, the structure should be stretched vertically with multiple hierarchy levels, which ensure control and standardization. A “vertical” company is known for having a large staff of middle managers between the CEO and the front line. Accessed January 26, 2021. Vertical differentiation - the location of decision-making responsibilities within a structure 2. See the answer. In Your Opinion, Which Of These Concepts Is Most Important For An Effective Organizational Structure? Organizational structure is defined as “the establishment of authority relationships with provision for coordination between them, both vertically and horizontally in the enterprise structure” (Koontz, 1994). 1. Many companies have realized the need to consider locating themselves between the two extremes, giving priority to either mechanistic or organic organizational structure. Please Use An Example. Andover, UK: Cengage Learning EMEA. Stevens, R., Loudon, D., Wrenn, B., & Mansfield, P. (2006). Position of the organization make changes and to induce predictable behaviour to happen more organically depth in,..., & Mansfield, P. ( 2006 ) financial data is encrypted safe... The third layers are team members supervised by the one directly above him, might! 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