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Organitional Impacts of Information Systems Use

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Organitional impacts of information systems use

Two common organizational forms are based on the hierarchical organization structure: functional and divisional. The functional form is a structure that groups common activities together. The division of labor is based on key functions, such as accounting, marketing, finance, engineering, and production. Because the training, work, and values are typically similar for people in the same function, their collaboration and efficiency is promoted within the function. This creates economies of scale and enables in-depth knowledge and skill development. At the same time, coordination and cooperation with other departments is more difficult. The functional form was used in practically every business up to World War II. It is still used in many small and medium-sized companies, especially if they only have one or a few products or services. In contrast is the divisional form that was ''invented'' by General Motors and DuPont. The divisional form cuts across functional lines and, instead, organizes according to outputs. Each division is responsible for a different set of customers, products, geographical markets, and so forth. Within the divisional unit, diverse functions such as manufacturing and marketing are represented, but employees tend to relate more to their division than to the functional area. The divisional form is good for coordinating organizational activities across functions, especially in unstable or dynamic environments. Typically it is more customer focused. Cognizant's originalIndia-centric organizational structure described at the beginning of the chapter is an example of a divisional form.

Flat Organization Structure In contrast, in the flat organization structure, decision making is centralized,

with the power often residing in the owner or founder. In flat organizations, everyone does whatever needs to be done to complete business. For this reason, flat organizations can respond quickly to dynamic, uncertain environments.

Entrepreneurial organizations often use this structure because they typically have fewer employees, and even when they grow, they initially build on the premise that everyone must do whatever is needed. To increase flexibility and innovation, decision rights may not be clearly defined. As the work grows, new individuals are added to the organization, and eventually a hierarchy is formed where divisions are responsible for segments of the work processes. Many companies strive to keep

the ''entrepreneurial spirit,'' but in reality work gets done in much the same way as with the hierarchy described previously. Flat organizations often use IS to off-load certain routine work to avoid hiring additional workers. As a hierarchy develops, the IS become the glue tying together parts of the organization that otherwise



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