Convenience

situational view of organization design
is based on the assumption that the
optimal design for any given organization depends on a set of relevant situational factors.
In other words, situational factors play a role in determining the best organization design
for any particular circumstance.
29
Four basic situational factors—technology, environment,
size, and organizational life cycle—are discussed here.
situational view of
organization design
Based on the
assumption that the
optimal design for
any given
organization
depends on a set of
relevant situational
factors
Chapter 6:
Organization Structure and Design
1 7 3
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Core Technology
Technology
consists of the conversion processes used to transform inputs (such as mate-
rials or information) into outputs (such as products or services). Most organizations use
multiple technologies, but an organization’s most important one is called its core
technology
.
Although most people visualize assembly lines and machinery when they think of tech-
nology, the term can also be applied to service organizations. For example, an invest-
ment firm like Fidelity uses technology to transform investment dollars into income in
much the same way that Union Carbide uses natural resources to manufacture chemical
products.
The link between technology and organization design was first recognized by
Joan Woodward.
30
Woodward studied 100 manufacturing firms in southern
England. She collected information about aspects such as the history of each organi-
zation, its manufacturing processes, its forms and procedures, and its financial per-
formance. Woodward expected to find a relationship between the size of an
organization and its design, but no such relationship emerged. As a result, she
began to seek other explanations for differences. Close scrutiny of the firms in her
sample led her to recognize a potential relationship between technology and organi-
zation design. This follow-up analysis led Woodward to first classify the organiza-
tions according to their technology. Three basic forms of technology were identified by
Woodward:
1.
Unit or small-batch technology
. The product is custom-made to customer specifica-
tions or produced in small quantities. Organizations using this form of technology
include a tailor shop specializing in custom suits, a printing shop that produces
business cards and company stationery, and a photography studio.
NetPhotos/Alam
y
Fidelity Investments uses technology to transform investment dollars into growth and income for
investors. This technology, in turn, plays a significant role in the kind of organization design that
best serves Fidelity. Other firms that use different technologies, meanwhile, will likely use different
forms of organization design.