STAGES MODEL OF STRUCTURE
Explain
the Stages Model of structure. Is it necessary for an organization to pass through
all successive stages of growth?
The experiences of many
firms indicate that organization structure evolves through different stages.
What structure an enterprise will have would depend upon its growth stage,
apart from size and the key success factors inherent in its business. For example,
the type of organization structure that suits a small speciality steel tubes manufacturing
firm relying upon ‘focus’ strategy in a regional market may not be suitable for
a large, vertically integrated steel producing firm with businesses in diverse geographical
areas. To extend our example further, the structural form suitable for a
multi-product, multi-technology, multi-business enterprise pursuing unrelated diversification
is likely to be still different. Recognition of this characteristic pattern has
prompted several attempts to formulate a model linking changes in
organizational structure to stages in an organization’s strategic development.
The basic idea behind the stages concept is that enterprises can be arranged along a continuum running from simple to very complex organizational forms; and that there is a tendency for an organization to move along this continuum towards more complex forms as it grows in size, market coverage, product line scope and as the strategic aspects of its customer—technology—business portfolio become more intricate. The stages model proposes four distinct stages of strategy-related organization structure.
Stage I : Organizations in this stage are essentially small, single
business and managed by one person. The owner entrepreneur has close daily
contact with employees. He personally knows all phases of operations. Most
employees report directly to him and he makes all pertinent strategic and
operating decisions. As a consequence, the organization’s strengths,
vulnerabilities and resources are closely linked with the entrepreneur’s
personality, managerial ability, style and financial position. In a way, a
Stage I enterprise is an extension of the interests, abilities and limitations
of the personality of its owner. The activities of such a business typically are
concentrated in just one line of business.
