PUB3704_A REPORT ON DIFFERENT ORGANISATIONAL STRUCTURES AND THE EXTERNAL ENVIRONMENT THEY OPERATE IN.

PUB3704ORGANISATIONAL STUDIES IN THE PUBLIC SECTOR. QUESTION 1 This section of this paper will be focussing on the external environment and the specific environment in which organisations operate in. 2.1. External environment The external environment refers to the environment in which institutions and operations operate it. It consists of different dimensions and factors that influence the organisation’s activities, decision making and policy formulation. These factors will be briefly discussed below: 2.1.1. Economic dimension The economic dimension of an organisation is the overall status of the economic system in which the organisation operates. The important economic factors for business are inflation, interest rates and unemployment. These factors of the economy always affect the demand for products, when interest rates are high, customers are less willing to borrow money and the company itself must more when it borrows (iEduNote, 2019). For instance, 2019 was a particularly challenging year for business and the government in South Africa. Deepening recession impacting negatively on the economy and already financially stressed consumers, and businesses, consumers increasingly became credit dependent. The potential downgrade in South Africa’s sovereign credit ratings to junk status by MOODY’S and other Ratings agencies resulted in the depression of consumers and investors in the country (National Consumer Tribunal, 2020;31). These events had a devastating impact on the economy, which in turn directly impacts on the institutions and government agencies and their financial performance. 2.1.2. Political-instability dimension The political factors of the general environment refer to the business-government relationship and the overall political situation of the country. The government of a country intervenes in the national economy through setting policies for business in our country; these include policies such as import policy, export policy, taxation policy, competition policy and consumer protection policy (iEduNote, 2019). Uncertainties about the political decisions that that political bearers will take and about the availability of funds make it difficult to create positive impressions on the future of government institutions (University of South Africa, 2019:129). Political instabilities in 2019 had a devastating impact on organisations and the business environment. State capture, perceptions created about public sector corruption, 2 | P a g e mobilizing against state capture and a rise in population with a more militant approach to social change, all had a negative impact on the economy and its performance, which in turn impacted organisations and their profitability (National Consumer Tribunal, 2020:31). 2.1.3. Socio-Cultural dimension Socio-cultural factors refer to customs, morals, values and demographic characteristics of the society in which the organisation operates (iEduNote, 2019). The socio-cultural dimension must be well analysed by managers, as it indicates the products, services, and standards of conduct that society is likely to value and appreciate, the standard of business conduct varies from culture to culture and so does taste and necessity of products and services. Sociocultural forces include culture, lifestyle changes, social mobility, attitudes towards technology, people’s values, opinions and beliefs (iEduNote, 2019). For example raising the old Apartheid flag for public display is very much offensive to most South African citizens. Business firms must offer products and services in the society that correspond to their values and attitudes. 2.1.4. The Judicial System dimension Well-functioning legal and judicial institutions are critical to economic growth in modern economies, they define the rules by which the markets function, and they provide means to resolve disputes, protect economic and social rights and hold governments accountable for their actions. The role of institutions goes beyond the legal framework. Government’s attitude towards markets, and freedoms and the efficiency of its operations are also very important: excessive bureaucracy, red tape, overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, inability to provide appropriate services to the business sector and political dependence of the judicial system imposes significant economic costs to businesses and slow the process of economic development (Kosenkov, 2018) 2.1.5. Ecological circumstances dimension Ecological environment is concerned with issues as to how the organisation interacts with and affects the natural environment or the ecology. Ecological forces in the general environment are important since they impact the natural resources which are necessary as inputs for business or for an economy at large. Also, environmental concerns have grown strongly in recent years, which make the ecological force a crucial factor to consider. For instance land, air and water pollution are realities every manager should be aware of. Businesses now more than ever before, need to consider and implement environmentally conscious practices in response to consumer demands for environmentally friendly and responsible products. For example, Woolworths Holdings Limited has a establishes a “Good Business Journey” policy that aims to make a difference to the environment through responsible sourcing, reduction in the consumption of energy and their waste footprint, ethical sourcing and reducing water wastage (Venter and Botha: 111). 3 | P a g e 2.2. Specific Environment The specific environment refers to that environment which relates directly to an institution and affects the achievement of objectives (University of South Africa, 2018:120). The specific environment factors include the institution’s clients, input suppliers, competitors, government institutions, trade unions and pressure groups. The factors of the specific environment are to be discussed below. 2.2.1. Clients Satisfaction of the customers is the primary objective of every organisation, for they are the people who pay for the organisation’s products or services. They are the people who provide the profit that the companies are targeting. For this sole reason, managers should pay close attention to the customers’ dimension of the specific environment because its customer’s purchase that keeps a company alive and sound (iEduNote, 2019) 2.2.2. Input Suppliers Suppliers are the providers of products or service materials necessary to the organisation’s operations. Dealing with suppliers is an important task of management. A good relationship between the organisation and suppliers is important for an organisation to keep a steady flow of information and quality input products. To ensure the long-term survival and growth of a company, it is essential to develop a long-term and dependable relationship between the business and its suppliers (iEduNote, 2019). 2.2.3. Competitors Competitors are organisations that offer the same services and products as an organisation, and most likely equal in size and strategic capabilities (Venter and Botha: 126). Policies of the organisation are often influenced by the competition in the environment. Competitive market place companies are always trying to stay and go further than their competitors. In the current world economy, competition and competitors have grown tremendously (iEduNote, 2019). For this reason firms need to analyse the competitive intensity in the industry, it needs to understand the competitive position in the industry to improve its chance of designing winning strategies. 2.2.4. Regulators Regulators are units in the task environment that have the authority to control, regulate or influence an organisation’s policies and practices. Government agencies are the main players in the environment and interest groups are created by its members to attempt to influence organisations as well as the government (iEduNote, 2019). For instance the Competition Commission South Africa is a statutory body constituted in terms of the competition Act, No 87 of 1998 by the South African government empowered to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the South African economy (). 4 | P a g e 3.2.5. Trade Unions Trade unions are independent organisations that promote and protect the interest of its members in issues such as wages and working conditions (South African Government). Trade unions and the chamber of commerce are common examples of interest groups (iEduNote, 2019). Examples of trade unions in the South African include the National Union of Mineworkers, the Congress of South African Trade Unions (COSATU) and the Food and Allied Workers Union (FAWU). 2.2.6. Pressure Groups Pressure groups are organisations and individuals with whom the organisation is in agreement with to the benefit of the organisation. These pressure groups in some way influence the organisation’s activities in various ways (iEduNote, 2019). 5 | P a g e 3. QUESTION 2 In this section of the paper the focus will be on four concepts in organisational structure, they are namely centralisation, decentralisation, concentration and deconcentration. These concepts will be discussed in more detail below. 3.1. Centralisation Centralisation refers to the concentration of the authority at the top of the administrative system. The process of transfer of administrative authority from a lower to higher level of government is called centralization, the converser decentralisation”, in a centralised system of administration, the lower levels called field offices) cannot act on their own initiative. They have to refer most of their problems to the higher level called headquartersoffice) for decision making. They act as only implementing agencies (Marume and Jubenkundu, 2016:106). Centralisation is divided into 2 categories – centralisation of decision making, and centralisation of the activities of an institution. The advantages of centralisation are that it allows for the highest degree of coordination possible and uniformity of operations and the most efficient control possible (University of South Africa, 2018:44). In a situation whereby the operations of an organisation are spread out in a wide geographic area, centralisation is not necessary, as all activities are to be performed by the office, in this regard centralisation can cause delays and inflexibility in a performance. (University of South Africa, 2018:44) Merits of Centralisation These are stated as follows: (Marume and Jubenkundu, 2016:106)  It provides for maximum control over the entire organisation.  It ensures that all the work is performed in the same manner and in accordance with the same general policies and principles.  It makes administrative abuses more difficult in matters like employment and handling of personnel, purchase and act of supply.  It ensures economy in administration by according duplication of work.  It facilitates the introduction of dynamism in the organisation through the active role of personnel leadership.  It is suitable for dealing with emergencies and anticipated matters. Demerits of Centralisation: (Marume and Jubenkundu, 2016:106) These are as follows:  It is to delay in securing action as the field officials have to refer the matter to the higher authorities.  It makes the head office over-burdened due to the “apoplexity” at the top and anaemia at the extremities. 6 | P a g e  It leads to autocratic central over subordinates and thus results in lack of flexibility in administration.  It makes administration irresponsive as the head office acts without the knowledge of local conditions and requirements.  It does not facilitate people’s participation in administrative process.  It does not allow development of second line of executives. 3.2 Decentralisation Decentralisation means dispersal of authority among the lower levels of the administrative system.” Everything that goes to increase the importance of the subordinate’s role is decentralisation; everything which goes to decrease it is centralisation”. In a decentralised system of administration, the field offices can act on their own initiative in specified matters. They are granted authority to take decisions without reference to the headquarters. For this reason, the essence of decentralisation is the vetting of decision-making power in the field office (Marume and Jubenkundu, 2016:106). Decentralisation is in two dimensions. Political and administrative, it is further sub-divided into territorial (vertical) decentralisation and functional (horizontal) decentralisation. Merits of Decentralisation These are stated as follows: (Marume and Jubenkundu, 2016:106)  It increases administrative efficiency by reducing delays, curbing red-tape and encouraging faster action.  It reduces the workload of the head office and thus enables the top echelons to concentrate in vital issues like policy for mutation, enumining major problems and it forts.  It develops resourcefulness and self-respect among subordinates by making them to take decisions with a sense of responsibility.  It makes administration more responsive as the field units acts with the knowledge of local conditions and requirements.  It facilitates people’s participation in administrative process and thus strengthens democracy at the grassroots level.  It encourages the expansion and diversification of the organisation for effective goalachievement.  It facilitates the adaptation of national policies and programmes to the varying conditions of different regions.  It alleviates the problem of communication overload in the organization by reducing paperwork at both higher and lower levels. Demerits of Decentralisation  It complicates coordination and integration of the activities of various units due to decrease in the degree of central over the total organization. 7 | P a g e  It makes communication among various levels difficult too and thereby reduces its effectiveness and authenticity.  It makes administration expensive due to duplication of work and lack of centralized housekeeping process.  It is not suitable for dealing with emergencies and unanticipated matters.  It encourages divisive forces in the organisation and thus threatens the organisational integrity. 3.3. Concentration Concentration is applicable in instances whereby decision making takes place at one point, usually by senior officials high up in the organisational structure (University of South Africa, 2018:45). The advantages offered by concentration are similar in part to those associated with centralisation: It provides maximum control over the entire organisation, ensure that all the work is performed in the same manner and in accordance with the same general policies and principle, and it enables the maximum utilisation of the human and material resources in the organisation and thus develops a corporate personality. On the other hand, an official who is not prepared to delegate or concentrates his or her decision-making powers within himself or herself, this can lead to delay, and deny many officials lower down in the hierarchy the opportunity for in-service training in their specific field. (University of South Africa, 2018:45). 3.4. Deconcentration Deconcentration refers to the process whereby a central organisation transfers some of its responsibilities to lower level units within its jurisdiction. This process redistributes the balance of power and authority between the central administration and the other units in the varying propositions (Aucoin and Bakvis, 1988). Deconcentration is based on functions for instance, when an independent service unit is created by the central administration or have a geographical bases for example, when a degree of decision-making capacity is granted to various administrative units across a given territory (Gelinas, 1975, Cour des comptes, 2003). The advantages offered by deconcentration are similar in part to those associated with deconcentration actions based on deeper knowledge of local particularities and clientele decisions better adapted to local contexts and taken more rapidly, and start encouraged involvement and collaboration on the part of local actors. On the other hand, deconcentration may lead to diminished uniformity, slackened control and the sidestepping of certain issues, within the hierarchy trying to shift responsibility to one another. 4. Conclusion An organisation needs to be positioned in a way that will enable it to identify n exploit opportunities and threats in the environment it operates in. The organisational structure plays a private role in ensuring that this can be achieved. Managers need to pay special attention to this to ensure that their organisation can thrive and have competitive advantage over its competition.