Explain the Traditional Organizational Structure and Its Limitations

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The Answer is Conventional approaches to organizing consist of business units,operating similarly but separately,controlled by a central authority (head office) that determines strategy and watches over implementation.This is a system of "command and control," made visible in organization charts that lay down organizational hierarchy.Even when companies decentralize decision making and accountability,they often recentralize when they run into hard times like economic downturns.
The main failing of the traditional approach is that it creates barriers to the spread of knowledge and to the achievement of economies of scale.Ideas and commands flow vertically between the center and the business unit,creating "silos" with little communication across the business units (or silos).Globalization frequently leads to attempts to add a "matrix overlay." Effective organization design requires more than ad hoc structural changes.
In traditional organizational structures,units were either within the organization and closely connected to other units,or they were outside the organization and not connected at all.Transactions with external suppliers were at arm's length.The line between what was inside and outside the organization has become blurred with the rapid growth in joint ventures,alliances,and other strategic relationships.Partnering underlines the need for new organizational approaches.

Explain the Traditional Organizational Structure and Its Limitations

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