Theory of the Firm Essay Example | Topics and Well Written Essays - 2750 words

Theory of the Firm - Essay physical exertionAlthough it is in truth difficult to suggest which, out of these two is a fall apart structure, but one put up clearly identify the merits of each structure. In the U-Form or Unitary form, organizations atomic number 18 broken up into clear departments for each process, for example, separate department for marketing, finance and production. The manager or head of each department reports to the point executive of the organization, whose function is to co-ordinate the activities of each department, relaying the firms overall strategy to them and being responsible for inter-departmental communication. Although, this structure is very efficient till the firm is of certain size, but it can lead to inefficiencies as the organization grows. These inefficiencies are communication difficulties, coordination and control and it become difficult to manage the entire organization from the centre.Another structure which results in the firm being ab le to overcome these problems is called M-Form or multi-divisional form of internal structure. In this structure, the firm is dual-lane a number of divisions. Each division could be responsible for particular gathering or group of products or a particular market. The day to day running and even certain long boundary decision of each division would be the responsibility of the divisional managers. Many people argue that M-Form is better than U-Form structure because it reduces the length of information flows. It also relieves the C.E.O of the coordination activities and he can focus on overall strategic planning. It also increases professional competition between the departments, which lead them to be more efficient. Each department runs as mini firm and try to utilize resources efficiently which increases the efficiency of the entire firm. (Lipsey and Chrystal, 2001)All these benefits that come-out as a result of M-Form structure lead many managers into believing that it is actual ly better than U-Form structure. But after heedful and deep analysis one cannot say that it is entire for firms of any size. If this structure is followed by an organization of excellent size than they would face confused problems, such as, it can very bureaucratic with many forms of layers of managers. Managers might mesh goals that conflict with those of shareholders or head office. As a result, some companies in recent years ease up moved back from M-Form structure to much flatter U-Form structure.So, in the end we can pause that M-Form is not better than U-Form structure. It is the situation and culture in the firm that is being followed determines which system is going to more reclaimable for the organization and, one cannot say that M-Form is necessarily better than U- Form structure.In the end, we can safely conclude that M-Form or U-Form structure themselves are not the best, but it is the flexibility of the firm which makes any structure good or bad. Some times you need to have a flatter structure, whereas at the other times, decentralisation works the best. I recommend that any firm that is governed with flatter and more responsive structure leave do much better than the firm with big span of control, as it would make it easier to control the subordinates and spare check and balance on the firms activities. ESSAY 2Structure conduct performance model is utilise to link various factors in the economic environment that affect the performance of the business. It also links the various