Business life cycles and its influence in an organization

Industries experience a similar cycle of life.

Business life cycles and its influence in an organization

Author synthesize work of previous author to suggest usable model generic to all organisations Tam and Gray, [36] Stages[ edit ] Generally, there are five stages to an organization's life cycle [3] Stage 1: The main importance is centered around the acknowledgement of having an adequate number of customers to keep the organization or business active.

At this stage, organizations look to pursue growth, [39] establish a framework and develop their capabilities. This stage signifies the organization entering a more formal hierarchy of management hierarchical organization.

Top and middle level management specialize in different tasks, such as planning and routine work respectively. Organizations experience a renewal in their structure of managementfrom a hierarchical to a matrix style, which encourages creativity and flexibility.

This stage initiates the death of an organization. The decline is identified by the focus on political agenda and authority within an organization, [4] whereby individuals start to become preoccupied with personal objectives, instead of focusing on the objectives of the organization itself.

This slowly destroys the functionality and feasibility of the entire organization. Similarly, a revolutionary phase refers to a period of considerable disturbance within an organization. Initially, the organization enjoys expansion through the creativity and proactive nature of its founders.

The founding members must either assume this role, or empower a competent manager to fulfill this if they are unable to. As the organization experiences expansion through directive leadership, a more structured and functional management system is adopted.

Business life cycles and its influence in an organization

Greater delegation of authority to managers of lower levels is required, although at the reluctance of top tier managers who do not wish to have their authority diluted. As the organization expands from delegating more responsibilities to lower level managers, top tier directors start to lessen their involvement in the routine operations, reducing the communication between both levels.

This leads to a conflict of interest with the directors, who feel that they are losing control of the expanded organization. As an organization expands from improving its coordination, such as through product group formation and authorized planning systems, a bureaucratic system develops.

Educational courses are arranged for managers, to equip them with the skills of solving team disputes and to foster greater teamwork. Complex and formal systems are also made simpler, and there is an increased emphasis on the communication between managers, to solve crucial problems.

Although Greiner identified expansion through collaboration as the evolutionary phase, he did not specifically identify the succeeding crisis revolutionary phaseas there was little evidence due to most of the organizations still being in the collaboration phase.

However, Greiner predicted that the crisis might involve the exhaustion of members in an organization, due to a strong requirement for innovation and teamwork. This is because the five phases are conceptual and can not be measured.

This models identifies seven different stages of organizational growth and uses corporate revenues as the way to define when each stage occurs begins and ends. These ranges are based upon manufacturing firms.

Business life cycles and its influence in an organization

An adjustment is made for the revenues of service and distribution firms. Revenue's of service firms are multiplied by a factor of 3 to be the equivalent of manufacturing firms, and Revenue's of distribution firms are multiplied by a factor of 2 to be the equivalent of manufacturing firms.

These adjustments are made to account for the difference in cost of good sold of manufacturing firms vis a vis service and distribution firms. A further explanation can be found in Flamholtz and Randle Recognizing one's position in the course of expansion[ edit ] Top tier managers should be aware of their organization's current stage, to be able to execute relevant solutions to the type of crisis faced.

This is because there may be vital experiences from each phase to be learned, that will be required to tackle future phases. It is also important to note that evolution is not a mechanical event, and organizations must actively seek out new solutions to the current crisis that are also suitable for the next stage of growth.

This would help managers in formulating solutions to cope with the crisis that develops in the future.Small business owners and other organization leaders may explore a variety of options designed to influence the enterprise's life cycle—from new products to new markets to new management.

Leaders seek to successfully duplicate their business model elsewhere; People attend to even longer-range planning, for example, years out Life Cycles of an Organization Organizational Life Cycles (it helps to see different diagrams) Barbarians to Bureaucrats Life Cycle Approach to Strategic Planning (in-depth and dated, but relevant).

Factors Affecting Organizational Design. to. An organization may skip a phase, or it may cycle back to an earlier phase. An organization may even try to change its position in the life cycle by changing its structure. and includes conditions that influence the organization such as economic, social‐cultural, legal‐political.

Match Your Sales Force Structure to Your Business Life Cycle cycle of a product or a business. However, the organization and goals of a sales operation have to evolve as businesses start up. Leadership Style and the Organization Life Cycle 1 Running Head: LEADERSHIP STYLES AND THE ORGANIZATION LIFE CYCLE evaluates them against the business assessment experience results.

First, the influential factors of Leadership Style as found in the literature are reviewed influence of Situational Favorableness.

Organizational structure provides the framework of an organization and its pattern of management. The purpose of structure is division of wo Fair Use Policy; Help Centre; Notifications. If outputs are standardized, product life-cycles are long, and consumer exceptions are few, more bureaucratic or mechanistic structures will be suitable.

What Is a Business Cycle & Why Is It Important? |