Organizational Analysis

Defined as a diagnostic organizational process

Organizational Analysis is defined as a diagnostic organizational process that helps companies comprehend their performance, analyze problem situations and opportunities, and design an appropriate action plan to improve company performance. It is an audit of organizational components. 

Organizational Analysis

An important aspect of OA is to perform and conduct an assessment of the various external forces that impact organizational performance. OA also involves the evaluation of organizational potential along with its resources and capabilities. 

Organizational Analysis focuses on the present operations and state of the company's structural framework and productivity variables. There are a few important objectives used by managers, including productivity, efficiency, and team building.

Productivity is an important objective of OA as efficiency is analyzed in relation to an outcome of a good or service and business operation. All factors involved in the production stage are analyzed. 

Graph

Another objective is enhancing efficiency to cut overhead costs, minimize waste, accelerate production process speed, and effectively manage time and workload. 

Teamwork is a fundamental component of organizational functionality. Tasks are allocated and distributed, and work is spread among team members in an organization. OA focuses on maintaining an efficient and high-performing trained workforce across the organizational structure while nourishing relationships between individuals at the company. 

Organizational analysis refers to developing theories that elaborate on the functioning of an organization in relation to how it responds to changes and shifts in environmental factors.

The goal of OA is to identify the best methodology for organizing a company and enhancing its operational efficiency

Steps of Organizational Analysis

The process of organizational analysis begins with the identification of the necessary factors that require evaluation to determine the organization's strengths and weaknesses.

The key goals of the organization need to be defined and understood in hopes of what it aims to achieve using a strategic process. It depends on the organizational objectives that a company puts its efforts towards.

Magnifying Glass

The next stage is the identification of the tools and resources needed to achieve the desired goal for future requirements based on the nature of the organization and its environment. 

Data collection is the compilation of various results collected by an organization to assess its strengths and weaknesses to conduct the organizational analysis. Results can be feedback, audits, and information gathering used to understand the system processes and procedures and then make improvements accordingly. 

The following stage in the organizational analysis process is to assess and identify the important factors that are related to organizational strengths and weaknesses. It involves finding the gaps that need to be worked on and improved upon to minimize consequences and enhance operational efficiency along with business performance.

Strengths are capitalized upon, and the strong areas are assessed to examine the factors that contribute to organizational strength and success. These strengths help the organization achieve its organizational objectives and lead to a competitive advantage.

All components are linked with organizational success, including strengths, weaknesses, opportunities, and threats. Therefore, to assess strengths and weaknesses, organizations conduct a SWOT analysis to establish organizational goals.

Benefits

An internal assessment of an organization's internal infrastructure and system processes has several benefits for the organization, such as improving its weaknesses, better comprehension of the company, and driving change and innovation to achieve a competitive advantage.

Benefits Of Organizational Analysis

The first advantage is that an organization mitigates risks, threats, or damages by conducting a thorough assessment of the internal variables that contribute to hindering company growth and success.

With proper examination, improvements to organizational weaknesses are made, and operational efficiency is enhanced. Therefore, the competitive position of the organization within the market is improved. 

Another advantage is that managers develop a better and more thorough understanding of the organization's process, systems, and internal capabilities by conducting a SWOT analysis for the company.

This will allow for better decision-making by managers and the best strategy being developed for organizational success.

The last advantage is that it drives change and innovation developments to modernize technological infrastructure and produce a competitive advantage. 

By conducting an OA, the organization can adapt to rapid changes in the external environment and adjust its internal capabilities to match external force alterations.

As a company identifies its strengths and weaknesses, it can achieve its organizational objectives, obtain economies of scale and thus develop a sustainable competitive advantage to improve its market standing. 

Organizational Analysis Models

Modeling is a common technique used in the analysis of organizations as it allows managers to seek the critical variables for achieving intended outcomes. 

Organizational models can be used to determine the ideal combination of organizational and technological infrastructure by a manager. Organizational models emphasize behavior, structure, and technology. 

Therefore, four critical models exist, including the rational, natural system, sociotechnical and cognitive models.  

The most commonly used Organizational Analysis model is the SWOT analysis model. SWOT analysis is an auditing and analytical modeling tool used to assess a firm's strategic position in relation to its environment. 

SWOT

Its key purpose is to determine the ideal strategy used by a firm in alignment with its resources and capabilities in relation to environmental factor requirements. A SWOT compiles the strengths, weaknesses, opportunities, and threats of a company. 

It aims to help companies become fully aware of all internal and external factors in decision-making to achieve organizational objectives. Companies can then identify the various influencing forces that have positive or negative attributes and thus effectively understand parts of a plan requiring attention and recognition.

Another model used is the McKinsey 7s Model. The McKinsey 7-S Framework is a beneficial tool used in the diagnosis of organizational problems. It contains seven interrelated elements, including structure, systems, style, strategy, skills, shared values, and staff, that can be used to change organizations holistically. 

Shared Values

Each element is critical as the framework illustrates the impact that one particular aspect has on the others within the organization. 

In successful, effective, and high-performing organizations, all elements maintain the same magnitude of importance to achieve the same objective. 

To increase organizational effectiveness, the McKinsey 7-S Framework can help identify elements that require change. 

These elements are categorized into hard and soft. Hard elements are easily describable and identifiable, laying the basis for management objectives, structure, and processes. The three hard elements are structure, strategy, and systems.

On the other hand, soft elements evolve constantly and are not easily identifiable. There may be an overlap between soft elements. The four soft elements include style, staff, skills, and shared values. 

The structure is how organizational activities are managed. For example, an organization can evaluate and test various structures and then decide which structure is best for its needs in terms of profitability potential. 

Strategy is the outline and stepping stone for how an organization can achieve its corporate objectives.

It constantly evolves due to technological changes, demographics, competition, and demand. For example, a strategy of an organization would change for organizations after the global COVID-19 pandemic as consumers' purchasing behavior has shifted more towards online. 

Hands

Systems are the organization's organized processes. An example would be an organization choosing to use a more waste-reducing manufacturing process that increases operational efficiency. 

Alternatively, style is the company's culture, including styles of management and leadership. 

The staff involves the management of talent, employees, and the development of people within the organization to ensure motivation, contribution, engagement, and high performance for maximum effectiveness.

Skills are both the capabilities and competencies that are possessed by employees and the organization. 

Lastly, shared values are the instilled principles guiding the organization towards achieving its goals, such as honesty, integrity, transparency with stakeholders, and excellent customer service. 

Therefore, McKinsey's 7-S Framework is beneficial for helping managers and leaders identify where the suitable changes should be made according to the elements discussed and determine its implications on the firm's effectiveness. 

A successful organization has cohesiveness between all seven elements to ensure organizational harmony embodied in its goals and strategic objectives.  

Organizations

The next four models are used in internal organizational analysis. This internal analysis is used to maintain organizational efficiency. These are known as the rational, natural system, sociotechnical and cognitive models. 

The rational model is based on the assumption that rationality is produced from judgment, ignorance, and calculative errors. The rational model showcases organizations as mechanical groups due to the structure of different parts, all components are altered to enhance organizational efficiency.

The organization's long-term development is seen as modifiable using modification mechanisms to accomplish fixed organizational goals.

The rational model is commonly implemented by managers and denotes a pyramidal organizational structure, where senior managers are at the top of the hierarchy and employees are at the lowest level of the organizational structure. 

Managers are responsible for controlling and demonstrating the highest authority in the rational model where employees are assigned tasks for completion. Employees must be given clear and detailed instructions. 

After completion, managers need to evaluate and review employee performance and then act accordingly in terms of reward and punishment.

Employee Evaluation

The natural system model sees organizations as systems that strive to achieve independent yet important goals. Therefore, under the assumptions of the natural system model, a company aims to maintain a balance of various needs and goals. 

Modifications are seen as unplanned and adaptive reactions to uncertain conditions which threaten organizational balance as a collective system. 

This natural system model focuses on the various threats to an organization's equilibrium that carry the possibility of disrupting an organization's balance. 

Changes have a multiplier effect where one decision affects the entire organization instead of individuals. The whole organization must be changed instead of one particular part. 

The sociotechnical model views companies as having a stronger ability to change their structure. The sociotechnical model sees organizations as growing as it interacts with their environment. The behavior of the organization is impacted by interdependent inputs. 

Lastly, the cognitive model is focused on decision-making processes for an organization since an organization dictates decisions in relation to its objectives based on available information.

Case Study: Coca-Cola's Organizational Analysis

Coca-Cola

The Coca-Cola Company is the largest global refreshment organization that functions in over 200 nations with a market portfolio including over 3000 drinking products. 

The commodities include sparkling drinks or refreshments with examples of water, juices, teas, coffee espressos, carbonated drinks, and caffeinated beverages.

The organization's focus is directed toward the production of beverages, and its brand advertising pushes it to comprehend and fulfill the various and constantly changing beverage needs of its consumers over the world. 

Coca-Cola's vision is to give all its consumers beverage products that are high in quality to satisfy and fulfill their personal needs regarding thirst.  

Strengths

  • Strong and prominent brand name which is useful for word-of-mouth communication that directly increases the number of sales

  • Global beverage market leader

  • Strong presence globally across 200 countries

  • Presence of more than 500 Coca-Cola brands

  • Integrate supply chain network with leading distributors of Coca-Cola products

  • Financial stability and financial success

  • Celebrity endorsements enhanced brand image and increased sales

  • Corporate Social Responsibility activities operating in alignment with community and stakeholder needs

  • Advanced packaging style and unique formula

Weaknesses

  • Pesticidal cases have adversely impacted Coca-Cola's brand image

  • Specialization in only beverages but no food products

  • Criticism was received for targeting advertisements to the young demographic with limited buying and purchasing power

  • Backlash and negative feedback from the public upon the exploitation of water-based resources

Opportunities

  • Untapped market potential

  • Greater marketing and advertising opportunities across different segmented markets

  • Acquisitions with other organizations

  • Expansion of goods and services in other markets

Threats

  • Negative health impact of Coca-Cola beverages in the long term

  • Government interference due to political agendas and regulatory changes

  • Inflationary pressure and economic instability

  • Intense rivalry with other competitors in the same beverage market such as Pepsi

Conclusion

As seen in this article, a deep understanding of organizational analysis has been deduced. 

The various steps within the organizational analysis have been examined in the context of a real-life example of Coca-Cola, the largest operating beverage organization globally, alongside a SWOT analysis to understand its strengths and weaknesses for better operational efficiency. 

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Authored and Researched by Haniya Ahmed Wasim | Linkedin

Edited by Colt DiGiovanni | LinkedIn

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