The design of an organisation is highly crucial for a firm in today’s world in order for it to achieve and sustain its competitive advantage that will place the firm in a stronger position than its rivals. The firm can manipulate the components of organisation design, fit these elements with one another and with the strategy, to impact the firm’s performance. Hence, the goal for the organisation is to have a good fit between the firm’s design and its competitive advantage in order for the firm to be strategically aligned with the strategy. Any effective design will have to address 2 general problems: the coordination and incentive problems and must do so in a way that supports the organisation’s strategy. The firm can make use of the
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Horizontal linkages can also be established across units to achieve coordination. Its mechanisms facilitate information and resource flows without affecting the organisation of the subunits and this allows cooperation across units without sacrificing the gains from specialisation and decentralisation. There are several forms ranging from informal to formal procedures which include personal network, liaison, task forces and integrators. The selection among these options depends on the interdependence among subunits. More interdependent subunits will require a more tightly coupled design. Horizontal linkages benefits are 2 fold: they promote information flows and they get the firm away from rigidity. An apt example would be the strategy of the Japanese auto mobile firms located in the United Kingdom. The managers and workers share common facilities and by doing so, horizontal linkages are built in the firm on a less formal setting with a flatter structure. Managers dine with the workers and this provides the platform for the quick dissemination of information and decision making.
Under the ARC analysis, routines also solves coordination problem as the established interfaces bring about large coordination gains. With each worker clear of his roles and the procedures, gains from specialisation is reaped. More importantly, huge informational efficiencies are gained as when tasks proceed from one unit to another, minimal