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activity, so more staff is taken on and some further specialization takes place within the
production function: mould making, dying, finishing, and packing. Managing the
finances and accounts soon becomes an issue. Handled initially by a subcontractor, the
firm's accountant, the volume of work now requires the employment of a full-time
specialist management accountant. Initially, orders came in without the need for a great
deal of marketing effort, but there may now be a need to employ sales people. The
amount of paperwork increases and the loss of a valuable order through poor
administration lead to the development of systems to handle orders, cash flow,
scheduling and so on.
Thus, as the firm grows, activities that initially formed just part of the founder's
responsibility emerge as specializations in their own right, and within functions, further
specialization takes place.
Coordination within the operational area in a larger firm is probably achieved
through standardization of work processes. The way the work is done is decided by, for
example, work study or production engineers, and coordination across the functions is
probably achieved through a combination of direct supervision (decisions and
interventions by the managing director), standardization (budgets and targets will be set
for each function) and ad hoc discussion or formalized meetings between managers
from different functions (mutual adjustment).
Functional specialization has the advantage of encouraging the development of
expertise, but the downside is that it can lead to parochialism and poor coordination of
activities across the organization. It is probable that some form of functional
specialization is essential in most organizations, otherwise the basic tasks of the
organization could not be fulfilled effectively: for example, patients treated, newspapers
printed, cars designed and manufactured. These basic tasks are likely to be common to
all firms in a particular industry.
2-5-5. A "contingency" approach to strategy and structure
Nowadays, few writers would subscribe to the classical rules of good organization
(e.g. "unity of command", limited "span of control"), favoring instead a contingency
approach. This approach takes as its starting point that there is no one best way to
organize - it all depends on the situation. The most thorough exposition of the
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