Our review of organizational thought will not take an essentially academic platform since this has been undertaken extensively elsewhere. A thorough treatment can be found, for instance, in J. Kelly's book, Organizational Behaviour [Richard Irwin, 1969]; a more popular treatment has recently appeared by Michael Barnes and others from P.A. Management Consultants Limited, entitled Company Organisation – Theory and Practice [George Allen & Unwin, 1970]. Derek Pugh, David Hickson and Bob Hinings have also published a most useful glossary of the views of Writers on Organisations, which originally appeared [from Hutchinsons] in 1964, but which has recently been revised and is now available as a Penguin book. Here we are especially concerned to demonstrate the strands of thought which have characterized development and the place of the major thinkers in such development.
These ideas constitute the intellectual background against which the organizational status quo in British marketing to be described in Part C has emerged.
B.1 Theory and Practice in Organization Structures
The individual working alone does not have problems of organization. He is responsible for his goals and for the solution of problems to achieve these goals, including the decision-making or methods, and scheduling of his activities. As soon as another one or more persons join in working on the task, then an organization is formed. New kinds of decisions are required over and above the technological decisions made by the individual working alone, decisions concerned with the patterns of relationships between those concerned in a joint task. The decisions required of the individual working alone can be summarized as ‘what? where? how? and how often?': to these the formation of organization adds ‘who?’ and ‘with whom?'
Pfiffner and Sherwood1 have argued a convincing case against having any narrow definition of ‘organization’, and suggest the following as a working definition for the purpose of studying organizations:
‘Organization is the pattern of ways in which large numbers of people, too many to have face to face contact with all others, and engaged in a complexity of tasks, relate themselves to each other in the conscious, systematic establishment and accomplishment of mutually agreed purposes.’
The important elements included in this definition are numbers involved, complexity of tasks, conscious rationality, and presence of purpose. We need not quibble with Pfiffner and Sherwood's distinction between groups capable of meeting face to face, and larger numbers. Neither should we take issue at this stage with the notion of complexity of task. The division of labour principle is as much concerned with simple as with complex technological processes. Much more important is the notion of conscious rationality. Argyris2 and Simon3 have argued that most behaviour in organizations is intended to be rational behaviour; organizations exist to achieve intentions or purposes which are rationally determined. The more vague the perception of the purpose, the less rational the behaviour demonstrated in relation to the purpose.
It should be noted that this working definition allows for a diversity and variety of goals or objectives.
The purposes or objectives mutually agreed by organization members are not the only major determinants of its structure. The shape of the organization will also be determined by the external environment in which it exists, and by its internal environment – the resources available to it.
The mutuality of agreement is itself conditioned by these environmental factors. Mutual agreement does not mean democratic determination of objectives, on Greek city state lines, and may only mean the implied agreement with objectives associated with an employer/employee relationship, but in recent years there has been some movement towards greater ‘participation’, as part of a wider climate which recognizes the ability and desire of many people to contribute to the most important decisions.
The external environment influences the structures of organizations in a very general sense. This is the macro-environment which includes the economic, social, cultural, technological and legal background. The micro-environment is the market situation in which the organization exists. McDougall and Tookey4 have suggested that organization structures are affected by various market characteristics such as the number of customers, the state of competition, the status of customers, the stability of demand, the geographical dimensions of markets, the degree of market segmentation, and the unit value of purchases. This analysis is parallel to Woodward's5 classification of technological elements in the internal environment of an organization. These elements are the characteristics of the methods of production used by the organization. Other aspects of the internal environment which would determine the organization structure would include resources of finance and human skills and any constraints placed upon the use of these resources.
Any formal study of marketing structures must, however, begin with a short resumé of organizational theory built up over the past seventy-five years. It is relevant to modern thinking in the creation of any type of industrial structure and its underlying principles are becoming more important with scientifically designed industrial structures.
Weber's studies on bureaucracy6 were designed to produce the perfect administrative system – similar to the physicists’ concept of a frictionless machine. He established that role is more important than the individual and that no individual should be allowed to create a structure so that his removal would lead to an organization's collapse. Weber's studies were directed at the State, but have since proved themselves elsewhere. For example, Henry Ford's death almost caused the collapse of the Ford Motor Company.
Another great organization theorist worthy of mention is F. W. Taylor7 whose concept of ‘Scientific Management’ became so hated that it was banned for thirty years by the U.S. Congress. However, he did establish the earliest ideas of measurement and organization of a task to achieve maximum efficiency.
Arch W. Shaw's8 contributions to organizational theory are the first directly linked to marketing. He provided a rigorous analysis of channels of distribution and control of such channels exercised by companies. Shaw saw there were different methods of distribution for different types of firm. He used the word ‘distribution’ instead of ‘marketing’. Shaw was followed by a man who might be called the first of the English-speaking practical management scientists, although he did not claim to be so. This was Alfred P. Sloan Jnr,9 whose plans for General Motors Corporation were introduced after Durant's system of one-man management had broken down and the company was illiquid. Sloan laid down a definite structure of management with tight control at all senior levels. Durant had had up to fifty people reporting to him with the result that he did not really know what was going on. Durant had also emphasized sales volume and not profitability. Such a system might work for an entrepreneur building up a company, but it was non-operable for one of the world's major corporations. Sloan laid down his concept of a company structure in twenty-eight pages of typescript.10 The final structure may not seem brilliant today but it was workable. He based his plans on two principles:
‘Responsibility attached to the chief executive of each operation shall in no way be limited. Each such organization, headed by its chief executive, shall be complete in every necessary function and enabled to exercise its full initiative and logical development – (decentralization of operation).
Certain central organization functions are maintained for the logical development and proper co-ordination of the Corporation's activities – (centralized staff services to advise the line on specialized phases of work, and central measurement of results to check the exercise of delegated responsibility).’
These have now been widely accepted as two principles involved in the construction of any company's structure.
After Alfred P. Sloan Jnr, the concepts of scalar chains and the grand theory of organizations were formally set down by Lydell Urwick11 in the United Kingdom. He formalized and modified these concepts and put them in the form known today. Urwick accepted, possibly by good...
