Good afternoon. As I promised you, today it is the turn of the questions we must ask ourselves when understanding the organizational context, as one of the contexts to analyze in the Entrepreneurial Contextual Analysis. Our project is El Salvador possible entrepreneurship journey with China. And the organization to analyze is El Salvador. Yes, indeed we will look at El Salvador as an organization full of industries and private companies,  social and religious institutions, with a Government Fairy Godmother (full of agencies and other public entities), as the public stakeholder, who helps the organization El Salvador to establish commercial relations with China. Before continuing, please note that I do not hold any political ideology. If I picked the project “El Salvador possible entrepreneurship journey with China”, I did it with the purpose to show you how to start to do the entrepreneurship contextual analysis. I always try to put myself aside of the political panorama, and I am moderate in my views. I don´t support extremes (right or left) at all. When it comes to Salvadoran politics, I feel like a United Nations observer, watching from the outside. In consequence, take this into consideration, please.

Let´s start with the Organizational Context Theory basics. For this purpose, we will stick to Henry Mintzberg ideas that you can find in detail in the document “The Structuring of Organizations”. Why will we use Mintzberg? Well, I simply like his views, which I consider extremely comprehensive in the design of organizations. I will try to synthesize in one single post, Mintzberg material about this topic. It is not going to be easy. As a professor,  when I was teaching strategy, I couldn´t cover this theme with my students, because it usually takes between 6 to 8 weeks to teach it with examples and exercises, but I will do my best.

In business, we have studied that organizations are defined by its structure. Henry Mintzberg has taught us there is not one type of organization but several configurations of the organizations. Every active organization has 6 basic parts:

1. Strategic Apex: It is the small part of it (as shown in the figure. It is the group of people who lead and where the whole system is monitored, supervised or overseen.
2. Middle Line: As the organization grows, more middle managers are needed. This part is created as a hierarchy of authority between the operating core and the strategic apex.
3. Operating Core: It is the base of any organization, those people performing the basic work of producing products and rendering the services.
4. Technostructure: A group of analysts who perform administrative duties, to plan and control formally the work of other. These professionals are called analysts by Mintzberg, and they are outside the hierarchy of line authority. These are usually the controller, the strategic planning unit, the talent trainers (in-house), the operation research staff, the technology designers, etc.
5. Supporting staff: These are staff units, which provide internal services of diverse nature, from a cafeteria, payroll, reception desk, legal counsel, investor relations or public relations office, etc.
6. Ideology: Ideology encompasses the traditions, the strong culture, and beliefs of an organization that distinguishes it from other organizations and infuses a certain life into the skeleton of its structure.

Mintzberg has indicated, “we have a small strategic apex connected by a flaring middle line to a large, flat operating core at the base. These three parts: Strategic Apex, Middle Line and Operating core are drawn in one uninterrupted sequence to indicate that they are typically connected through a single chain of formal authority.”

“The technostructure and the support staff are shown off to either side to indicate that they are separate from this main line of authority, influencing the operating core only indirectly. The ideology is shown as a kind of halo that surrounds the entire system”.

All the people working in the organization, are hired to make decisions and take actions. They can be full-time, part-time employees, or committed volunteers. All the people working inside form an internal coalition of internal influencers. There are external influencers who create a field of impact or sway around the organization: employee associations, suppliers, clients, partners, competitors, unions, other owners, government bureaus, special interest groups, etc. Together they are called an external coalition to the organization.

The organizations have various attributes, in addition to its 6 main parts structure. These attributes are coordinating mechanisms, design parameters, and situational factors.

Let´s see each of these attributes here in the following presentation. Please carefully read it. Thank you.

This slideshow requires JavaScript.

If you wish to download the last slides, click here: Eliescalante Structuring of the Organizations

Once we understand the 4 attributes of the organization, Mintzberg established six configurations of organizations: The entrepreneurial organization, the machine organization, the professional organization, the diversified organization, the innovative organization, the missionary organization and a seventh one, the political organization.

For El Salvador organizational context analysis, now it is the time to ask ourselves the following questions:

What type of configuration does El Salvador have as a country organization? My best bet is that we are evolving from a political structure to an entrepreneurial organization.

How do all the attributes combine for our Salvadoran country organization?

Which is the primary coordinating mechanism?

Which is the key part of the El Salvador organization?

What are the essential parameters of our Salvadoran organizational design: job specializations, behavior formalization, training at every level, unit groupings by functions and markets served, interdependences, industries size and formalization, planning and control systems in each industry, liaison devices or mechanisms used to encourage mutual adjustments within and between industries…

What type of decentralization does El Salvador have?

What is the degree of evolution in our country, in terms of our age-size structure?

Which are our technical systems into our operating core industries to produce outputs? Are these complex, automated, controlled or anarchic?

What type of environment characteristics our Salvadoran organization has in terms of markets, political climate, economic conditions, and so on?

Who exercises power control and how is the power control in our country? What is the degree of influence from the external coalition to our politics?

What is our degree of centralization and formalization in comparison to China organization structure?

It is clever to perform an organizational context analysis of El Salvador, before going to knock the door to other countries cooperation or investments. It is the foundation or the base to understand who we are. What country do we have? What is El Salvador organization structure? In addition, once we understand ourselves, only then we will be able to be successful in our entrepreneurial journey of finding commercial allies or future cooperation/investments with other countries.

Cartoon from El Pais Honduras newspaper.

Those countries who don´t know themselves very well are condemned to don´t ask for what they really need and want for the long run (remember to think ahead at least 100 years). Our current Salvadoran Organizational structure has to be hyper-well analyzed, understood and digested by the Government authorities beforehand. Regardless of who is ruling the country, the Salvadoran organizational structure has to be analyzed.

To be continued… Stay tuned! Thanks.

Source References:

All the material written here is based on “The Structuring of Organizations” by H. Mintzberg. The original book is here: https://www.nrc.gov/docs/ML0907/ML090710600.pdf

https://www.adb.org/sites/default/files/publication/29644/organizational-configurations.pdf

http://www.elpais.hn/2018/08/23/el-salvador-china-continental/

Disclaimer: All the presentation slides shown on this blog are prepared by Eleonora Escalante MBA-MEng. Nevertheless, all the pictures or videos shown on this blog are not mine.  I do not own any of the lovely photos or images posted unless otherwise stated.

Published by eleonoraescalantestrategy

Corporate Strategy Artist, San Salvador, El Salvador View all posts by eleonoraescalantestrategy