Guide

Business organisational structure

Reasons for changing your organisational structure

Typical reasons for organisational change vary. They range from disruptive technologies and changing market conditions to the need to improve quality, productivity or profit.

Many types of organisational change exist. Change can be:

  • planned or unplanned
  • transformational or incremental
  • remedial or developmental

Different external or internal factors can cause or trigger organisational change.

What causes organisational change?

The main reason for restructuring a business is to execute a new strategy. A strategy sets out a plan that determines how a business will use its major resources to meet its strategic objectives.

When you change your strategy, you often have to adapt your business structure to ensure that the two elements continue to support each other. This may happen, for example, when you:

  • transition from a start-up to a scale-up company
  • take on a partner, or introduce change in management
  • move into new product lines
  • prepare your business for growth
  • expand your business overseas

Find out more about strategic planning for business growth.

External factors affecting organisational change

External factors that might prompt a change in your business' structure include having to:

  • address new markets
  • react to changes in product or service demand
  • keep up with new technologies or products from competitors

Other external events that can affect either your business or your rivals can also stimulate organisational change. These include, for example:

Internal factors affecting organisational change

Internal business needs can also prompt business change. For example, these may include the need:

  • to raise capital, improve cash flow or profitability of your business
  • to improve working practices and processes
  • to eliminate excess job positions and duplicate management roles
  • to reorganise internal functions, such as sales and marketing, for efficiencies

Prepare for organisational change

Being able to recognise the signs of oncoming organisational change can help you prepare for the change and implement policies that will ensure your business' growth.

If you wait until your business' position is threatened, it may result in defensive and ineffective management. Proactive business change is much more effective. This is when management foresees a change in the market or economy, which will affect the business and makes changes in order to improve its position. Read more about change management.

Analysing your strengths and weaknesses can help you identify potential changes. You can use SWOT, PESTLE and other models for strategic analysis.