EXECUTIVE SUMMARY

The organizations have been becoming more competitive and many companies are in fortune
500 list but there are only 57 original organizations that have been on the list every year since
1995 because not all the companies have resources and abilities to stay on the list for long
time. They become obsolete or might be replaced by other companies. Only those companies
can stay on the list for long term which have the required resources and abilities to survive
the competitive race. In this report, the characteristics of different sizes of organization, the
stages of firm’s lifecycle as well as the causes of decline and their stages have been
discussed. As a new startups business are small and they are trying to make themselves
survive in the competitive era while large organizations are globalized having a mechanistic
structure, standardized and complex. Each organization experience stages of life cycle
including entrepreneurial, collectivity formalization and elaboration. Business should always
be prepared to handle all matters in an efficient professional way if it is not it will become
extremely hard for them to survive so it is necessary to control organizations with best fit
control models either bureaucratic control, clan control or market control. Those corporations
which cannot sustain their effective performance and fail to control move towards decline.
Companies try to implement downsizing strategy to improve its competitiveness if they
survive, they remain in market but if they not they will be perished. Finally, the recent
researches and case study relate to the key concepts are discussed.
Table of Contents
ACKNOWLEDGEMENTS.......................................................................................................2
EXECUTIVE SUMMARY........................................................................................................3
ORGANIZATION SIZE AND LIFECYCLE............................................................................5
INTRODUCTION......................................................................................................................5
LARGE ORGANIZATION....................................................................................................5
SMALL ORGANIZATION....................................................................................................6
WHICH ORGANIZATION SIZE IS BETTER?....................................................................6
BIG & SMALL COMPANY HYBRID..................................................................................7
ORGANIZATION LIFE CYCLE DEVELOPMENT............................................................7
Entrepreneurship Stage.......................................................................................................7
Collectivity Stage................................................................................................................7
Formalization Stage............................................................................................................8
Elaboration Stage................................................................................................................9
BUREAUCRACY...................................................................................................................9
Bureaucracy in Changing World.........................................................................................9
SIZE & STRUCTURAL CONTROL...................................................................................10
Formalization....................................................................................................................10
Centralization....................................................................................................................10
Personnel Ratios................................................................................................................10
BUREAUCRACY VERSUS OTHER FORMS OF CONTROL.........................................10
Bureaucracy Control.........................................................................................................10
Market Control..................................................................................................................11
Clan Control......................................................................................................................11
DECLINE..............................................................................................................................11
Organizational Atrophy.....................................................................................................11
Vulnerability.....................................................................................................................11
Environmental decline......................................................................................................12
MODEL OF DECLINE STAGES........................................................................................12
Blinded stage.....................................................................................................................12
Inaction stage....................................................................................................................12
Faulty action stage.............................................................................................................12
Crisis stage........................................................................................................................12
Dissolution stage...............................................................................................................13
DOWNSIZING.....................................................................................................................13
DOWNSIZING IMPLEMENTATION................................................................................13
 Communication.................................................................................................................13
Aid displaced workers.......................................................................................................13
Help the survivors thrive...................................................................................................13
RESEARCH AND CASE STUDY RELATED TO KEY CONCEPTS.................................15
ORGANIZATION SIZE.......................................................................................................15
Problem of the Study.........................................................................................................15
Findings of the Study........................................................................................................15
Recommendation of the Study..........................................................................................15
ORGANIZATION LIFE CYCLE.........................................................................................15
Problem of the Study.........................................................................................................15
Findings of the Study........................................................................................................16
Recommendation of the Study..........................................................................................16
BUREAUCRACY.................................................................................................................16
Problem of the Study.........................................................................................................16
Findings of the Study........................................................................................................16
Recommendation of the Study..........................................................................................16
NOKIA DECLINE................................................................................................................17
Justification.......................................................................................................................17
Reasons Behind Nokia Decline.........................................................................................17
Proposed Solutions............................................................................................................18
CONCLUSION........................................................................................................................19
Reference..................................................................................................................................20
 ORGANIZATION SIZE AND LIFECYCLE

INTRODUCTION

The expansion is witnessed in global market as well as technology continuously by

transforming the business into a competitive world. There are many ways pursued by
corporations in order to create higher economical merits. The prominence of innovation is
inevitable for the business world. The potency of the firm is relied on how comparatively and
quickly they are adapting to the changes through innovative strategic orientation as compared
to their competitors. The revolution of the market causes the transformation of social status as
well as other necessity of living thereby increasing the need of modernization. The
preparations should be made by businesses in advance so that they could deal with the
uncertainties prevailing in the environment efficiently and if they failed to do so it is difficult
for them to survive in the marketplace.

The organizations have been becoming more competitive and many companies are in fortune
500 list but there are 57 original organizations that have been on the list every year since
1995 because not all the companies have resources and abilities to stay on the list for long
time. They become obsolete or might be replaced by other companies. Only those companies
can stay on the list for long term which have the required resources and abilities to survive
the competitive race. In an endeavor to prosper or flourish, there are many pressures
confronted by organizations. Moreover, growth is necessary to remain healthy or successful.
Cease to growth sometimes results in customer unsatisfaction because their demands are not
met as they desire, and the competitors can increase their market share by taking advantage of
it.

LARGE ORGANIZATION:

For organization being large in size is very significant in terms of economic health. Giant
corporation allows economies of scale, make ways for employees towards extensive kinds of
opportunities as well as increases the prospects of investing in risky projects. The attributes
of large organizations entail standardization, mechanistic structure, and complexity. The
workplace of giant organizations is considered vigorous and stimulating enabling them to
allure as well as retain quality employees. Large organizations can recover promptly after
having failures by making employees feel secure during the period of uncertainty. The
attribute of complexity of giant organization facilitate the execution of multifaceted tasks as
well as the production of diversified products. After getting famous, giant organizations are
able to remain popular for long time in market. However, giant organizations need more time
in order to adapt to rapid changes involved in the environment (Daft, Murphy & Willmott,
2010).

Giant organizations have the ability to recover quickly from failure contradictory to small
organizations (Gleeson, 2019). Giant organizations are able to maintain their established
positions much better as compared to small organizations as they have least possibilities of
becoming large and more profitable (Govindarajan, Lev, Srivastava, & Enache, 2019). It is
very complicated for giant organizations to handle all the tasks in the absence of formal
mechanism. This is the reason that giant companies implement formal structures where
specialization of tasks are high and elaborated rules as well as guidelines that aid work
procedures. The formalized structure assists the organization to operate effectively (Harcourt,
n.d.).

SMALL ORGANIZATION:

Small organizations usually follow organic structure which is the opposite of formal
structure. Organic mechanism assists the organizations to adapt to environmental changes
more promptly as well as stimulate or motivate innovative activities and entrepreneurship.
Higher commitment exhibited by employees towards small organizations due to the fact that
these employees feel as they are part of the mission, culture as well as community involved in
organization and this involvement results in higher motivation. Employees are able to
perform diversified tasks contradictory to narrow and specialized jobs. Employees perceives
that working in a small company is very vigorous as well as fulfilling as compared to giant
one. (Daft, Murphy & Willmott, 2010).

WHICH ORGANIZATION SIZE IS BETTER?

Giant organization enables employees’ stimulation towards organizational innovation and

would probably need innovation by the strength of being huge in size as well as complexity.
Small companies are highly flexible and have the capability to adapt as well as enhance
according to the environment effectively results in increased innovation (Jung & Lee, 2016).
Employees of giant companies are less involved in meaningful interactions which results in
weak interpersonal associations. On the other hand, employees more often interact with each
other in order to establish robust social relationships by knowing more about themselves
(Andrews, 2016). However, smaller firms have to face scarcity or dearth of resources
including human or financial capital as well as inadequate economies of scale but confront
least public pressure (Wickert, Scherer & Spence, 2016).

BIG & SMALL COMPANY HYBRID:

Integration of the resources and reach of giant organizations with the attributes of flexibility
as well as simplicity involved in small companies results in hybrid form. Establishing new
type of organization by emphasizing the power of decentralization as well as reducing
hierarchy’s layers incorporated with the high employment of information technology
facilitates the process of reaping benefits of both forms of organizations such as large and
small. Consequently, giant corporation by restructuring itself into smaller component or units
would have the features of large one as well as have the attributes of quick adaptability of
changes (Daft, Murphy & Willmott, 2010).

ORGANIZATION LIFE CYCLE DEVELOPMENT:

Entrepreneurship Stage:

Organization’s infancy stage entails the product development and implementation of

strategies to survive in market. Entrepreneurs being founders dedicate their all resources for
the technical activities related to production as well as marketing. In this stage, organization
exhibit the traits of informal mechanism and non-bureaucracy. Lengthy working hours and
control lies with the owners (Moores & Mula, 2000). In this phase firms confront with dearth
or scarcity of customers as well as undergo deficiencies of knowledge regarding possible
revenues, costs and industry dynamics (Jovanovic 1982). Being in the initial stage firms have
to bear substantial expenses in establishing organization practices, procedures, mechanisms,
abilities as well as employee adroitness (Pérez et al. 2004).

Crisis: Requirement of Leadership- Growth of organization results in employees’ issues.

Consequently, entrepreneurs need to either modify the organization mechanism to facilitate
persistent growth or the leadership abilities are required to resolve these kinds of issues (Daft,
Murphy & Willmott, 2010).

Collectivity Stage:

Development of departments or units with a hierarchy of sovereignty, job responsibilities and

a initiating division of labor. In this stage, employees realize or recognize the organization
mission as well as devoted their time and energy in assisting the organization to get success.
Communication and control are characterized as informal however some formal mechanisms
initiate to occur (Moores & Mula, 2000). This stage is characterized by substantial increase in
sales as well as product categories. Growing firms have already overpower or vanquish the
inceptive possibilities of withdrawal as well as have acquired the sufficient information
pertinent to their competitiveness and are able to direct their attention more on product
modification (Hasan, 2018).

Crisis: Requirement of Delegation- Provided the top management is not able to embrace the
delegation process and desire to retain all the sovereignty with themselves then the problems
arises. The subordinates started to feel that they are prevented to contribute in decision
making process by the robust top management demands delegation of authority (Daft,
Murphy & Willmott, 2010).

Formalization Stage:

This stage entails the implementation and employment of rules, regulations, guideline as well
as control mechanisms. This stage is characterized by inadequate communication following
high formal structures as well as addition of other staffs. Top management put more emphasis
on issues like strategic planning and make middle management responsible of making
decisions regarding firm’s operations. In order to ameliorate cooperation and coordination
decentralized units are established. To motivate managers towards making efforts for the
benefit or success of the company incentive systems are implemented. All this results in
persistent growth by developing connections between top management and field units
(Moores & Mula, 2000).

Crisis: High Red Tape is witnessed- Organization is characterized by high bureaucracy and
hampered the process of innovation. The large size as well as complexity involved in the
organization is not tackled by formal mechanism (Daft, Murphy & Willmott, 2010).

Elaboration Stage:

Organization gained high level of bureaucracy. Social control decreases the necessity of
formal controls as teams and coordination of managers and task forces replaced formal
mechanisms. Various divisions are formed to facilitate the process of collaboration by
following the philosophy of small organization (Moores & Mula, 2000).
Crisis: Requirement of Revitalization- After reaching this stage the organization may
experience temporary decline and are required to revamp itself from time to time (Daft,
Murphy & Willmott, 2010).

BUREAUCRACY:

the notion of bureaucracy was first discovered by Max Weber, also called bureaucratic theory
of management, bureaucratic management theory or the Max Weber theory. According to his
conviction, organization can be established efficiently with the help of bureaucracy. He also
advocated the fact that bureaucratic structure is better as compared to traditional structures.
The notion of bureaucracy emphasizes the equal treatment of everyone and the elucidation of
division of labor related to each employee (Mulder, 2017).

The encumbrance involving in bureaucracy results in increased administrative however, it is

able to facilitate the coordination of key activities in organizations (Andrews Boyne &
Mostafa, 2017). Weber advocates bureaucratic organizations are characterized by rules
restricted, specialized, hierarchical as well as meritocratic and these characteristics are
appropriate to meet the demands of modern industrialized markets (Ang, 2016). According to
Bolin & Härenstam (2008), the traits of bureaucracy includes specialization, centralization as
well as formalization. However, various management theories have been evolved but still the
bureaucracy theory established by Max Weber remains a classical one. Due to its immanent
rational trait bureaucracy will persist to provide guidance to the dominant organizations
(Dash & Padhi, 2020).

Bureaucracy in Changing World:

Many corporations in order to overcome the limitations of bureaucratic system endeavors to

decentralize authority, remove excessive layers of hierarchy as well as reduce rules and
procedures to promote the philosophy of small company. The reason behind these
modifications is the companies’ desires for the trading of economies of scale for responsive
and adaptive organizations. Various corporations are establishing subdivisions to reap the
benefits of small companies. Different strategies to overpower the issues related to
bureaucracy includes employment of temporary systems and implementing the combination
of formalized and flexible approaches in order to respond to uncertain environmental
conditions (Daft, Murphy & Willmott, 2010).
SIZE & STRUCTURAL CONTROL:

Formalization:

It alludes to regulations, directives and policies hold a prominent position in corporations

Dedahanov, Rhee & Yoon, 2017). Documentation entails policies, job prescription and rules
which facilitates the elaboration of desired behaviors as well as activities. Procedures
characterized by formalization emphasizes stringent execution of policies as well as
regulations without departure (Prajogo and McDermott, 2014). The efficacy of formalization
is might be neutral, favorable, or unfavorable (Kaufmann, Borry & DeHart‐Davis, 2019).

Centralization:

It promotes development of hierarchy in corporations by centralizing the process of decision

making (Auh and Menguc, 2007). It alludes to the context when top management make all
decisions without involving the participation of employees at lower level (Dedahanov, Rhee
& Yoon, 2017). Employees involved in centralized corporations required to push decision
power upward in the organization (Kaufmann, Borry & DeHart‐Davis, 2019).

Personnel Ratios:

The proportion of top administrators to total employees is inadequate in giant corporations.

The ratio related to clerical and professional staff increases as the organization grow larger
(Daft, Murphy & Willmott, 2010).

BUREAUCRACY VERSUS OTHER FORMS OF CONTROL:

Bureaucracy Control:

The basis of Bureaucracy lies on the careful standardization of behavior as well as

performance assessment with the help of prescribed guidelines or directives (Ouchi, 1979).

 Rational-legal authority – this notion entails employees’ conviction regarding rules

and the rights of sovereigns.
 Traditional authority – this notion entails that the organization has inherent abilities
and rights to compel rules and directives.
 Charismatic authority – the enticement particular individual impels people to emulate
him as sovereign.
Market Control:

It alludes to the utilization of price competition in order to assess the output as well as
productivity of corporations or its major units. It entails the confronting of control issues with
the help of their ability to accurately assess as well as reward each employee according to his
direct contribution. It allows fair compensation system (Ouchi, 1979).

Clan Control:

According to Ouchi (1979) when bureaucracy or market control fails then clan control is the
appropriate one. Clan control promotes collaboration on the basis of shared customs and
values that are internalized with the help of socialization in corporation.

DECLINE:

It alludes to the crucial as well as enduring decrease in the resource base of corporation
(Hayne, 2017). Decline firms confront high risks of withdrawal from the market due to their
internal weaknesses (Habib and Hasan 2017). According to Daft, Murphy & Willmott (2010),
the causes of decline are the following.

Organizational Atrophy:

It alludes to the context when organizations became older, highly bureaucratic as well as
inefficient. Moreover, it also involves the deterioration of organization’s capability to adjust
or accommodate according to environment.

Vulnerability:

It embodies strategic incompetence to flourish in the environment especially related to small

or not fully established organizations. They are susceptible to the changes in customers’
preferences or other environmental uncertainty.

Environmental decline:

It alludes to the reduction in all kinds of resources available for supporting organization.
When environment lacks competence to assist corporations then the organization need to take
actions either to reduce the size of operations or turn to different domain or sphere.
MODEL OF DECLINE STAGES:

According to Weitzel & Jonsson (1989), following are the stages of decline:

Blinded stage:

The incompetency of organization of discerning internal or external variations that leads to

endanger its survival and these weaknesses or changes stimulate the organization to be
rigorous. Carelessness leads the firm towards the ignorance of signs or signals that could
show it how to deal with the upcoming problems.

Inaction stage:

In this stage, the performance atrophy has not realized crisis, but organizational members
could perceive it. The manifest signals ignored by the leadership regarding the existence of a
problem.

Faulty action stage:

At this stage, organizational failure could be deferred or prevented by implementing accurate

changes. Unforeseeable implementation strategies or plans results in equally unforeseeable
outcomes. All organizational endeavors to prevent decline progression are going to enter the
upcoming more alarming stage.

Crisis stage:

the organization realizes its alarming situation. In this period, it needs to undergo severe
revitalization or may be experience some failure. The decreasing credit ratings of corporation
will demoralize investors results in increasing the acquirement of additional capital cost.
Customers shift to the substitute products in the search of better quality and prices or the
occurrence of market saturation. If the organizations become unsuccessful in addressing these
issues, then it moves towards the ultimate stage of decline.

Dissolution stage:

The ultimate decline phase is immutable. The condition of organization become worse
because of capital diminution, erosion of markets and reputation, and the departure of
competent employees. The prevalence of rapid deterioration in unforgiving environments is
inevitable unless the organization left no choice and the best option is to shut down.

DOWNSIZING:

It alludes to the permanent depletion of workforce. Generally related to the reorganization of

the corporation in reaction to the dynamic environment (Tehubijuluw, 2017)

DOWNSIZING IMPLEMENTATION:

The downsizing strategy does not result in the desired financial outcome. The following
action can be taken to ease the downsizing process.

Communication:

The implementation of downsizing must be properly communicated to the employees. The

honest communication regarding the reasons of downsizing to the employees enables them to
retain their feeling or sense of dignity (Feldman and Leana, 1994). In the absence of these
communication, employees would feel neglected, the possibility of dissemination of rumors
become certain and then the employees would get discouraged (De Meuse Vanderheiden &
Bergmann, 1994)

Aid displaced workers:

According to Feldman and Leana (1994) organization should give assistance to employees by
providing advance notification of layoffs, severance pay and extended benefits as well as
outplacement assistance.

Help the survivors thrive:

After implementing the process of downsizing the remaining employees left with the fear that
they would be the next. Equal attention must be paid to both victims as well as survivors
related to downsizing. Organization must make endeavors to assist survivors in
accomplishing their task with reduced staff by avoiding high turnover among the remained
employees as well as keep intact employees' loyalty and job involvement (Appelbaum,
Everard, & Hung, 1999).
 RESEARCH AND CASE STUDY RELATED TO KEY CONCEPTS

ORGANIZATION SIZE:

The research conducted by Rini, Chandrarin & Assih in 2019 named “The Effect of
Performance Management Practices and Company Size to Innovation and the Impact on
Organizational Performance”.

Problem of the Study:

Innovation can assist public sector to employ available resource more efficiently in order to
provide quality service and its efficacy on public sectors’ performance is required to be
measured. The study is executed to assess the efficacy of performance management practices
as well as company size over innovation which then affect organizational performance.

Findings of the Study:

The findings advocate that the organization size have no efficacy on the organizational ability
to innovate but innovation is affected by the practices regarding performance management.
The study manifested the efficacy of organization size as well as practices regarding
performance management on the performance exhibited by organization with the help of
innovation.

Recommendation of the Study:

The influence Innovation over organizational performance suggest that the organizations
should implement innovation optimally in order to improve the performance.

ORGANIZATION LIFE CYCLE:

The study conducted by Akbar, Akbar, Tang & Qureshi in 2019 named “Is bankruptcy risk
tied to corporate life-cycle? evidence from Pakistan”.

Problem of the Study:

Firms exhibit variations in the degree of resources, competencies, strategies, mechanism,

information asymmetry, financial stability as well as competitive advantage at different
stages. The study is executed to identify the intensity of bankruptcy risk during the firm
lifecycle and how to address it.
Findings of the Study:

The results manifested that the firm exhibits higher degree of bankruptcy chances or risk
during the introduction, growth and decline stages whereas exhibits less degree of bankruptcy
chances or risk during maturity stage. Moreover, the financial stability of firms is high during
growth stage than the introduction stage.

Recommendation of the Study:

Managers of the firms must take into consideration the efficacy of life cycle over financial
vulnerability. Consequently, this would enable management to take decisions which assures
the firm’s financial viability in long term. Moreover, the managers are suggested to avoid
making investment in those projects which have low NPV but requires high debt financing
during introduction as well as decline stages because this might expand the firm’s financial
encumbrance whereas reducing returns that would result in extensive financial suffering.

BUREAUCRACY:

The study conducted by Woyengo, Nzulwa & Odhiambo in 2019 named “Influence of
organizational structure on employee job satisfaction and commitment in the civil service in
Kenya”.

Problem of the Study:

The study is executed to evaluate the efficacy of organizational structure including

formalization, centralization as well as span of control on the job satisfaction as well as
commitment of the employees.

Findings of the Study:

The results manifested that the efficacy of formalization, centralization as well as span of
control is significant on the job satisfaction as well as commitment of the employees working
in civil service of Kenya.

Recommendation of the Study:

The top policy makers is recommended to review as well as make endeavors to implement
the examined organizational structure comprising formalization, centralization as well as
span of control so that employee job satisfaction as well as commitment could be enhanced
thereby ameliorating service delivery.

NOKIA DECLINE:

The initial success of Nokia was resulted in due to the choices made by prescient as well
discerning management choices that exploit the innovative techs of firm as digitalization and
deregulation of telecom networks promptly disseminate across the globe. The unprecedented
growth of Nokia is witnessed in less than a decade. Being one of the most vogue as well as
valuable brands worldwide captured over 40 percent global market share in mobile phones
industry. However, several wrong decisions made during the time period ranges from 2001 to
2005 lead to the beginning of Nokia decline (Doz, 2017).

After 2007 Nokia started to lose its dominance and popularity in the mobile market. The
global market share of Nokia narrowed down to 25 percent during 2011 which forced it to
make collaboration with Microsoft in terms of software. After that Nokia declared that it
would be selling its entire mobile business to Microsoft in 2013 with remaining 14 percent
market share which reduced to 1% in 2015. In 2016, Microsoft declared that it would willing
to continue the production of inherited mobiles from Nokia. The consequent decline of Nokia
mobile phone business from the peak position all over the world to its utter downfall results
in around eight years (Peltonen, 2019).

Justification:

Nokia being one of the successful as well as vogue in the industry related to
telecommunication and mobile phones in the past. However, with the passage of time the
entrants of new players with novel and innovative ideas overtake the Nokia by manufacturing
mobile phones with diversified as well as new features according to the tastes, preferences
and requirement of customers. The perception of Nokia that no one can ever defeat them as
well as their wrong decisions lead them towards failure (Bhalodiya & Sagotia, 2018).

Reasons Behind Nokia Decline:

According to Sulphey (2019), following are the reasons behind Nokia decline:

 The incompetence of leadership in Nokia to modify their existing strategies according

to the prevalent technological disruption at that time because of their control culture.
  The inefficiency of Nokia to exploit the opportunity of making collaboration with
Google Android and the development of an OS that would have become more
appropriate for smartphone systems as compared to existing Symbian OS. But Nokia
had blind trust in its Symbian OS did not let it to explore this opportunity.
 The focus of research and development department of Nokia concentrated on
immanent properties including adamantine handset, battery durability, improved
camera pixels, etc. by ignoring the radical changes regarding the consumer
preferences as well as dynamic market demands.
 Nokia did not take into consideration the magnitude related to apps, software as well
as the establishment of an ecosystem around the apps. Moreover, they underrated the
third-party apps’ significance in smartphones.

Proposed Solutions:

According to Bhalodiya & Sagotia (2018), following are the prop[osed solutions:

 The adoption of Android operating system would have become beneficial

 Removal of prevalent CEO would have helped in preventing decline
 Medium range smartphones should have targeted.
 Reintroduction of old model with latest features.
 CONCLUSION

The report depicts the merits of giant and small organizations as well as hybrid form of taking
advantages of both forms. Then elaborate each stage of firm life cycle and how each stage
affect the firm’s performance as well as how corporations can employ effective strategies to
enhance their performance and profitability as well as to prevent from possible failure or
decline during their life cycle. Moreover, diversified forms of control and downsizing
strategies are also described. Finally, the recent researches and case study relate to the key
concepts are discussed.
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