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Formalization is the rules and procedures followed by an organization to a degree which includes trainings. It standardizes or regulates the behavior and determines the relationship between the organization such as the relationship between the leader and the followers. In terms of designs, formalization makes use of high specialization of labour and usually have a wide span of control. The main objective of formalization is to reduce differences in the behaviors of the employees. This can be done by both formal and informal means. Formal is standardized based on written rules.
Formalization in Toyota is really important due to the Toyota Production System (TPS) having a unique principle called the “just-in-time” production.
This principle reduces wastage of resources and emphasizes the importance of efficiency for the employees. In TPS they want their customers to have a perfect product even though stopping the production may be costly. This increases their image in the market.
Huawei has a high formalization and is highly influenced by the company. If the higher ups make a rules the employees have to follow them without questioning the authority.
Due to Huawei having high formalization it is said that it has the ability to shape and transform the market with innovative products. The step-by-step approach includes the preparation of the change, adjustments and process optimization, and the completion of transformation.
Both Toyota and Huawei make use of formalization and have always been by the book. As the technology improves and as their companies gets better and larger the use of formalization in the companies get higher. All the employees have to follow the guidelines and they can’t do what they want. Both the companies give their employees authority to stop the manufacturing when they see a fault in the system.
To conclude, formalization in an organization is using systematic rules and procedures which control the employee’s activities and actions. Like every other organizational structure, formalization has its own advantages and disadvantages. One of the advantages in having a formal organization is that when there is a problem employees know where to look for answers. One of the disadvantages is that due to them behaving in the same manner they lose their motivation to work. In the above companies, both Huawei and Toyota have a high formalization which is good in terms of their business structure. But for some business the use of formalization is not suited especially in huge companies where there are many sectors and many employees.
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