Introduction
Organizations are constantly changing and evolving to ensure they remain competitive within the marketplace, and use initiatives to maintain their competitive status. One of the best ways that companies can restructure is to adopt an internal company system. An internal company system is, ‘[1]used to create an internal organization and incentive system to equally distribute profits made by the company to all stake holders of the firm’.
History of Internal Companies
The use of an internal company system began in 2006, as a way to re-organize individual business units to have a greater interactivity. This system allows each division to operate independently, yet share resources, facilities and technology with other divisions, who then operate as their own company. This connectedness enables them to offer services not just within their own division, but through the other divisions as well. By providing each division with the support of other divisions, they are able to remain competitive while keeping costs associated with operations, such as salaries and benefits, lower.
It is important to note that the internal company system can vary significantly between organizations. In some cases, it involves the consolidation of managerial duties and resources, while in others, it involves entirely different business units operating as separate companies under one controlling organization.
The Benefits of an Internal Company System
Adopting an internal company system allows an organization to be more competitive and responsive to changing market conditions. Companies are now able to respond to customer demand with greater agility and efficiency. Companies are able to deploy resources across the different groups and can specialize in certain industries or markets, making them more competitive.
In addition to increased responsiveness and agility, an internal company system can help an organization remain profitable in the long-term. By utilizing new costs saving measures within each business unit the company can reduce organizational costs, while still remaining competitive. Internal companies can also improve and streamline communications within the departments, making it easier to quickly and efficiently respond to customer needs.
Lastly, an internal company system can provide a greater degree of control to the divisions themselves, giving them the ability to make their own decisions, rather than relying solely on the upper-level management of the organization. This can help to foster greater innovation and collaboration within the divisions, resulting in improved productivity and profitability.
Conclusion
Companies who adopt an internal company system are able to reap multiple benefits, including increased competitiveness, improved responsiveness, streamlined communication and improved cost savings. This system has revolutionized the way in which many companies operate and has enabled them to remain successful in the ever-changing and dynamic business world. With its numerous advantages, it is clear to see why this system has become increasingly common.
