Differentiation of the Organization's Internal Environment
Differentiation in organizations involves division of labor and specialization. These necessarily result from the organization’s composition–many different work units with different kinds of tasks, using different skills and work activities coordinating with one another for a common end.
Division of labor involves assigning different tasks to different people in the organization’s different work units. Related to it is specialization, the process in which different individuals and units perform different tasks. An organization’s overall work is complex and would be too much for any individual, therefore, the bigger the organization, the more work units or work divisions and specializations are to be expected.
Integration of Work Units
Integration is another process in the organization’s internal environment which involves the collaboration and coordination of its different work units or work divisions. Coordination refers to the procedures that connect the work activities of the different work divisions/units of the firm in order to achieve its overall goal. Structural mechanisms may be devised in order to increase collaboration and coordination. The more highly differentiated one’s organization is, the greater the need for integration among the different units.