Structural Considerations & Types of Structure

8/9/2019 Structural Considerations & Types of Structure

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structural considerations& types of structure


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We usually conceive of organisationstructure as a chart consisting of boxes Inwhich the name of position or designation of

personnel is written in a hierarchical orderalong with the depiction of relationship thatexist between various positions.

To a strategist, an organisation structure isnot only a chart but much more.

INTRODUCTION


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WHAT IS ORGANISATIONSTRUCTURE

A organisation structure is the way howtasks and sub-tasks reuired to implement astrategy are arranged.

The diagrammatical representation ofstructure could be an organisation chart butchart shows only the !skeleton".

The !flesh and blood" that bring to life anorganisation are several mechanisms thatsupport the structure.


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All these cannot be depicted on a

chart, but a strategist has to grapplewith the complexities of creating thestructure, making it work, redesigning

when reuired, and implementingchanges that will keep the structurerelevant to the needs of the strategiesthat have to be implemented.

In short, we can say that the effectiveimplementation of strategy reuiresthe right #.$.


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STRUCTURA!"ECHANIS"S

%efining the ma&or tasks reuired toimplement a strategy.

'rouping tasks on the basis of common

skill reuirements.$ub-division of resposibility and

delegation of authority to perform

tasks.(oordination of divided responsibility.

%esign and administration of

information system.


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%esign and administration of the controlsystem.

%esign and administration of the

appraisal system%esign and administration of the

motivation system.

%esign and administration of thedevelopment system.

%esign and administration of the

planning system.


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DE#INITION

) #rgaisation structure is the formalsystem of task and authorityrelationships that control how peoplecoordinate their actions and useresources to achieve organisationalgoals*.

-'areth +. ones. #rgaisational Theory


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T$%ES O# ORGSTRUCTURE

There are various types of organisationalstructures which are as follows..

$imple organisational structure

unctional structure%ivisional structure

$/ structure

0atrix structure1etwork structure

other structures


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SI"%!E ORG STRUCTURE

The widely prevailing organisationalstructure found in respect of very smallenterprises is a simple one.

This structure is the most elementaryform of structure and it appropriatefor a organisation that is owned andmanaged by one person.


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"ERITS

2uick decision making.Ability to change with market signals.

3ower is centralised.

Informal and simple org. systems.(ontrol of all the b"ss activities.


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DE"ERITS

Ignore strategic decisions

Taking everything on one"s head has its

own risks and disadvantages.It does not encourage the developmentof future managers.

This structure becomes Inadeuate asthe b"ss expands.


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#UCTIONA! STRUCTURE

In this structure, the organisation isdesigned on the basis of the basicfunctions, namely, production, financeand accounting, marketing and personnel.

the need arises for specialised skills anddelegation of authority to managers who

can look after different functionalareas.


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The functional structure is commonlyfound in small companies and also inlarge companies with single product lineor narrow product ranges.

This structure seeks to distributesdecision making and operational

authority along functional lines.


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"ERITS

4fficient disribution of work throughspecialisation.

3rovides clear definition of functions

and responsibilities.%elegation of day-to-day operations.

Time for ocus on strategic decisions.

Improve development of functionalexpertise.

$implifies training.


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DE"ERITS

(rates difficulty in coordination amongdifferent functional areas.

5eads to functional, and line and staffconflicts .

3romotes narrow specialisation andpotential rivalry or conflict.


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DI'ISIONA! STRUCTURE

As organisation structure expands anddiversifies, divisional structure comesinto existence.

unctional structure is inadeuate whengrowth and complexity increasing in termsof geographic expansion, marketsegmentation and diversification.

These types of organisations divide thefunctional areas of the organisations todivision.


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This structure is diversify amongvarious divisions, where one division isresponsible for one product, and onemanager to get one product6or service7produced and marketed.

According to the product

characteristics, various divisions areestablished.


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"ERITS

4ach product line gets concentratedattention.

It places responsibilities for profits at

the divisional level.It facilitates measurement of unit

performance.

'ood training ground for strategicmanagers.

4ncourages general management

development.


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DE"ERISIf there are too many divisions, coordination

becomes complex and difficult.3roblem with the extent of authority given

to division managers.

3otential for policy inconsistencies betweendivisions.

Increase the problems of top management

control.It may give rise to conflicts between various

divisions.


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S(U STRUCTURE

A $/ has been defined by sharplin, as)any part of b"ss orgaisationn which istreated separately for strategic

management purposes*.When organisations face difficulties in

managing divisional structure, it

becomes difficult for the topmanagement to exercise strategiccontrol.


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$/ is the discrete element of the b"ssserving specific product market withreadily identifiable competitors and forwhich strategic planning can beconducted.

$/ commonly found among enterprises

having b"ss spread over a vastgeographical area.


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"ATRI) STRUCTURE

0atrix structure is a combination ofstructures, so it becomes popular.

It may take the form of combining

product and geographical divisions orfunctional and divisional structure.

$uch type of structure is created by

assigning functional specialists, whonormally work in a department in theirarea of specialisation.


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In matrix organisation structure, usuallyemployees have two bosses to whomthey may have to report.

This type of structure exists in largemulti-pro&ects organisations so thatthey can move employees to any teamwherever their services are needed.

This structure is widely used inconstruction, marketing, aerospace, andhighly technological industries.


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"ERITS

It promotes development to themanagers through increased involvementin decision making.

(ombination of advantages of differentalternative structures.

Allow individual specialists to beassigned where their talent is the mostneeded.

3rovides good exposure to specialists ingeneral management.


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DE"ERITS

%ual accountability creates confusionand difficulty.

+euires a high level of vertical and

hori8ontal coordination.$hared authority may create

communication problems.

$cope for conflicts.It may take more time for decision.


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NETWOR* STRUCTURE

A network design is a cluster ofdifferent organi8ations whose actionsare coordinated by contracts and

agreements rather than through aformal hierarchy of authority.

0ore often one organi8ation takes the

lead in creating the network as itsearches for a way to increaseeffectiveness.


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The network design typically consists ofseveral satellite organi8ations behavedaround a core firm.

1etwork design offers flexibility,innovation, uick to threats andopportunities and reduced costs and

risks. 1etwork designs accommodate

strategic alliances among competing

firms.


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ORGANISATIONA!

STRUCTURESThere are also some other types oforganisational structures which are asfollows..

3roduct-based structures

(ustomer-based structures

3rocess-based structures'eographic structure

intrepreneurial structure


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%RODUCT+(ASEDSTRUCTURE

The grouping of activities on the basisof the product or product lines isfollowed by organisation where there is

a need to delegate to a division allfunction related to that particularproduct or product line.

$uch a need arises when the strategyadopted reuires exclusive attention to aproduct or a group of product.


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4xpansion and diversification strategiesmay reuired a product based structureas it facilitates the addition or deletion

of product divisions.


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CUSTO"ER+(ASEDSTRUCTURE

In some organisatations division may becreated on the basis of the customer groupserved.

The rationale foe customer based structureis that grouping of activities on the basis ofcustomer would enable the organisatation

to provide exclusive attenntion to separateand distinict customer group.


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Thus , an organisation may haveindividual sales divisions andinstitutional sales divisions to serve

consumers and instititutionsrespectively.


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%ROCESS+(ASEDSTRUCTURE

In organisations where productionor service is

organised on the basis of processes 6or

euipments7, a process-based structureis feasible.


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ITRE%RENEURIA!


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ITRE%RENEURIA!STRUCTURE

The interpreneurial structure offers

the benefits of revitali8ingorganisations to act as intrepreneurs toapply inclusive attention to the

development of new ideas, products orservices.

The interpreneurial structure benefits

where it is possible to manage andcoordinate several small groups and theorganisation is in a position to risk timeand resources when pro&ects are not

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Structural Considerations & Types of Structure

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