Structural types

Organizing for Organizing for SuccessSuccess

Structural TypesStructural Types

Simple structure:Simple structure:A simple structure can be thought of as no formal A simple structure can be thought of as no formal structure at all. In a simple structure the structure at all. In a simple structure the organization is run by the personal control of an organization is run by the personal control of an individual.individual.

Characteristics:Characteristics:Usually found in small businessesUsually found in small businessesLittle division of management responsibility and Little division of management responsibility and formal processes are missing.formal processes are missing.The main problem here is that the organization can The main problem here is that the organization can operate effectively only up to a certain size, beyond operate effectively only up to a certain size, beyond which it becomes too cumbersome for one person which it becomes too cumbersome for one person to control the same.to control the same.

Owner MANAGER

Employees

The Functional structure:The Functional structure:As firms grow , excessive demands may be placed As firms grow , excessive demands may be placed on the owner-manager in order to obtain and on the owner-manager in order to obtain and process all the information necessary to run a process all the information necessary to run a business. Chances are that a owner will not be business. Chances are that a owner will not be skilled in all specialties to run a growing business. skilled in all specialties to run a growing business. Such growth in the overall scope and complexity of Such growth in the overall scope and complexity of the business necessitates a functional structure the business necessitates a functional structure wherein the major functions of the firm are grouped wherein the major functions of the firm are grouped internally and led by a specialist.internally and led by a specialist.

A functional structure is based on the primary A functional structure is based on the primary activities that have to be undertaken by such an activities that have to be undertaken by such an organization such as finance and accounting, organization such as finance and accounting, production, marketing, human resources production, marketing, human resources management, etc.management, etc.

Advantages:Advantages:

well-defined channels of communication and well-defined channels of communication and authority/responsibility relationships. authority/responsibility relationships. improve productivity by minimizing duplication of personnel improve productivity by minimizing duplication of personnel and equipment, and simplifies training as well.and equipment, and simplifies training as well.

Disadvantages:Disadvantages:The functional structure can result in narrowed perspectives The functional structure can result in narrowed perspectives because of the separateness of different department work because of the separateness of different department work groups. groups.

Decisions and communication are slow to take place because Decisions and communication are slow to take place because of the many layers of hierarchy. Authority is more centralized.of the many layers of hierarchy. Authority is more centralized.

The functional structure gives managers experience in only The functional structure gives managers experience in only one field—their own. Managers do not have the opportunity to one field—their own. Managers do not have the opportunity to see how all the firm's departments work together and see how all the firm's departments work together and understand their interrelationships and interdependence. In understand their interrelationships and interdependence. In the long run, this specialization results in executives with the long run, this specialization results in executives with narrow backgrounds and little training handling top narrow backgrounds and little training handling top management duties.management duties.

A multi Divisional structure:(M-A multi Divisional structure:(M-form)form)It is built of separate divisions on the It is built of separate divisions on the basis of products, services or basis of products, services or geographical areas.geographical areas.

The Divisional structure- Disney in the 1990’sThe Divisional structure- Disney in the 1990’s

Divisional structure:Divisional structure:Because managers in large companies may have Because managers in large companies may have difficulty keeping track of all their company's difficulty keeping track of all their company's products and activities, specialized departments products and activities, specialized departments may develop. These departments are divided may develop. These departments are divided according to their organizational outputs. according to their organizational outputs. Examples include departments created to Examples include departments created to distinguish among production, customer service, distinguish among production, customer service, and geographical categories. This grouping of and geographical categories. This grouping of departments is called divisional structure. departments is called divisional structure.

These departments allow managers to better These departments allow managers to better focus their resources and results. Divisional focus their resources and results. Divisional structure also makes performance easier to structure also makes performance easier to monitor. As a result, this structure is flexible and monitor. As a result, this structure is flexible and responsive to change. responsive to change.

A holding Company A holding Company Structure:Structure:An investment company consisting of An investment company consisting of shareholdings in a variety of separate business shareholdings in a variety of separate business operations. These subsidiaries may operate operations. These subsidiaries may operate independently, have other shareholders and independently, have other shareholders and retain their original company names.retain their original company names.

The parent company limits decisions to the The parent company limits decisions to the buying and selling of subsidiaries with little buying and selling of subsidiaries with little involvement in their product or market strategy.involvement in their product or market strategy.

Holding companies are extremely flexible, with Holding companies are extremely flexible, with the ability to bring in outside shareholders as the ability to bring in outside shareholders as partners and to buy and sell their subsidiaries as partners and to buy and sell their subsidiaries as conditions change . However they are hard to conditions change . However they are hard to control, because of the hands-off management control, because of the hands-off management style and the rights of outside shareholdersstyle and the rights of outside shareholders

The matrix structure:The matrix structure:A matrix structure is a combination of A matrix structure is a combination of structures which could take the form of structures which could take the form of product and geographical divisions or product and geographical divisions or functional and divisional structures functional and divisional structures operating in tandemoperating in tandem

This structure not only increases employee This structure not only increases employee motivation, but it also allows technical and motivation, but it also allows technical and general management training across general management training across functional areas as well. functional areas as well.

Potential advantages include:Potential advantages include:Better cooperation and problem solving.Better cooperation and problem solving.Increased flexibility.Increased flexibility.Better customer service.Better customer service.Better performance accountability.Better performance accountability.Improved strategic management.Improved strategic management.

Drawbacks:Drawbacks:

The two-boss system is susceptible to power The two-boss system is susceptible to power struggles, as functional supervisors and struggles, as functional supervisors and team leaders vie with one another to team leaders vie with one another to exercise authority.exercise authority.

Members of the matrix may suffer task Members of the matrix may suffer task confusion when taking orders from more confusion when taking orders from more than one boss.than one boss.

Teams may develop strong team loyalties Teams may develop strong team loyalties that cause a loss of focus on larger that cause a loss of focus on larger organization goals.organization goals.

Network Structure:Network Structure:

Corporate

Headquarter

Project

Group

Project

GroupFunctio

n X

Function Y

Region A

Region B

The network structure is most suited to The network structure is most suited to organizations that faces a continually organizations that faces a continually changing environment, requiring a changing environment, requiring a quick response, high level of quick response, high level of adaptability and strong innovation adaptability and strong innovation skills.skills.

Advantages:Advantages:●●High level of flexibility to change structural High level of flexibility to change structural arrangementsarrangements●●Permits concentration of core competenciesPermits concentration of core competencies●●Adapt to cope with rapid environmental Adapt to cope with rapid environmental changechange

Disadvantages:Disadvantages:●●Loss of control and lack of coordinationLoss of control and lack of coordination●Risks of overspecialisation●Risks of overspecialisation● High costs of duplication● High costs of duplication

Team- based structuresTeam- based structuresA team based structure attempts to combine A team based structure attempts to combine both horizontal and vertical coordination both horizontal and vertical coordination through structuring people into cross- through structuring people into cross- functional teamsfunctional teams

The team structure has many potential The team structure has many potential advantages, including the following:advantages, including the following:Intradepartmental barriers break down.Intradepartmental barriers break down.Decision-making and response times speed Decision-making and response times speed up.up.Employees are motivated.Employees are motivated.Levels of managers are eliminated.Levels of managers are eliminated.Administrative costs are lowered.Administrative costs are lowered.    The disadvantagesThe disadvantages include: include:Conflicting loyalties among team members.Conflicting loyalties among team members.Time-management issues.Time-management issues.Increased time spent in meetings.Increased time spent in meetings.

Project- based structuresProject- based structuresA project –based structure is one where A project –based structure is one where teams are created, undertake the work and teams are created, undertake the work and are then dissolvedare then dissolved