Structure of organization is arrangement of jobs within organization. It defines how jobs are grouped and coordinated in entity. Authorities and responsibilities of individuals working at different levels of organizations are defined according to structure of entity. In simple words organizational structure gives basic understanding how organization operates, its resources, filed of operations and specializations.
Following are the main organizational structures:
This type of Structure is suitable for small organizations where tasks are simple. Organization is owned by single person. Workers simply act on orders of boss. Consider operation of small medical store, with owner and 2 workers performing their duties on direct orders of owner. This type of entity enjoys benefits of absence of communication layers because direct orders are given by owners to workers so communication is much quick as compare to other structures. Dis advantages include the limitations of entrepreneurial structure only for small businesses.
Features of entrepreneurial structure:
- Simple processes
- Small number of employees
- No formal company structure
Functional structure applies to larger entities with multiple departments.
When organization grow , level of its activities expand and now only owner cannot take whole responsibility rather level of responsibility is divided into many responsible persons mostly managers. There is need of some base to divide duties in that.
In functional structure organization is divided into different departments on basis of functions e.g sales departments will include sale persons whose function is only to made sales similarly other departments are also formed on similar functions basis.
- pooling of expertise
- helps in recruitment and management
Communication problems may occur between different departments
When continue to grow and expand to different countries. Such entity is technically named as “multinational organization”. Due to company growth in multiple countries it uses divisional structure to handle operations. For example Pepsi operates in all almost all regions of world, so to manage expanded operations it may base its structural on continents or regions with certain countries in each region. Decisions will be made at each region to deal with instantly changing market requirements. When we say decisions it mean that production, sales, marketing all will these will be locally decided at each region and with local resources of each region.
Divisional structure is also known as “geographical structure”.
- Local decision making is suitable to rapidly changing environment
- Independence to regional managers giving them confidence
- Loss of economies of scale
- Inconsistency in standards
Entities dealing with variety of products may divide its operations on products basis helping to specialize product related issues.
Johnson n Johnson (J&J) owns250 companies in 60 countries of the world. It divides its operations in basis of its major products segments. Divided into 3 major product segments, the first product is “Consumer segment” dealing with baby care, skin care, oral care, wound care and women’s health care products. Second product segment is” Medical Devices & Diagnostics “including instruments used by medical professionals for diagnose and prevention of diseases. Third product segment is “Janssen Pharmaceutical” dealing with important medical needs of time. This product structure has helped J&J to expand its business from US to 60 countries in world.
This structure is more complex, individual is answerable to both project and functional managers. This structure ensures completion of certain function (e.g. production) within time limit, so ensures timely completion of tasks at same time maintaining quality.
Works operates two ways in matrix structure. Functional managers retain decision making powers of their departments .On the other hand project managers are given overall responsibility to completion of projects and they play the leading role in matrix structure
- timely completion of tasks
- output focused
- flexibility in structure
- Dual Authority creates conflict
- High costs
- Stressful for employees( answerable to two managers)