Organizational Structures Flashcards
Functional Structure
designed in terms of various functions e.g production, marketing, finance. This is the most widely use organizational structure classification and inexpensive
Features of Functional Structures
1) Well defined communication channels which are usually downward
2) Clearly outlined chains of command and supervisory roles
3) Utilizes job specialization and departments have well defined roles
4) Net flexible and relies on formal procedures
Advantages of Functional structures
1)Promotes cordination and control
2) Specialization can lead to improved productivity
3) Allows for delegation to lower level management
4) Accountability and clariy displayed
Disadvantages of Functional Structures
1) Too stringent and may lead to low morale
2) Decision making process is slow
3) Difficulty in adapting change
4) Specialization can lead to lack of focus on organization as a whole
5) Not suitable for large businesses
6) Coordination problems
Product Structure
When business has different products, management can be separated for each product. Each product will have its own management structure answerable to top management.
Features of Product Structure
Allows for delegation
Each unit is responsible for own profitability
Each product is assigned its own functional areas
Advantages of Product Structure
Focus can be placed on a particular product’s performance
Diversification is encouraged
Promotes positive competition
Each product division is given more autonomy to achieve objectives
Disadvantages of Product Structure
Can be expensive
Duplication of functional areas in some cases is unnecessary
Competition may have some negative consequences to the firm
Success of a product is highly dependent on people direct contact
Geographical Structures
Structure is organized in terms of regions or countries. However each region can be organized functional area or product. Frequently used by MNCs
Features of Geographical Structures
Each region is responsible for its own profitability
Different regions could be arranged on a functional or product basis
Regions are allowed some amount of autonym in the management of their operations
Advantages of Geographical Structures
Quick response to local environment changes
Organization is presented with international opportunities
Ease if delegation to regions
Responsibility for profits may breed efficiency
Disadvantages of Geographical Structures
Duplication of resources between regions
Poor coordination accross the regions can hurt organization
Competition may lead to conflict
Lack of control
Matrix Organizational Structure
Developed for rapidly changing business environments. Combines functional, product and possibly geographical structures. Can illustrate vertical lines of authority concentrating on major functional areas and horizontal lines showing lines of authority across the division.
Advantages of Matrix Organizational Structure
Total communication between all members of the team
Flexible and adaptable to changing environment
Improved managerial skills
Crossover of ideas between people with specialist knowledge tend to create more successful solutions
More focus on operations of project and business
Disadvantages of Matrix Organizational Structure
- Less direct control form top
- Slower decision making process
- Power struggle among managers
- Conflict between goals
