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
Team Structure
The thrust of teamwork in organizations has led to the development of team organizational structures. Team structure removes departmental boundaries.
Advantages of Team Structure
- Employee motivation
- Remove departmental barriers
- Speeds up decision making
- Easily adaptable to change in enviroment
- Allows authority to be delegated as hierarchy
- Avoids problem of double reporting like matrix structure
Disadvantages of Team Structure
- Conflicts as departments compete for secure resources
- Possibility of a problem of dual loyalties
- Time spent on meetings
- Dependence on training
Network Structure
Links number of separate organizations with a desire to achieve a common goal through their interaction.The firms are linked by and to a HQ
Advantages of Network Structure
- Minimizes administrative costs
- Flexibity
- No hierachy structure so faster decision making
Disadvantages of Network Structure
- Loss of control
- Time consuming communication i.e Meetings
- Failure of an external company affects the host
Virtual Organizations
Goal oriented composed of multiple members residing in geographicaly displaced locations using technology to communicate
Features of Virtual Organizations
1) Minimal physical structure
2) Heavy reliance on communication technology
3) No boundaries to operations
4) Work from home
5) Few physical assets
6) Reliance on part - time, elf employed workers
Advantages of Virtual Organizations
- Swifter reaction times to change
- Reduction of operating expenses
- Efficient use of office supplies
- Access to worldwide expertise
- Flatter structure gives more control
- Elimination of physical barriers
Disadvantages of Virtual Organizations
- Complexity since restricted face to face
- Lack of job security
- Workers might not be self motivated
- Increased risk of miscommunication
- Lack of Control
Factors Affecting Classification of Organizational Structures
- Size of the firm
- Business Cycles - inflation or recession
- Business stratergies or objectives
- Business Enviroment - SLEPT
Characteristics of Formal Organizational Structures
1) Hierachy
2) Chain of Command
3) Span of Control - Narrow or Wide Span
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