Types of Organizational

Structure

Presented by:
Group no - 5
 Topics to be covered
Introduction of Presenters.
Why Structure?
Structure Defined.
Types of Structure.
Advantages of Structures.
Disadvantages of Structures.
Introduction of Presenters
 Determinants
• To what degree are tasks subdivided into
separate jobs?
• On what basis will jobs be grouped together?
• To whom do individuals and groups report?
• How many individuals can a manager efficiently
and effectively direct?
• Where does decision making authority lie?
• To what degree will there be rules and
regulations to direct employees and managers?
 Structure defined

Specification of the jobs to be done within an

organization and the ways in which they relate to
one another. This allows the organization to
achieve its goals. At some organizations the
structure is rigid, at other it is more flexible.
 Organization Structure is about
 Power and Control and the
Re-distribution of Power and Control
 Decision Making at the
Lowest appropriate level
 Effective Communication
 Effective Coordination
Elements of Organizational Structure

Department- Span of
alization Control

Organizational
Structure
Elements

Formalization Centralization
Mechanistic vs. Organic Structures
Mechanistic Organic

• High formalization • Low formalization

• Narrow span of control • Wide span of control

• High centralization • Low centralization

Types of Organizational Structure

• Functional

• Divisional

• Matrix
Functional Organizational Structure
Organizes employees around skills or
other resources (marketing, production)

President

Finance Production Marketing

Functional structures in a business, branch
bank, and community hospital.
 “Functional Structure”
• Small-size, single-product

• Undifferentiated market

• Scale or expertise within the function

• Common standards

• Usually, early on in the Organizational Life Cycle

Advantages of functional structures

– Economies of scale.
– Task assignments consistent with expertise
and training.
– High-quality technical problem solving.
– In-depth training and skill development.
– Clear career paths within functions.
Disadvantages of functional structures

– Difficulties in pinpointing responsibilities.

– Sense of cooperation and common purpose
break down.
– Narrow view of performance objectives.
 Divisionalized Structure
Organizes employees around geographic
areas, products, or clients

President

Enterprise Laserjet Consumer

Systems Solutions Products
 Divisional structures
– Group together people who work on the same
product or process, serve similar customers,
and/or are located in the same area or
geographical region.
– Common in complex organizations.
– Avoid problems associated with functional
structures.
Divisional structures based on product,
geography, customer, and process.
Apple Before and After Restructuring
Channel:

Dealers
Product 1:
Desktops
Mass
retailers
Product 2:
Mac Dealers
Laptops
Direct sales
Product 3:
Palmtops
Mail Order
Before Design After Design
 CEO
Apple: Geographical Structure Steve Jobs

Apple Apple Apple Apple

Products USA Europe Pacific

Europe
Canada
West

Europe
Sales Australia
North
Service and
Marketing Japan
France
To Regions
Latin
South America
Europe
Far
East
Geographic Structures: Crown Cork
& Seal, Neiman Marcus and
Regional
Wal-mart Operations

CEO
Regional Regional
Operations Operations
Central Support
Functions

Individual
stores
Regional
Operations
Advantages of divisional structures

– More flexibility in responding to environmental

changes.
– Improved coordination.
– Clear points of responsibility.
– Expertise focused on specific customers,
products, and regions.
– Greater ease in restructuring.
Disadvantages of divisional structures

– Duplication of resources and efforts across

divisions.
– Competition and poor coordination across
divisions.
– Emphasis on divisional goals at expense of
organizational goals.
Project-Based Matrix Structure
Employees are temporarily assigned to a specific
project team and have a permanent functional unit
President

Engineering Marketing Software

Manager Manager Manager

Project A
Manager

Project B
Manager

Project C
Manager
 Asea, Brown, Boveri - ABB

CEO
(Michel Demaré )

Executive
Committee

Power
Power Power
Power 47
47Other
Other
National Robots
Robots
Transformers
Transformers Generation
Generation Business
BusinessAreas
Areas
Companies

Germany
Germany

U.S.A
U.S.A

Norway
Norway
137
137Other
Other
National
National
Companies
Companies
 “Matrix structure”
– Combines functional and divisional structures
to gain advantages and minimize
disadvantages of each.
– Used in:
• Manufacturing
• Service industries
• Professional fields
• Non-profit sector
• Multi-national corporations
Advantages of matrix structures

– Better cooperation across functions.

– Improved decision making.
– Increased flexibility in restructuring.
– Better customer service.
– Better performance accountability
Disadvantages of matrix structures

– Two-boss system is susceptible to power

struggles.
– Two-boss system can create task confusion
and conflict in work priorities.
– Team meetings are time consuming.
– Team may develop “groupitis.”
New developments in Organization Structure

• Team structures
• Network structures (Virtual organizations)
• Boundary less organization
How a team structure uses cross-functional
teams for improved lateral relations
A network structure for a Web-based retail business
 The boundary less organization
eliminates internal and external barriers
Some more types of Organizational
Structure…

Lets call it a day

Thank You