Why is an Organizational Structure Needed? A weak matrix organization structure resembles the characteristics of a functional organization structure. Functional structures are useful for relatively big companies. Each unit has a divisional manager responsible for performance and who has authority over the unit. According to Anderson, because of the unlimited shelf space of the Web, the cost of reaching niche goods is falling dramatically. Machine organisation or Machine bureaucracy has formal rules regulating the work, developed technostructure and middle line, is centralised, hierarchical. Therefore, lateral communication between functions become very important, so that information is disseminated, not only vertically, but also horizontally within the organization.
Weak Matrix Organization Structure In weak matrix organizations, the project manager will have limited power and authority. Starbucks has product-based divisions in its organizational structure. Bureaucratic Structure Organizations which use a bureaucratic structure are usually larger and have standard procedures and processes. This approach makes it much easier to assign responsibility for actions and results. On the other hand, divisional organisation structure refers to the structure wherein the organisational functions are grouped together, into divisions, depending on product, service, market or geographies. Also, a company will have a simpler process if they need to change the size of the business by either adding or removing divisions.
Therefore, you will select a matrix organizational structure. Divisional Larger companies that operate across several horizontal objectives sometimes use a divisional organizational structure. It is particularly useful for new entrepreneurial business as it enables the founder to control growth and development. Specialization High specialization can be seen in functional organizations since the use of shared functions Divisional organizations use separate functions and this result in low specialization. Each department has a manager or director who answers to an executive a level up in the hierarchy who may oversee multiple departments. Communication sometimes fails due to having to pass messages through so many layers of authority, but everyone knows what responsibilities they hold, so little to no decision making takes place until the various teams gather together to create strategies for achieving their daily, weekly and monthly quotas for sales and service. For visual representation, please see the diagram in this.
In course of time, such a manager may gain power and in a bid to assert his independence may ignore organizational interests. In this case, you may be assigned to the project for a short time, or they may transfer you there while your services are required. Some experts also mention the design, common in global companies, such as , and. When businesses get large enough to need an organized company structure, they traditionally segregate personnel by work function. Urban Geography, 17 6 , 502-525. Due to the high volume of production, it is not practical to produce all products in a single location and distribute to a number of countries.
Further, the divisions may also try to maximize their profits at the cost of other divisions. You will select the functional organizational structure because the functional structure is good for an organization involved in production. Advantages of the Divisional Organization Structure The key points in favor of the divisional structure involve placing decision making as close to the customer as possible. Such structure is common for , ,. This sort of horizontal decision-making by model is often used in , other and when running a or. Here the project manager does not have authority and has a part time staff. They will also automatically receive emails with the full text of status updates.
Teams can be both horizontal and vertical. This structure allows decentralized decision making, greater autonomy, more inter-departmental interactions, and thus greater productivity and innovation. Both structures are vertical, stacking a middle- and upper-management hierarchy atop a base of employees, and having characteristics such as a tendency toward rigidity. Types of Organizational structure If you search the internet for this topic, you will see many theories differentiating organizations into various kinds. Organizational structure is a setup which determines the hierarchy of people, their function, the workflow, and the reporting system. Balanced Matrix Organization Structure In balanced matrix organizations, power and authority are shared between the functional managers and the project managers.
What type of organizational structure does your organization have? This combination may help organizations achieve higher efficiency, readiness, and quick market adaptation. Both product and functional leadership is related through program and project management. Hello Fahad, I am currently deciding how to identify the organization structure of the small business as described below: A tour business offering a adventure trip packages. In such a situation, it leads to conflicts among different departments. The divisional structure allows decision-making to be shifted downward in the organization, which may improve the company's ability to respond to local market conditions. Moreover, the functional heads of all the departments report directly to the top management of the organisation.
These competitive advantages are essential in interacting with the industry environment, which involves the strong force of competition shown in the. When a divisional structure is organized in geographical terms, the same products are divided according to specific sales regions. Often, growth would result in , the most prevalent structure in the past. Because all employees are in a single reporting relationship in a functional or divisional structure, the analyst can easily track individual performance, working hours, and expenditures. When there is a separate project manager position, the role for functional leader is limited to technically leading the subordinates and is disjointed from management functions. Characteristics of organizational structure relating to hybrid competitive strategy. Also, the divisional head of each division is responsible for the profit or loss of his division so that each division acts as a profit centre.
The matrix organization structure usually exists in large and multi-project organizations, where they can relocate employees whenever and wherever their services are needed. That way, not only can the analyst familiarize himself with the ongoing activities in each team, he is also able to respond quickly to changes in budgets and forecasts with the latest information. Organizations have to be very competitive, efficient, and dynamic to survive and grow. Organizational structure was considered a matter of choice. Functional structures are often characterized by a large degree of formalization, making each function reliant on standardized ways of operating.