A simple structure can be thought of as no formal structure at
all. In a simple structure the organization is run by the personal
control of an individual.
Usually found in small businesses
Little division of management responsibility and formal
processes are missing.
The main problem here is that the organization can operate
effectively only up to a certain size, beyond which it becomes
too cumbersome for one person to control the same.
The Functional structure:
As firms grow , excessive demands may be placed on the ownermanager in order to obtain and process all the information
necessary to run a business. Chances are that a owner will not
be skilled in all specialties to run a growing business. Such
growth in the overall scope and complexity of the business
necessitates a functional structure wherein the major functions
of the firm are grouped internally and led by a specialist.
A functional structure is based on the primary activities that
have to be undertaken by such an organization such as finance
and accounting, production, marketing, human resources
well-defined channels of communication and authority/responsibility
improve productivity by minimizing duplication of personnel and equipment,
and simplifies training as well.
The functional structure can result in narrowed perspectives because of the
separateness of different department work groups.
Decisions and communication are slow to take place because of the many
layers of hierarchy. Authority is more centralized.
The functional structure gives managers experience in only one field—their
own. Managers do not have the opportunity to see how all the firm's
departments work together and understand their interrelationships and
interdependence. In the long run, this specialization results in executives with
narrow backgrounds and little training handling top management duties.
A multi Divisional structure:(M-form)
It is built of separate divisions on the basis of
products, services or geographical areas.
Because managers in large companies may have difficulty
keeping track of all their company's products and activities,
specialized departments may develop. These departments are
divided according to their organizational outputs. Examples
include departments created to distinguish among production,
customer service, and geographical categories. This grouping
of departments is called divisional structure.
These departments allow managers to better focus their
resources and results. Divisional structure also makes
performance easier to monitor. As a result, this structure is
flexible and responsive to change.
A holding Company Structure:
An investment company consisting of shareholdings in a
variety of separate business operations. These subsidiaries
may operate independently, have other shareholders and
retain their original company names.
The parent company limits decisions to the buying and selling
of subsidiaries with little involvement in their product or
Holding companies are extremely flexible, with the ability to
bring in outside shareholders as partners and to buy and sell
their subsidiaries as conditions change . However they are
hard to control, because of the hands-off management style
and the rights of outside shareholders
The matrix structure:
A matrix structure is a combination of structures
which could take the form of product and geographical
divisions or functional and divisional structures
operating in tandem
This structure not only increases employee
motivation, but it also allows technical and general
management training across functional areas as well.
Potential advantages include:
Better cooperation and problem solving.
Better customer service.
Better performance accountability.
Improved strategic management.
The two-boss system is susceptible to power struggles,
as functional supervisors and team leaders vie with one
another to exercise authority.
Members of the matrix may suffer task confusion when
taking orders from more than one boss.
Teams may develop strong team loyalties that cause a
loss of focus on larger organization goals.
The network structure is most suited to
organizations that faces a continually changing
environment, requiring a quick response, high
level of adaptability and strong innovation skills.
●High level of flexibility to change structural
●Permits concentration of core competencies
●Adapt to cope with rapid environmental change
●Loss of control and lack of coordination
●Risks of overspecialisation
● High costs of duplication
Team- based structures
A team based structure attempts to combine both
horizontal and vertical coordination through
structuring people into cross- functional teams
The team structure has many potential advantages,
including the following:
Intradepartmental barriers break down.
Decision-making and response times speed up.
Employees are motivated.
Levels of managers are eliminated.
Administrative costs are lowered.
The disadvantages include:
Conflicting loyalties among team members.
Increased time spent in meetings.
Project- based structures
A project –based structure is one where teams are
created, undertake the work and are then dissolved
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