This document discusses organizational structures and their characteristics. It begins by defining organizational structure as the ways in which a firm can organize itself, such as by function, product, or service. It then examines different types of structures including functional, divisional, and matrix structures. For each type, it provides examples and discusses their advantages and disadvantages. Additional topics covered include mechanistic versus organic structures, team and network structures, and circular structures. The document provides a comprehensive overview of key considerations in organizational structure.

1. Ruhulla Abdul
IFF 2-2
Moscow 2016
FINANCIAL UNIVERSITY UNDER THE GOVERNMENT OF THE RUSSIAN
FEDERATION

2. Organizational structure – the possible ways in which a
firm can organize itself, for example, by function, byproduct
or service
The word structure implies organization. People who work
in an organization are grouped so that their efforts an be
channeled for maximum efficiency.
Organizations can be structured in an infinite variety of
ways, ranging from highly complex to extremely simple.
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3. ● Achieve efficiency in the utilization of resources;
● Provide opportunities for monitoring organizational performance;
● Ensure the accountability of individuals;
● Guarantee coordination between the different parts of the enterprise;
● Provide an efficient and effective means of organizational
communication;
● Create job satisfaction, including opportunities for progression;
● Adapt to changing circumstances brought about by internal or external
developments.

4. 1. Designates formal reporting relationships
 number of levels in the hierarchy
 span of control
2. Groupings of
 individuals into departments
 departments into the total organization
3. Design of systems for
 effective communication
 coordination
 integration across departments

5.  1. Functional (traditional) — A form of organization that groups a company’s
activities around essential functions such as manufacturing, sales, or
finance.
 2. Divisional (project) — A form of organization that groups together those
employees who are responsible for a particular product
type or market service according to workflow. It may be:
 Product
 Customer
 Geographic
 Process
 3. Matrix (hybrid) — Companies are structured by creating a dual hierarchy
in which functions and divisions have equal control.
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6. • One of the most common types of
organizational structures,
• Organization based on common job
functions.
• Example: an organization with a
functional structure would group all
of the marketers together in one
department, group all of the
salespeople together in a separate
department, and group all of the
customer service people together in a
third department.
• It is most appropriate to small
companies which have few products
and locations and which exist in a
relatively stable environment.
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 Functional Organization Advantages
1. It is simple, obvious, and logical.
2. It fosters efficiency.
3. It can simplify executive hiring and training.
4. It can facilitate the top manager’s control.
 Functional Organization Disadvantages
1. It increases the workload on the executive to
whom the functional department heads report.
2. It may reduce the firm’s sensitivity to and
service to the customer.
3. It produces fewer general managers.

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9.  Some organizations are
structured in accordance with
product lines or divisions or
departments.
 They are headed by general
managers who are responsible
for their own resources.
 Divisions are likely to be seen as
profit centers and may be seen
as strategic business units for
planning and control purposes.
 Some departments, e.g. accounts
will be centralized
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 Divisional Organization Advantages
1. The product or service gets the single-minded attention of its own
general manager and unit, and its customers may get better, more
responsive service.
2. It’s easier to judge performance.
3. It develops general managers.
4. It reduces the burden for the company’s CEO.
 Divisional Organization Disadvantages
1. It creates duplication of effort.
2. It may diminish top management’s control.
3. It requires more managers with general management abilities.
4. It can breed disconnection.

13.  A matrix structure aims to combine
the benefits of decentralization (e.g.
speedy decision making) with those
of co-ordination (achieving
economies and synergies across all
business units, territories and
products).
 It usually requires employees from
various departments to form a group
to achieve a specific target.
 They require dual reporting to
managers and the diagram shows a
mix of product and functional
structures.
 For example in a university, a
lecturer may have to report to both
subject and department heads.
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15.  Matrix Organization Advantages
1. Access to expertise.
2. Stability of permanent department assignments for
employees.
3. Allows for focus on specific projects, products, or customers.
 Matrix Organization Disadvantages
1. Confusion of command.
2. Power struggles and conflicts.
3. Lost time in coordinating.
4. Excess overhead for managing matrix functions.
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17. Mechanistic and organic structures
• Mechanistic structures are typified by narrow spans
of control; high centralization, specialization, and
formalization;
• Organic structures (“flat” structures) are typified by
wide spans of control; decentralization; low
specialization and formalization;
Circular structure
• The circular structure depicts all divisions as being
part of the same whole.
• the circular structure can be confusing, especially
for new employees. it can be difficult for employees
to figure out who they report to and how they’re
meant to fit into the organization.

18. Team Structures
Make extensive use of permanent and
temporary teams, often cross
functional, to improve communication,
cooperation, and problem solving.
Network Structures
Maintain a staff of core fulltime
employees and use contracted services
and strategic alliances to accomplish
many business needs.

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