ORGANIZATIONAL STRUCTURE
Organizational structure: the internal framework of a business that shows the way
in which management is organized and linked together, and how authority is
passed through the organization.
This structure indicates:
• who has overall responsibility for decision making.
• formal relationship between different people and department, formal
channels of communication, both vertical and horizontal.
Business objectives and changes in organizational structure
• new competitors: requires flexibility, should be able to adapt to meet
changing demand.
• business grows & develops: requires change of internal structures.
• business objective changed: structure must reflect the objectives.
• intrapreneurship is encouraged: encourage innovation.
Divisional organizational structure: a structure that organizes the activities of a business around
geographical area or product groups.
organizational structure can be differed by product, by function & by geographical area
• focus on specific market segments
• respond to consumer needs and market changes more quickly
• measure the performance and profitability of each division separately.
Potential disadvantages include:
• duplication of roles, for example, each division has its own sales team
• rivalries between divisions might develop as they each focus on divisional objectives
• loss of overall central control over each division.
, TYPES OF ORGANIZATIONAL STRUCTURE
1. Functional structure: departments have clearly defined roles and
responsibilities in a specialized area such as marketing, finance, HR or
operations.
ADVANTAGES DISADVANTAGES
• Employees often display a high level of • The structure is a vertical one and this
departmental loyalty and pride in the work of their often does not allow for good connections
department. between departments therefore,
• It encourages employees to become specialists Coordination between departments is
and this can increase efficiency and productivity. difficult
• Departments are led by managers who are • Communication flows through the
specialists in the functional area. department heads to the top management,
so employees may feel remote from senior
management.
• There might be competition between
departments, which may not benefit the
whole organization.
2. Hierarchical structure: a structure consisting of multiple level in which all of
the members apart from one are subordinates to someone else.
Level of hierarchy: a stage of organizational structure where all the personnel have
equal status and authority.
Wide structure, tall structure.
Chain of command: is the route through which authority from the chief executive
and the board of directors is passed down through an organization.
Span of control: number of subordinate employees directly accountable to a
manager.
ADVANTAGES DISADVANTAGES
Organizational structure: the internal framework of a business that shows the way
in which management is organized and linked together, and how authority is
passed through the organization.
This structure indicates:
• who has overall responsibility for decision making.
• formal relationship between different people and department, formal
channels of communication, both vertical and horizontal.
Business objectives and changes in organizational structure
• new competitors: requires flexibility, should be able to adapt to meet
changing demand.
• business grows & develops: requires change of internal structures.
• business objective changed: structure must reflect the objectives.
• intrapreneurship is encouraged: encourage innovation.
Divisional organizational structure: a structure that organizes the activities of a business around
geographical area or product groups.
organizational structure can be differed by product, by function & by geographical area
• focus on specific market segments
• respond to consumer needs and market changes more quickly
• measure the performance and profitability of each division separately.
Potential disadvantages include:
• duplication of roles, for example, each division has its own sales team
• rivalries between divisions might develop as they each focus on divisional objectives
• loss of overall central control over each division.
, TYPES OF ORGANIZATIONAL STRUCTURE
1. Functional structure: departments have clearly defined roles and
responsibilities in a specialized area such as marketing, finance, HR or
operations.
ADVANTAGES DISADVANTAGES
• Employees often display a high level of • The structure is a vertical one and this
departmental loyalty and pride in the work of their often does not allow for good connections
department. between departments therefore,
• It encourages employees to become specialists Coordination between departments is
and this can increase efficiency and productivity. difficult
• Departments are led by managers who are • Communication flows through the
specialists in the functional area. department heads to the top management,
so employees may feel remote from senior
management.
• There might be competition between
departments, which may not benefit the
whole organization.
2. Hierarchical structure: a structure consisting of multiple level in which all of
the members apart from one are subordinates to someone else.
Level of hierarchy: a stage of organizational structure where all the personnel have
equal status and authority.
Wide structure, tall structure.
Chain of command: is the route through which authority from the chief executive
and the board of directors is passed down through an organization.
Span of control: number of subordinate employees directly accountable to a
manager.
ADVANTAGES DISADVANTAGES
