The Different Ways Organizations Can Be Structured and Operated


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The Different Ways Organizations Can Be Structured and Operated

There are four major ways a company - organization can be structured
and operate. P.C.G (o) Ltd I would dare say that is structured and
operates with the functional structure. In order to make it clear and
understandable I am analyzing here below the four ways that
organizations can structure and operate. We will observe that all four
structures have there advantages and disadvantages. In order also to
assist you understand better the differences of the four ways that
organizations can be structured see in Page 4 & 5 Figures 1,2,3 which
are the layout of the organization charts for each structure:

1. Functional

2. Divisional

3. Hybrid

4. Matrix

1. Functional Structure involves the departmentalization in which
positions are grouped according to there main functional- specialized
area. To make it more clear and for example, the Production or
operations function combines activities directly related to
manufacturing a product or delivering a service. Marketing focuses on
the promotion and sale of products and services. Human resources are
responsible for attracting, retaining, and enhancing the effectiveness
of organization members. Finance is concerned with obtaining and
managing financial resources.

The advantages and Disadvantages of this structure are as follows:

Advantages:

In depth Development of expertice

Clear career path within function

Efficient use of resources

Possible economies of scale

Ease of coordination within function

Potential technical advantage over competitors

Disadvantages:

Slow response time on multifunctional problems

Backlog of decisions at top of hierarchy

Bottlenecks due to sequential tasks

Restricted view of organization among employees

Inexact measurement of performance

Narrow training for potential managers

2. Divisional structure is a type of departmentalization in which
positions are grouped according to similarity of products, services,
or markets. With the divisional structure, each division contains the
major functional resources it needs to pursue its own goals with
little or no reliance on other divisions.

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There are three major forms
of divisional structure:

A. Product

B. Geographic

C. Customer

Divisional structure has also its advantages and disadvantages:

Advantages

Fast response to environmental change

Simplified coordination across functions

Strong orientation to customer requirements

Simultaneous emphasis on division goals

Accurate measurement on division performance

Broad training in general management skills

Disadvantages

Duplication of resources in each division

Reduction of in-depth expertise

Heightened competition among divisions

Limited sharing of expertise across divisions

Restrictions of innovation to divisions

Neglect of overall goals

3. Hybrid structure is a form of departmentalization that adopts parts
of both functional and divisional structures at the same level of
management. It attempts to incorporate many of the major advantages of
functional as well as divisional departmentalization. Many
organizations, especially large ones, have some combination of
functional and divisional departments.

The Advantages and Disadvantages of this structure are pointed out
here below:

Advantages

Alignment of corporate and divisional goals

Functional expertise and/or efficiency

Adaptability and flexibility in divisions

Disadvantages

Conflicts between corporate departments and divisions

Excessive administrative overhead

Slow response to exceptional situations

4. Matrix structure is a type of departmentalization that superimposes
a horizontal set of divisional reporting relationships onto a
hierarchical functional structure. The result is a structure that is
both a functional and a divisional organization at the same time.
There are two chains of command, one vertical and one horizontal.

Again this structure has its advantages and disadvantages:

Advantages

Decentralized decision making

Strong project or product coordination

Improved environmental monitoring

Fast response to change

Flexible use of human resources

Efficient use of support system

Disadvantages

High administrative costs

Potential confusion over authority and responsibility

Heightened prospects for interpersonal conflicts

Excessive focus on internal relations

Overemphasis on group decision making

Possible slow response to change

Many have attempted to develop the ideal organization structure. A
structural configuration that seemed to work for one organization was
a deterrent to effectiveness in another. Researches came to recognize
that the best structure for a given organization depends on such major
contingency factors as technology, size, and environment.

FUNCTIONAL STRUCTURE

[IMAGE]

(Figure 1)

DIVISIONAL STRUCTURE

[IMAGE]

(Figure 2)

MATRIX STRUCTURE

[IMAGE][IMAGE][IMAGE][IMAGE][IMAGE][IMAGE]

(Figure 3)


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