Organizational Structure
by Hailah Alh
1. Simple Structure
1.1. The oldest & most common organizational.
1.2. Motives: Highly informal.
1.3. Pitfalls: Employees may not understand their responsibilities.
2. Functional Structure
2.1. Where the major functions of the firm are grouped internally.
2.2. Motives: Enhanced coordination & control.
2.3. Pitfalls: Impeded communication & coordination due differences in values.
3. Divisional Structure
3.1. Where products, projects, or product markets are grouped internally.
3.2. Motives: Quicker response to changes in the market environment.
3.3. Pitfalls: Can be very expensive.
4. SBU Structure
4.1. Similar products or markets are grouped into units to achieve synergy.
4.2. Motives: Planning & control done by the corporate office.
4.3. Pitfalls: Can be difficult to achieve synergies .
5. Holding company Structure
5.1. Where businesses in a corporation’s portfolio are the result of unrelated diversification.
5.2. Motives: Cost savings due to fewer personnel and lower overhead.
5.3. Pitfalls: Corporate office has little control .
6. Matrix Structure
6.1. Functional departments are combined with product groups on a project basis.
6.2. Motives: Increases market responsiveness.
6.3. Pitfalls: Can lead to power struggles & conflict .
7. Boundaryless Designs
7.1. Organizations in which the boundaries, including vertical, horizontal, external, and geographical boundaries, are permeable.
7.1.1. Motives: Transaction costs between the firm and its suppliers are reduced.
7.1.1.1. Pitfalls: Relationships between individuals become more important than profits
7.2. Barries-free organization
7.2.1. Motives: Leverage the talents of all employees.
7.2.1.1. Pitfalls: Difficult to overcome political and authority boundaries inside and outside the organization.
7.3. Modular organization
7.3.1. Motives: Directs firm’s managerial and technical talent to the most critical activities.
7.3.1.1. Pitfalls: Inhibits common vision through reliance on outsiders.
7.4. Vistula organization
7.4.1. Motives: Enables the sharing of costs and skills.
7.4.1.1. Pitfalls: Leads to potential loss of operational control among partners.
8. International Operations
8.1. Multi-domestic Strategies use:
8.1.1. International division structure.
8.1.1.1. Geographic-area division structure .
8.2. Global Strategies use:
8.2.1. Worldwide functional structure .
8.2.1.1. Worldwide product division structure .