What Is organizational Structure

A firm’s organizational structure is a formal

configuration that largely determines what the
firm will do and how it will complete its work

An organization structure is the arrangement

of tasks and sub tasks required to implement
a strategy
Type of organization structure
Entrepreneurial structure
Functional structure
Divisional structure
SBU structure
Matrix structure
Entrepreneurial structure
ADVANTAGES:

•QUICK DECISION MAKING

•TIMELY RESPONSE TO ENVIRONMENT CHANGES
•INFORMAL AND SIMPLE ORGANIZATION SYSTEM

DISADVANTAGES:

•EXCESSIVE BURDEN ON OWEN MANAGER

•CAN IGNORS STRATEGIC DECISIONS
•CAN NOT EXPAND BUSINESS IF REQUIRES
Functional structure
ADVANTAGES

Effective distribution of work through specialization

Delegation of day to day operational functions
Providing time to top management

DISADVANTAGES

•Difficulty in coordination
•Narrow specialisation
•Leads to conflict
Divisional structure
ADVANTAGES
Enables grouping of functions in division
Quick response to environment changes
Top management free to take strategic decision

DISADVANTAGES
Problems in allocation of resources
Inconsistency arising from sharing of authority
SBU structure
ADVANTAGES:

•Establish coordination between divisions

•Facilitates strategic management
•Accountability to all levels

DISADVANTAGES:

•Difficult to handle too many SBU

•Difficulty in assigning responsibility
Matrix structure
ADVANTAGES:

•Benefit of specialists
•Fosters creativity
•Provides good exposure to specialist in general management

DISADVANTAGES:

•Dual accountability
•Create communication problems
Structure and strategy

determines

Structure
Strategy

Affects
 Business Strategies
•Cost leadership
•Differentiation or Focus strategies
Structure For Cost Leadership
FEATURES

•Efficiency orientation
•Strong central authority
•Tight cost control
•Detailed control reports
•Close supervision
•Routine tasks
•Limited employee empowerment
STRUCTURE FOR FOCUS STRATEGY
FEATURES
•Marketing is the main function for keeping track of new product
ideas
• New product R & D is emphasized
• Most functions are decentralized, but R & D and marketing may
have centralized staffs
•Flexible organization
•Strong capability in R & D
•Rewards for risk taking
•Learning orientation
•Liberal amount of empowerment
Structure for corporate strategies

•Structure for integration strategies

•Structure for diversification strategies
•Structure for internationalization strategies
STRUCTURE FOR RELATED DIVERSIFICATION

CEO PR

legal

Corporate Corporate
Corporate finance
HRM marketing

SBU SBU SBU SBU

A B C D
STRUCTURE FOR UNRELATED
DIVERSIFICATION
CEO

Corporate Corporate Corporate Corporate

finance HRM marketing PR

DIVISION DIVISION DIVISION DIVISION

A B C D
Structure For Internationalization Strategies

•Structure For International Division

•Growth Product Structure
•Global Geographical Structure
•Global Matrix Structure
Structure For International Division
CEO

INTERNATIONAL
FINANCE HRM MKT
DIVISION
Growth Product Structure
CEO

PROD PROD PROD PROD

OPER
FINA UCT UCT UCT UCT
HRM MKT ATIO
NCE DIVISI DIVISI DIVISI DIVISI
Ns
ON A ON B ON C ON D
Global Geographical Structure
CEO

CORPORATE
STAFF
COO

REGION B REGION B REGION C REGION D

Global Matrix Structure
CEO

REGION A REGION B REGION C REGION D

SBU 1

SBU2

SBU3

SBU4