Organization Structure
Sunaina Ahuja.
Why structure?
Division of labor
Coordination mechanisms
Distribution of decision rights
Organizational boundaries
The informal structure
The political structure
Legitimate basis of authority
Structure should …
Ensure accountability and responsibility at all levels
Enable effective and efficient decision making at all
levels
Facilitate information and resource flows
Upward, downward, and lateral flows
Provide for effective coordination between the
various parts
Functions, divisions, or geographically dispersed units
Evaluation of a structure
Efficiency of resource utilization
The organization’s ability to perform its task reliably, with quality, and
with economy of effort and resources such as labor and capital
Efficiency of time utilization
The speed and timeliness with which the organization is able to
execute its tasks
Responsiveness to the environment
The organization’s ability to satisfy the demands of the environment in
which operates
Adaptability over time
Ability of the organization to innovate and to change dynamically over a
period of time
Ability to hold people accountable
The ability to hold individuals in the organization accountable for the
performance of certain activities that contribute to the improved overall
performance
Different forms of structure
Functional Structure
Divisional Structure
Matrix Structure
Network Structure
Functional Structure
General Management
Finance Marketing Manufacturing Sales R&D
Functional Structure
Characteristics
High functional specialization
High formalization
High centralization
Functional Structure
Advantages
greater efficiency
minimizes duplication of efforts
Develops norms and values within function
which allow them to function more efficiently
Provides people with an opportunity to
sharpen their skills
people in the similar function can supervise
and monitor each other
Functional Structure
Disadvantages
Control problems
Communication problems
Measurement problem
location problem
lack of customer orientation
Strategic problem
Divisional Structure
General Management
R&D Human Resources
Watches Division Jewelry Division Garments Division Health Care Division Cameras Division
Manufacturing Marketing Sales
Divisional Structure
Characteristics
High specialization
High formalization within the division
Limited decentralization
Divisional Structure
Advantages
Increased organizational effectiveness
Increased control
Profitable growth
Internal labor market
Divisional Structure
Disadvantages
Managing the corporate -Divisional problems
Coordination problems between divisions
Bureaucratic costs
communication problems
Matrix Structure
General Management
Function 1 Function 2 Function 3
Division 1
Division 2
Division 3
Matrix Structure
Characteristics
Vertical flow of functional responsibility and
horizontal flow of product responsibility
Dual Reporting
Flexibility
Mutual adjustment and Team work
Minimal reliance on vertical control thru formal
authority
Multiple membership
Matrix Structure
Advantages
Reduces functional barriers and sub unit
orientation
Opens up communication channels and
provide opportunity to learn from each other
Maximizes the use of skilled professionals
Dual functional and product focus promotes
concern for both cost and quality
Matrix Structure
Disadvantages
Dual reporting
Role ambiguity
Network Structure
Characteristics
Blurring of boundaries between the
organization and its environment
Formed based on core competencies
High entrepreneurial interdependence
Lots of flexibility
Contracts are easy to make or break
Single legal entity may be a member of
multiple organizations
Network Structure
Characteristics
Dispersion
Empowerment
Restlessness
Interdependence
Different forms of structures
Functional Divisional Matrix Network
Division of labor By inputs By outputs By inputs and By knowledge
outputs
Coordination Hierarchical Division GM and Dual reporting Cross-functional
mechanisms supervision, plans corporate staff relationships teams
and procedures
Decision rights Highly centralized Separation of Shared Highly
strategy & decentralized
execution
Boundaries Core/ periphery Internal/ external Multiple interfaces Porous and
markets changing
Importance of Low Modest Considerable High
informal structure
Politics/ Conflict Inter-functional Corporate, Along matrix Shifting coalitions
divisional, and dimensions
inter-divisional
Basis of authority Positional and General Negotiating skills Knowledge and
functional management and resources resources
expertise responsibility &
resources
Forms of structures: Advantages & disadvantages
Functional Divisional Matrix Network
Resource efficiency Excellent Poor Moderate Good
Time efficiency Poor Good Moderate Excellent
Responsiveness Poor Moderate Good Excellent
Adaptability Poor Good Moderate Excellent
Accountability Good Excellent Poor Moderate
Environment for Stable Heterogeneous Complex Volatile
which best suited environments environments environments environments
with multiple
demands
Strategy for which Focused/ low cost Diversified Responsiveness Innovative
best suited strategies strategies strategies strategies
Thank you
