A Functional Organization structure is a hierarchical type of organizational structure wherein

people are grouped as per their area of specialization and supervised by the functional manager
with expertise in the same field, so that their skills can be effectively utilized and the
organizations objective can be achieved.
Here, all authority, budget allocation, and decision making power stays with the functional
manager. A project manager has no role in this type of structure. Even if he exists, his role will be
very limited and he has to ask the functional manager for his requirements. Here, a project
manager may have the title of a coordinator or an expeditor.
The Functional Organizational structure is suitable for an organization which has ongoing
operations such as manufacturing and production operations.
In functional organizations, the organization is divided into various specific departments; e.g.
human resource, marketing, finance, operations, etc. Each department will have its own
department head and he will be responsible for the performance of his section. This helps control
the quality and uniformity of performance.
Benefits of the Functional Organization Structure: Following are a few benefits of functional
organizations:

Employees are grouped as per their knowledge and skills.

Workers are very skilled and efficient because they are experienced in same type of work
and hence they perform well.

Job responsibilities and reporting are straight to the functional head, and the hierarchy
path is clear.

Employees feel job security, and therefore, perform without any fear.

Employees have faith in the organization.

Employees have a clear career growth path.

Within the functional department communication, cooperation and coordination is

excellent.

Disadvantages of the Functional Organization Structure: Following are a few disadvantages

of functional organizations:

The employee may become lazy due to repeating the same type of work.

Conflicts may arise due to the promotion of another employee.

Highly skilled employees cost more to the organization.

The functional manager pays attention to only his department; he usually doesnt care for
other teams or sections.

Poor communications and poor inter-department coordination.

Employees may have little understanding or concern for anything happening outside of
their functional area. This may cause obstacles in communication, coordination, and
cooperation.

Functional structure is rigid; therefore, they are very slow to adopt changes.

Delays in decision making due to bureaucratic hierarchy.

In matrix organization structure, the knowledge and skills of the talented employees could be
shared between the functional departments and the project management teams, as needed.
Here, the employee generally works under two bosses. The authority of the functional manager
flows vertically downwards and the authority of the project manager flows sideways. Since, the
authorities flow downward and sideways, this structure is called the Matrix Organization
Structure.
In matrix organization structure, usually employees have two bosses to whom they may have to
report. Which boss is more powerful depends upon the type of matrix structure.
Matrix organizational structure exists in large multi-projects organizations so that they can move
or relocate employees to any team wherever their services are needed. Matrix structure has the
flexibility of applying the organizations talent where it is needed. Here, employees are
considered to be shared resources between the project teams and the functional units.

Matrix organization structure can be further divided into three categories; e.g.
1.
2.
3.

Strong Matrix
Balanced Matrix, and
Weak Matrix.

Strong Matrix: In strong matrix, most authority and power lies with the project manager. Here,
the project manager has a full time role; he controls the project budget, and he has full time
project management administrative staff under him. Strong matrix structure has a lot of common
characteristics of the projectized organization.
Balanced Matrix: In balanced matrix, power is shared between the functional manager and the
project manager. Although, the project manager has full time role, he has only part time project
management administrative staff under him. In a balanced matrix both managers control the
project budget.
Weak Matrix: In a weak matrix, the project manager has a part time role with very limited
power and authority. His role will be more like a coordinator or an expediter. Weak matrix
structure is very close to the functional organization structure. In a weak matrix structure, the
functional manager controls the project budget.

Advantages of the Matrix Organization Structure: Followings are a few advantages of the
matrix organization structures:

The main benefit of matrix organization is that highly skilled and capable resources can
be shared between the functional units and important strategic projects.

Communication is smooth across the boundaries.

It is a good environment for professionals to develop their career.

Project team can get the highly skilled personnel they require.

People can be selected based on skills and suitability.

Employees have job security.

Typically the efficiency of matrix organizations is higher.

Disadvantages of the Matrix Organization Structure: Some disadvantages of matrix

organization structure are as follows:

Employees may have to report to two bosses, which can add confusion, and conflicts may
arise, particularly in the balanced matrix environment where both bosses have equal
authority and power.

Conflicts may arise between the bosses regarding the power and authority.

Employees may become confused regarding their roles and responsibilities, especially
when they are assigned to a task which is somewhat different than what they were doing.

Sometimes unclear priorities may also confuse the employees.

Generally matrix organizations have more managers, which make overhead cost very
high.

Many times in matrix organizations, workload is high. Employees have to do their regular
work, along with the additional project related tasks.

Definition
A divisional organizational structure usually consists of several parallel teams focusing on a
single product or service line. Examples of a product line are the various car brands under
General Motors or Microsoft's software platforms. One example of a service line is Bank of
America's retail, commercial, investing and asset management arms. Unlike departments,
divisions are more autonomous, each with its own top executive--often a vice president--and
typically manage their own hiring, budgeting and advertising. Though small businesses rarely
use a divisional structure, it can work for such firms as advertising agencies which have
dedicated staff and budgets that focus on major clients or industries.

Advantages
Divisions work well because they allow a team to focus upon a single product or service, with a
leadership structure that supports its major strategic objectives. Having its own president or vice
president makes it more likely the division will receive the resources it needs from the company.
Also, a division's focus allows it to build a common culture and esprit de corps that contributes
both to higher morale and a better knowledge of the division's portfolio. This is far preferable to
having its product or service dispersed among multiple departments through the organization.

Disadvantages
A divisional structure also has weaknesses. A company comprised of competing divisions may
allow office politics instead of sound strategic thinking to affect its view on such matters as
allocation of company resources. Thus, one division will sometimes act to undermine another.
Also, divisions can bring compartmentalization that can lead to incompatibilities. For example,
Microsoft's business-software division developed the Social Connector in Microsoft Office
Outlook 2010. They were unable to integrate Microsoft SharePoint and Windows Live until
months after Social Connector could interface with MySpace and LinkedIn. Some experts
suggested that Microsoft's divisional structure contributed to a situation where its own products
were incompatible across internal business units.