TYPES OF ORGANISATIONAL

STRUCTURES & ITS IMPACT ON

THE ORGANISATION

Submitted by : Liyana K
Roll No. : 21BC139
Section : N
S. Topic Page
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No No.
1. Introduction 3
2. Meaning and definition 4
3. Types of organizational structures 5
4. Line organization 6
5. Functional organization 7
6. Line and staff organization 8
7. Project organization 10
8. Matrix organization 12
9. Network organization 14
10. Bibliography 16

INDEX

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INTRODUCTION
With the advent of industrial revolution, the general stores at
the corner boomed into large manufacturing and trading
companies. Suddenly, there were hundreds of employees in the
place of two or three and dozens of tasks to complete in place
of one. A need for a formal setup of task allocation was born,
giving rise to introduction and development of formal
organizational structures in the organizations.
As an organization grows in size and diversity, it becomes
increasing difficult to allow it to function organically with
individuals and groups making decisions as they fit. A sound
structure becomes essential for the efficient and effective
functioning of the enterprise.

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MEANING AND DEFINITION
Organizational structure is a powerful determinant of
organizational behavior. Executive are constantly wrestling
whether or not to centralize or decentralize, for example, and
how to structure the various functions in their firms.
Organizational structure is the framework of reporting
relationships in an organization. It is a system that outlines how
certain activities are directed in order to achieve the goals of an
organization. It can include rules, roles and responsibilities.
Organizational structure also determines how information
flows between levels within the company.

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TYPES OF ORGANISATIONAL STRUCTURE
 Line organization
 Functional organization
 Line and staff organization
 Project organization
 Matrix organization
 Network organization

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 LINE ORGANISATION

According to Lundy, “line organization is characterized by

direct lines of authority flowing from top to the bottom of the
organizational hierarchy and lines of responsibility flowing in an
opposite but equally direct manner”.
Unlike other structures, specialized and supportive services do
not take place in these organizations. Each department head has
control over their department. It is one of the simplest forms of
organizational structure.
Line organization is suitable for a small enterprise where there is
a small number of people and few levels of authority. The work
is usually of routine nature requiring little skills and simple
methods of operation are used.

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 FUNCTIONAL ORGANISATION

Under functional organization, each function or a group of

functions are given to a specialist. Each specialist has control
over their function no matter where the function is performed
in the organization. Functional authority permits a specialist in
a given set of activities to enforce his directive within limited
and clearly defined scope of authority.
For example, a foreman is responsible for to the maintenance
engineer for repairs, to the inspector for quality of outputs, to
the purchase manager for proper use of materials and so on.
Every subordinate receives orders from several functional heads
and they’re accountable to all of them for their respective
functional areas.
One of the very common demerits of a functional organization is
the violation of principle of unity of command. Multiple lines
of command weaken discipline and control. There is diffusion
of authority and overlapping of efforts.

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LINE AND STAFF ORGANISATION

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Line and staff organization is a modification of line organization
and it is more complex than line organization. According to
this administrative organization, specialized and supportive
activities are attached to the line of command by appointing
staff supervisors and staff specialists who are attached to the
line authority. The power of command always remains with
the line executives and staff supervisors guide, advice and
counsel the line executives.
Line and staff structure is a combination of line structure (which
concentrates control too much) and staff structure (which
divides control too much). Therefore it combines both the
advantage of unity of command and specialization. The need
for staff positions arises when the work of an executive
increases and its efficient performance requires expert
guidance which he himself cannot provide due to limited
capabilities.

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PROJECT ORGANISATION

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The project structure consists of a number of horizontal
organizational units to complete projects of a long duration.
Each project is vitally important to the organization. Therefore,
a team of specialists from different areas is created for each
project. The size of the team varies from one project to another.
The activities of the project team are coordinated by the project
manager who has authority to obtain advice and assistance of
experts both inside and outside the organization.
The core concept of project organization is to gather a team of
specialists to work on and complete a particular project. The
project staff is separate from and independent of the functional
departments.

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MATRIX ORGANIZATION

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Matrix or grid organization is a hybrid structure combining two
complimentary structures – functional departmentalization with
pure project structure. Functional structure is a permanent
feature of a matrix organization and retains authority for the
overall operation of the functional units. Project teams are
created whenever specific projects require a high degree of
technical skill and other resources for a temporary period.
Functional departments create a vertical chain of command
while the project team forms the horizontal chain. The
functional or vertical lines of authority intersect product or
horizontal lines, thereby forming a matrix or grid. Thus, a matrix
organization is a two dimensional structure, a combination of
pure project structure and the traditional functional structure .

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 NETWORK ORGANIZATION

In a network structure, more than one organization combine to

produce a good or provide a service. These organizations might
form a partnership, or one might hire others to work for them on
different functions. A famous example of a firm following a
network structure is H&M, the famous clothing manufacturer.
H&M outsources much of its production and processing in
different countries including Bangladesh, Pakistan, China,
Denmark, France Germany, India, Indonesia, Italy and more.

The figure on the top demonstrates how a network structure

works. There is a core company that delegates work to other
companies or initiates the partnership with them to achieve an
objective. Here, the core company is in a partnership with or has
done delegation of the work to manufacture company,
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marketing, and promotion company, distributor, product design
company, and engineering company. Delegating work to other
companies and paying them for that work is outsourcing.
Outsourcing has been increasing lately, mainly due to the cost
advantages which the firms get by outsourcing the work.
Consequently, other companies whom you outsource work are
specialists in what they do. As a result of which, there is an
increase in the chance that their quality of work will be better.

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 BIBLIOGRAPHY
 Management principle and applications
(textbook) by Dr C B Gupta
 https://www.advergize.com/
insights/different-types-of-
organizational-structures-a-deatiled-
overview/
 https://www.investopedia.com/
terms/o/organizational-structure.asp

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