Machine Translated by Google

Resources for Business French Teachers and Trainers

Self-training: Understanding the Credit: Joelle Bonenfant

business world John Lacroix

Concept: Company structure

The company is an organized and structured system, and the structure constitutes an essential element
to ensure its optimal functioning.

1. Definition.

The structure of a company can be defined as the set of devices by which a company distributes,
organizes, coordinates and controls its activities.
The whole structure of a company is represented by an organization chart which shows the
distribution of the areas of activity and supervision/dependency of the different agents, with the
general management appearing at the top.

2. Types of structures.

There are several types of structures :

Hierarchical structure: it is based on the principle of single command, each

employee reporting to only one hierarchical superior.

Advantages: simplicity of command, clarity and security.

Disadvantages: partitioning, poor flow of information, heaviness, bureaucracy.

Executive
management

Production Financial
personnel
management direction
management

Level 1: General management

Level 2: Specialized departments (production, finance, marketing, etc.)
Level 3: Sub-directorates
Level 4: Heads of service
Machine Translated by Google

Functional structure: it is based on the principle of functional division of authority and plurality of
command, each employee depending on several managers, each having authority only in his field of competence.

Advantages: very effective specialization of personnel, pooling of skills.

Disadvantages: possibility of conflicts generated by the multiplicity of command, risk of dilution of
responsibilities.

Direction
general

Production Directorate of Commercial

staff management
management

Factory 1 Factory 2 Billing Purchases

Hierarchical-functional structure: it is based on the principle of single command and the need to
resort to advisory bodies made up of specialists.
Advisors specializing in specific areas are attached to line managers. The hierarchy decides. Functional
managers help with the decision.

We then have 2 lines:

- the line of command (operational directors). - the advice

line (functional directors who do not give orders).
This structure is also called “staff and line” (staff: advises – line: decision-making power).

Disadvantage: risk of difficult relations between operational and functional staff.

Direction Line units

Staff units

Function A B-function C-function

Lines of subordination (line)

Advisory support
channels (staffs)
Machine Translated by Google

Divisional structure: it is based on the principle of decentralization of power and decentralization of

decisions. The divisional form distinguishes very clearly between general management and operational
management.

In this structure, the activity is divided into subsets with a certain autonomy called divisions. These are
created according to a logic of market, product, product-market couple, activity or type of clientele.

Advantages: autonomy of the divisions, common culture of the product, human size of the divisions
(better working relations), good coordination because the manager takes care of the entire life of the
product and the general management can devote themselves to their role of strategy.
Disadvantage : economies of scale can be lost due to the multiplication of functional departments (accounting,
marketing, etc.), distribution of common resources between several costly divisions and loss of expertise,
interest of the group less important compared to the interests of the division (which becomes autonomous)

Direction

Market X Y Z

Matrix structure: it is based on a principle of dual command.

It combines the division by function and by division, each individual having 2 superiors, a project manager
evolving according to needs and a permanent superior.
It is based on the idea of "project group".

The division of activities is done according to 2 criteria:

- by specialized function (marketing, production, etc.). - by product

or by project.
Advantage: well suited to management by product or by market, allows you to take advantage of the skills of
two managers.
Disadvantage: sometimes lack of coordination (duality of command), risk of conflict, high costs.

Executive management

F unct ion A F unct io n B F unct io n C

Responsible :
- P r oduct 1
- Market 1
- P ro je c t 1

Responsible :
- Product 2
- Market 2
- P ro je c t 2

3. Operational and functional.

Machine Translated by Google

The company is structured in two levels: decision and execution, and reflection and decision support,
operational and functional.

Operational bodies :

The operational bodies contribute directly to the activity of the company: Purchasing, Sales, Deliveries,
Warehouse departments.
If an operational person stops working, the corresponding production is not provided.

The operational staff are part of the hierarchical line. They include heads of directorates,
departments and employees.

Functional organs :

The functional bodies have the role of advising, assisting: Research, Control, Marketing, HRD,
function of Secretary General, function of Assistant.

There may be what is called a staff, which is made up of specialists who have an advisory role. They
can be asked to study a specific file in order to propose a solution.

In the absence of a functional person, the company will continue to produce even if certain decisions
have to be delayed.
In the reality of the company, the border is often difficult to establish between these two categories.
Indeed, the functional services have an advisory role but often have a delegation of authority over the
services in their area of expertise (eg Marketing Director on Commercial Service).