ORGANIZATION AND MANAGEMENT

Chapter 4
ORGANIZING WEEK 7

Organizational Structures
Day7

Lessons/Topic: Organizational Structures

• distinguished the various types of organizational structures
• Differentiate formal from informal organization

Introduction
Each employee in a particular company or organization has his or her own specializations that correspond to his
or her special skills and abilities. This specialization is what makes him or her efficient in doing his or her task.

Organizational Structure
define as a system of how tasks are to be allocated, who reports to whom, who has the authority, and what are
the coordinating mechanisms and interaction patterns to ensure that work is done. Organizational structure creates
order by arranging the various parts of the organization, the workflow, the reporting relationships, and the
communication channels. It promotes coordination of activities and performance results to achieve the organizational
strategy and goals.
What are the Types of Organizational Structure?
There are six types of Organization Structure. the following are:

Functional Structure
In functional Structure, members with similar skills are grouped together into functional departments, such as
production, marketing, finance, and human resources. This simple structure is found in smaller business organizations
that have one or a few products or services. The functional structure is simple and not elaborate. The authority is
centralized in one person. An organization with a functional structure is only commonly described as a flat organization,
with everyone reporting to one senior executive who dominates the decision-making within the organization. There are
no several layers of hierarchy of management levels.
Organizational Chart Showing Functional Structure

Chief Executive Officer

Human Manufacturing Finance Accounting Marketing

Resources

Divisional Structure
In the divisional structure, members of the organization who are grouped together work on the same product,
service, or process, or serve similar customers. This structure is common to complex organizations that have diverse
operations covering many products, customers, processes, and territories. In the opening case scenario, the corporate
structure of San Miguel Corporation that emphasizes core businesses is an example of a divisional structure, with a focus
on products or services.
The divisional structure, therefore, exists because of product or marketing diversity within the organization.
The Different Types of Divisional Structure
• Product Structure – The grouping of members and jobs is by product or services.
• Geographic Structure – The grouping of members and job is by location of activity.
• Customer Structure – The grouping of members and jobs is by customers served.
• Process Structure – The grouping of members and jobs is by related work process.

Prepared by:
Mrs. Jewela J. Guiriba
SHS Teacher/ ABM Strand Coordinator
ORGANIZATION AND MANAGEMENT
Chapter 4
ORGANIZING WEEK 7

Owner/President

Region 1

Marketing Operations Finance

Matrix Structure
Matrix organization combines the functional and divisional structures. Specialists from specific functional
departments are assigned to work on one or more interdisciplinary teams. Thus, workers belong to at least two groups
at the same time, such as being a member of both the functional department and the product team. The head of the
product team serves as the project leader. The project leader directs his or her staff, who are also from the functional
departments.
In a matrix structure, therefore, every employee has two functional department managers and a project leader.
It can be said that the matrix structure is unique because it breaks the unity of command concept in management.
Team Structure
Team Structure is created to complete special projects, to solve problems, or to accomplish daily tasks. They
may be composed of permanent and temporary teams. Some are convened as “task forces” to handle specific activities.
For instance, an organization may create a quality Improvement team overall in charge of designing leading, and
monitoring activities throughout all departments and units.
Network Structure
The network structure is formed by having a core of full-time employees working together with outside partners
who provide support or supply or service. It employs a minimum staff and mostly contacts out the work to be done.
There are three forms of network structure, namely the task force, the committee, and the collegial form.
1. Taskforce –a structure formed on a temporary basis to accomplish a complex task that involves a number of
organizational subunits.
2. Committee – is another form of network structure composed of selected members from different backgrounds.
It is organized as a temporary or a permanent structure.

A collegial form is another network structure composed of members from professional backgrounds. It is
commonly found in universities and professional
Virtual Structure
Virtual Structure eliminates the boundaries among units that compose the organization by using information
technology (IT) and the internet to communicate with members and accomplish specific objectives. Work is spontaneous
and excludes lines of authority. Communication flows are rapid and information sharing is continuous.

Formal and Informal Organization

Organizations are also distinguished by the nature of the formality of their structures. It is important to know the
difference between formal and informal structures because they have implications in terms of work expectations and
the nature of relationships among members.
A formal Organization has a documented organizational chart of the officers and managers who direct the organization.
The organizational or management chart shows the authority of the officers, the lines of communication, and the
reporting relationship in the organization.

Prepared by:
Mrs. Jewela J. Guiriba
SHS Teacher/ ABM Strand Coordinator
ORGANIZATION AND MANAGEMENT
Chapter 4
ORGANIZING WEEK 7
Three features of formal organization
1. Formalization pertains to the degree to which the work task or jobs are standardized. If the job is
highly formalized, employees have a minimum discretion over what they have to do and how they
do it.
2. Complexity is another characteristic of a formal structure that pertains to the degree of
differentiation between the units based on the task they performed.
3. Centralization is a characteristic of a formal structure that pertains to the degree to which decision-
making is concentrated in one area within the organization.
Informal Organization
have an informal structure. They are not officially created but are freely formed by members who have a need
for them. They are also called “shadow” organizations behind the formal organization because relationships among
members are not specified but can be observed. Relationships in informal organizations are less structured and more
spontaneous compared to those in formal organizations.

References: https://www.youtube.com/watch?v=-XZ1poxYt84
https://bizfluent.com/info-8101157-formal-vs-informal-organizational-structures.html
(1680) DIFFERENCE BETWEEN FORMAL ORGANIZATION AND INFORMAL ORGANIZATION - YouTube

References: Diwa Senior High School Series

Organization and Management
pages 89-98

Prepared by:
Mrs. Jewela J. Guiriba
SHS Teacher/ ABM Strand Coordinator