Organization Structure

Prof. H.K.Padmanabhan
 Concept.
 Types of Organization Structure
Concept:
 Organization structure is a chart consisting of name or
designation of personnel written in hierarchical order along
with the depiction of the relationship that exists between
various positions.

 The organization structure is a tool for managerial

performance tool, organization must adapt itself to
changing conditions and circumstances and it must always
be compatible with the requirements of management duties
and responsibilities.
Types of Structure
 Entrepreneurial.
 Divisional.
 Functional.
 SBU Matrix.
 Network Structure.
 Cellular/ Modular.
Entrepreneurial Structure

Owner

Manager

Employee
Entrepreneurial Structure
 Advantages:
 Quick decision making (Centralized).
 Timely response.
 Informal and Simple system.

 Disadvantages:
 Excessive Reliance.
 Ignore strategic Decision.
 Inadequate for expansion.
Functional Structure

CEO

Marketing Finance HR Public

Operations
Relations
Functional Structure
 Advantages:
 Efficient distribution.
 Delegation of roles and responsibilities.
 Focus on strategic decisions.

 Disadvantage:
 Difficulty in co-ordination.
 Costly.
 Leads to conflict – role, function, staff.
Divisional Structure
CEO

General General
Manager Manager
Division - A Division - B

Marketing Marketing

Operations Operations

HR HR

Finance Finance
Divisional Structure
 Advantages:
 Effective functioning.
 Quick decision making.
 Focus on strategic decision.

 Disadvantages:
 Inconsistent authority.
 Costly.
 Problem in allocation of resources.
SBU Structure

CEO

SBU -1 SBU-2 SBU-3

Division Division Division Division Division Division

A B A B A B
SBU Structure
 Advantages:
 Easy co-ordination.
 Focus on strategic control.
 Distinct Business.

 Disadvantages:
 Diverse and large structure.
 Difficult to add SBU Layer.
Matrix Structure

CEO

Finance HR Marketing Operations

Matrix Strucutre
 Advantages:
 Allows functional specialist.
 Fosters creativity by diverse talent.

 Disadvantages:
 Creation of confusion and difficulty.
 Combination of vertical and horizontal level.
 Poor communication.
Stable Vs Turbulent
Organization Design
Stable Organization
Large Firm.
Vertical Communication.
Centralized Decision making.
Vertical Integration.
Work / Quality based team.
Functional work team.
Minimum training.
Individual focused job
design.
Turbulent Organization
Small Units.
Horizontal Communication.
Decentralized Decision
Making.
Virtual Organization.
Autonomous work team.
Cross functional work team.
Extensive training.
Value chain / Team focused
job design.
Thank - You