UNIT – 3

ORGANIZATIONAL STRUCTURE

An organization is a social unit of individuals that is designed and managed to achieve

collective goals. As such organizations are open systems that are greatly affected by the
environment they operate in. Every organization has its own typical management structure
that defines and governs the relationships between the various employees, the tasks that they
perform, and the roles, responsibilities and authority provided to carry out different tasks.

An organization that is well structured achieves effective coordination, as the structure

delineates formal communication channels, and describes how separate actions of individuals
are linked together.

Organizational structure defines the manner in which the roles, power, authority, and
responsibilities are assigned and governed, and depicts how information flows between the
different levels of hierarchy in an organization.

CONCEPTS OF ORGANIZATIONAL STRUCTURE

A sole proprietor with one or two employees doesn't need an organizational structure. The
more complex the business, the more important the structure becomes – it determines who
wields authority and who has responsibility for particular projects or goals. There's no single
ideal organizational structure; use whatever concepts of organization work best for your
company. The process of organizational structure determination begins with familiarizing
yourself with existing structures.

Functional Structures

Basing your structure on employee functions is an simple concept for organizing the
company. Different functions such as marketing, finance, human resources and Internet
Technology each have their own department and each department focuses exclusively on that
function. The drawback is that a department may fixate on its own function, its own budget
and its own goals with no thought for the company as a whole. Even when problems require
solutions from multiple departments, they may not cooperate.

Divisional Structure

Divisions are mini-companies built around particular products or regions. A car company
could have one division for SUVs, one for luxury cars, and another for economy vehicles, for
example. Each division contains all the functions necessary to handle business for that region
or product line. Because everyone in the division shares a common goal, such as boosting
sales for their products, there's more cross-function cooperation, according to Lumen
Learning.). The downside is that every division duplicates the same functions – sales,
marketing and manufacturing – which is often wasteful.

Process Structure

The process structure divides up the organization around processes, such as research,
manufacturing and sales. Unlike a purely functional structure, a process-based organization
considers how the different processes relate to each other and the customer. The sales process
doesn't begin until the manufacturing process produces something to sell; manufacturing, in
turn, waits on research and development to create the product. Process-based structures are
geared to satisfying the customer – the end result of all the processes – but they only work if
managers understand how the different processes interact.

Matrix Structure

The matrix structure is often overlaid on top of a company's functional structure to tackle
projects that involve multiple departments. Project managers recruit staff for their teams from
different departments so that all the necessary functions work on it together. This offers
companies flexibility and a better use of resources than a purely functional model, according
to Indeed. The downside is that authority and the chain of command become more confused,
as team members answer to both the project manager and their department supervisor.

Organizational concepts in management shift with the development of a company as well, so

it is possible that what might work for your company at some point will not always work.
Reevaluate as your company evolves and revisit your structure accordingly.