Functional structure

• A structure in which positions are grouped according to

their main functional (or specialised) area.
• A functional organization is a common type of organizational
structure in which the organization is divided into smaller groups
based on specialized functional areas, such as IT, finance, or
marketing.
• Functional departmentalization arguably allows for greater
operational efficiency because employees with shared skills and
knowledge are grouped together by function.
Functional structure
Functional structure
Advantages:
• In-depth expertise development
• Clear career path within function
• Efficient use of resources
• Possible economies of scale
• Ease of coordination within function
• Potential technical advantage over competitors
Functional structure
• Disadvantages:
• Slow response to multifunction problems
• Decision backlog at top of hierarchy
• Bottlenecks due to sequential tasks
• Inexact measures of performance
• Narrow training of future managers
Divisional structure
• The divisional structure is a type of organizational structure that groups
each organizational function into a division. These divisions can correspond
to either products or geographies.
• Each division contains all the necessary resources and functions within it to
support that product line or geography (for example, its own finance, IT,
and marketing departments).
• A multidivisional form (or “M-form”) is a legal structure in which one
parent company owns subsidiary companies, each of which uses the parent
company’s brand and name.
• The divisional structure is useful because failure of one division doesn’t
directly threaten the other divisions. In the multidivisional structure, the
subsidiaries benefit from the use of the brand and capital of the parent
company.
Divisional structure
Divisional structure
Advantages:
• Fast response to environmental change
• Simplified coordination across functions
• Simultaneous emphasis on organisational goals
• Strong customer orientation
• Accurate measurement of performance
• Broad training in management skills
Divisional structure
• Disadvantages:
• Resource duplication in eachdivision
• Reduction of in-depth expertise
• Competition amongst divisions
• Limited sharing of expertise between divisions
• Innovation restricted to each division
• Neglect of overall goals
Hybrid structure
•A structure adopting both functional and divisional
structures at the same management levels.
•Functional departments in a hybrid structure are called
corporate departments and authority from the
organization’s top level
•A hybrtid structure is used in organizations facing
considerable environmental uncertainty which is best
accommodated by a divisional structure requiring
functional expertise.
Hybrid structures
Hybrid structure
Advantages:
• Alignment of corporate and divisional goals
• Functional expertise and/or efficiency
• Adaptability and flexibility in divisions
Hybrid structure
• Conflicts between corporate departments and divisions
• Excessive administration overhead
• Slow response to exceptional situations
Matrix structure
• The matrix structure is a type of organizational structure in which
individuals are grouped simultaneously by two different operational
perspectives.
• Matrix structures are inherently complex and versatile, making them more
appropriate for large companies operating across different industries or
geographic regions.
• Proponents suggest that matrix management is more dynamic than
functional management in that it allows team members to share
information more readily across task boundaries; it also allows for
specialization that can increase depth of knowledge.
• A disadvantage of the matrix structure is the increased complexity in the
chain of command, which can lead to a higher manager-to-worker ratio
and contribute to conflicting loyalties among employees.
Matrix structure
• Advantages:
• Strong product coordination
• Improved environmental monitoring
• Flexible use of human resources
• Efficient use of support systems
• Fast response to change
Matrix structure
• Disadvantages:
• Highadministrative costs
• Confusion over authority and responsibility (potential)
• Excessive focus on internal relations
• Overemphasis on group decision- making