ORGANIZATION THEORIES FOR

EFFECTIVE BUSINESS
MANAGEMENT
What we need to know about

Organizational
Design
Organizational Design
An organizational
structure is a
hierarchical outline
of a company's roles,
teams, and
employees.
Two main classifications of theories
regarding organizational design.
Traditional Theories Modern Theories
• Traditional pertains to the • Modern refers to
usual or old fashion ways contemporary or new design
theories
TRADITIONAL THEORIES
Traditional
[Simple Organizational Design]
Traditional
[Simple Organizational Design]
Strengths Weaknesses
• Flexible • The risk that
overdependence with
overdependence on a single
person
• Fast decision making and • No longer appropriate as the
results company grow
Traditional
[Functional Organizational Design]
Traditional
[Functional Organizational Design]
Strengths Weaknesses
• Cost-saving advantages • Managers have little
knowledge of other units’
function
• Management is facilitated
because workers with
similar tasks are grouped.
Traditional
[Divisional Organizational Design]
Traditional
[Divisional Organizational Design]
Strengths Weaknesses
• Focused on results • Possible duplication of
activities and resources
• Managers are • Increased cost and
responsible for what reduced efficiency.
happens to their
products and services.
MODERN THEORIES
Modern
[Team Organizational Design]
Modern
[Team Organizational Design]
Strengths Weaknesses
• Better Communication • Potential conflict
• Teams Resolve Problems • Some people are not team
Quicker players
• Flexible and Empowered • Under-performing employees
Workforce hide behind the team
• Empowerment of team members
and reduced barriers among
functional areas
Modern
[Matrix-Project Organizational Design]
Modern
[Matrix-Project Organizational Design]
Strengths
• A specialist is involved in the
project
• Increased communication
efficiency
• Improved employee motivation
• Increased teamwork
• Maximize resource usage
• Increase professional
development
Weaknesses
• Task and personality conflicts
• The potential conflict between
managers and projects
• Authority confusion
• Reduced employees effectiveness
• Increased management overhead
costs
Modern
[Project Organizational Design]
Modern
[Project Organizational Design]
Strengths Weaknesses
• Flexible designs • Task and personality
conflict
• Fast decision making
Modern
[Boundary-less Organizational Design]
Modern
[Boundary-less Organizational Design]
Strengths Weaknesses
• Highly flexible • Lack of control

• Responsive and draws • Presents

on talent where it is communication
found difficulties
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