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Organizational

structure is a formal system of job relationship that coordinates employees to achieve a company's goals with the use of information systems.

Functional

structure Divisional structure Matrix structure

In the functional structure, above, the employees are working in departments based on what they are doing i.e. we have engineering department, maintenance department, finance department, research department, Warehouse department, purchasing department.

Advantage:For example, all the maintenance engineers are working in the same department and thus they will exchange knowledge and support each other.
Disadvantage:This structure makes the coordination between different department more difficult than other structures.

Divisional structure divides, shown above, the employees based on the product/customer segment/geographical location.

For example, each division is responsible for certain product and has its own resources such as finance, marketing, warehouse, maintenace..etc. Advantage:Accordingly, this structures is a decentralized structure and thus allows for flexibility and quick response to environmental changes. Disadvantage:On the other hand, this structure results in duplication of resources because, for ex., we need to have warehouse for each division. obviously, it does not support the exchange of knowledge between people working in the same profession because part of them are working in one division and the others are working in other divisions.

Matrix structure, shown above, combines both structures. For example, we can have a functional structure and then assign a manager for each product. Some employees will have two managers: functional manager and product manager. This type of structure tries to get the benefits of functional structure and also of divisional structure.
Disadvantage:It is not easy to implement because of the dual authority. This structure is very useful for multinational companies.

What is your strategy? How many products do you have? What type of technology are you using? How big is your company/organization?

For

example, if we think the divisional structure is the best type for our condition then we should have tools to exchange knowledge between engineers working in different divisions. These tools can include forums on the LAN and conferences to exchange knowledge. Conversely, if we adopt functional structure, we can form teams from different functions to solve problems and develop our products.

The

results are not your perception that you are the best. Measure yourself compared with similar companies. Do you need one week to take a decision that they make in one hour? Are your employees motivated more than those in other companies? Are you developing new products and services faster than other companies? Are you achieving your main strategy?