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Examples of divisions include regional a U. S Division and an EU division , consumer type a division for companies and one for households , and product type a division for trucks, another for SUVS, and another for cars. The divisions may also have their own departments such as marketing, sales, and engineering.
The advantage of divisional structure is that it uses delegated authority so the performance can be directly measured with each group. This results in managers performing better and high employee morale.
Also, a company will have a simpler process if they need to change the size of the business by either adding or removing divisions. When divisional structure is utilized more specialization can occur within the groups.
When divisional structure is organized by product, the customer has their own advantages especially when only a few services or products are offered which differ greatly. When using divisional structures that are organized by either markets or geographic areas they generally have similar function and are located in different regions or markets. This allows business decisions and activities coordinated locally.
The disadvantages of the divisional structure is that it can support unhealthy rivalries among divisions. This type of structure may increase costs by requiring more qualified managers for each division.
Also, there is usually an over-emphasis on divisional more than organizational goals which results in duplication of resources and efforts like staff services, facilities, and personnel.
The matrix structure groups employees by both function and product simultaneously. This structure can combine the best of both separate structures. A matrix organization frequently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and decentralized forms. An example would be a company that produces two products, "product a" and "product b". Using the matrix structure, this company would organize functions within the company as follows: Matrix structure is only one of the three major structures.
The other two are Functional and Project structure. Matrix management is more dynamic than functional management in that it is a combination of all the other structures and allows team members to share information more readily across task boundaries. It also allows for specialization that can increase depth of knowledge in a specific sector or segment. There are both advantages and disadvantages of the matrix structure; some of the disadvantages are an increase in the complexity of the chain of command.
This occurs because of the differentiation between functional managers and project managers, which can be confusing for employees to understand who is next in the chain of command. An additional disadvantage of the matrix structure is higher manager to worker ratio that results in conflicting loyalties of employees. However the matrix structure also has significant advantages that make it valuable for companies to use.
This correlation between individuals and project needs is what produces the concept of maximizing strengths and minimizing weaknesses. The flat structure is common in small companies entrepreneurial start-ups, university spin offs. As companies grow they tend to become more complex and hierarchical, which leads to an expanded structure, with more levels and departments. All of the aforementioned organizations operate in the field of technology, which may be significant, as software developers are highly skilled professionals , much like lawyers.
Senior lawyers also enjoy a relatively high degree of autonomy within a typical law firm , which is typically structured as a partnership rather than a hierarchical bureaucracy. Some other types of professional organizations are also commonly structured as partnerships, such as accountancy companies and GP surgeries. Often, growth would result in bureaucracy , the most prevalent structure in the past. It is still, however, relevant in former Soviet Republics, China, and most governmental organizations all over the world.
Shell Group used to represent the typical bureaucracy: It featured multiple levels of command and duplicate service companies existing in different regions. All this made Shell apprehensive to market changes,  leading to its incapacity to grow and develop further. The failure of this structure became the main reason for the company restructuring into a matrix.
Starbucks is one of the numerous large organizations that successfully developed the matrix structure supporting their focused strategy. Its design combines functional and product based divisions, with employees reporting to two heads.
This structure can be seen as a complex form of the matrix, as it maintains coordination among products, functions and geographic areas. With the growth of the internet, and the associated access that gives all levels of an organization to information and communication via digital means, power structures have begun to align more as a wirearchy , enabling the flow of power and authority to be based not on hierarchical levels, but on information, trust, credibility, and a focus on results.
In general, over the last decade, it has become increasingly clear that through the forces of globalization, competition and more demanding customers, the structure of many companies has become flatter, less hierarchical, more fluid and even virtual. One of the newest organizational structures developed in the 20th century is team and the related concept of team development or team building.
In small businesses, the team structure can define the entire organization. Xerox , Motorola , and DaimlerChrysler are all among the companies that actively use teams to perform tasks. Another modern structure is network. While business giants risk becoming too clumsy to proact such as , act and react efficiently ,  the new network organizations contract out any business function, that can be done better or more cheaply. In essence, managers in network structures spend most of their time coordinating and controlling external relations, usually by electronic means.
Virtual organization is defined as being closely coupled upstream with its suppliers and downstream with its customers such that where one begins and the other ends means little to those who manage the business processes within the entire organization. A special form of boundaryless organization is virtual. Hedberg, Dahlgren, Hansson, and Olve consider the virtual organization as not physically existing as such, but enabled by software to exist.
This means while the core of the organization can be small but still the company can operate globally be a market leader in its niche. According to Anderson, because of the unlimited shelf space of the Web, the cost of reaching niche goods is falling dramatically. Although none sell in huge numbers, there are so many niche products that collectively they make a significant profit, and that is what made highly innovative Amazon.
In the 21st century, even though most, if not all, organizations are not of a pure hierarchical structure, many managers are still blind to the existence of the flat community structure within their organizations. The business is no longer just a place where people come to work. Alleles are different forms of a gene. Henry Mintzberg considers five main parts of organization: An additional element is organisational ideology. Mintzber considers six main mechanisms of coordination of work: Mintzberg considers seven main configurations of organizational structure: Entrepreneurial organisation or Simple structure has simple, informal structure.
Machine organisation or Machine bureaucracy has formal rules regulating the work, developed technostructure and middle line, is centralised, hierarchical. Professional configuration or Professional bureaucracy mostly coordinates the work of members of operating core, professionals, through their training for example, in university. Diversified Configuration or Divisionalized form consists of several parts having high autonomy.
Innovative Configuration or Adhocracy gathers the specialists of different fields into teams for specific tasks. Missionary organisation coordinates the work through organisational ideology. Political configuration happens when the power is mostly used through workplace politics.
From Wikipedia, the free encyclopedia. Business administration Management of a business Accounting. Management accounting Financial accounting Financial audit. Cooperative Corporation Limited liability company Partnership Sole proprietorship State-owned enterprise. Annual general meeting Board of directors Supervisory board Advisory board Audit committee. Commercial law Constitutional documents Contract Corporate crime Corporate liability Insolvency law International trade law Mergers and acquisitions.
Commodity Public economics Labour economics Development economics International economics Mixed economy Planned economy Econometrics Environmental economics Open economy Market economy Knowledge economy Microeconomics Macroeconomics Economic development Economic statistics.
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Informal organization and Formal organization. Hierarchical organization and Flat organization. Corporate governance Corporation Industrial and organizational psychology Dynamic governance Management Organizational architecture Organizational behavior Organizational culture Organization development Organizational psychology Parent company Value network. Examining the literature on organizational structure and success. College Mirror, 43, 1, The inherent limits of organizational structure and the unfulfilled role of hierarchy: Lessons from a near-war.
Organization Science, 18, 3, Organizational structure for the twenty-first century. L'esempio della cooperazione intellettuale della Società delle Nazioni". Memoria e Ricerca 2: French version PDF and English summary. Essays in Sociology, translated, edited and with an introduction by H. Routledge and Kegan Paul.
Editor , Donnellon A. Editor , , The Post-Bureaucratic Organization: Organization Science, 13, 2: Retrieved 1 Sep Today, many are large international conglomerates that trade publicly on one or many global exchanges. In an attempt to create a corporation in which stockholders' interests are looked after, many firms have implemented a two-tier corporate hierarchy.
On the first tier is the board of governors or directors: On the second tier is the upper management: Let's begin by taking a closer look at the board of directors and what its members do. Please note that this article focuses on corporate structure in the U.
Elected by the shareholders, the board of directors is made up of two types of representatives. The first type involves inside directors chosen from within the company. The other type of representative encompasses outside directors , which are chosen externally and are considered to be independent from the company. The role of the board is to monitor a corporation's management team, acting as an advocate for stockholders.
In essence, the board of directors tries to make sure that shareholders' interests are well served. As the other tier of the company, the management team is directly responsible for the company's day-to-day operations and profitability. Together, management and the board of directors have the ultimate goal of maximizing shareholder value.
In theory, management looks after the day-to-day operations, and the board ensures that shareholders are adequately represented. But the reality is that many boards include members of the management team. When you are researching a company, it's always a good idea to see if there is a good balance between internal and external board members. Other good signs are the separation of CEO and chairman roles and a variety of professional expertise on the board from accountants, lawyers and executives.
This does not necessarily signal that a company is a bad investment, but as a shareholder, you should question whether such a corporate structure is in your best interests. Board of Directors Elected by the shareholders, the board of directors is made up of two types of representatives. Board members can be divided into three categories: Chairman — Technically the leader of the corporation, the board chairman is responsible for running the board smoothly and effectively.
His or her duties typically include maintaining strong communication with the chief executive officer and high-level executives, formulating the company's business strategy, representing management and the board to the general public and shareholders, and maintaining corporate integrity.
The chairman is elected from the board of directors.
As the other tier of the company, the management team is directly responsible for the company's day-to-day operations and profitability. Chief Executive Officer (CEO) – As the top manager, the CEO is typically responsible for the corporation's entire operations and reports directly to the chairman and the board of directors. It is the CEO's responsibility to implement board decisions and initiatives, as well as to . Jun 30, · Types of organizational structure in management can include flat structures as well as functional, product and geographical-structured organizations. Flat Organizational Structure Many small companies use a flat organizational structure, where very few levels of management separate executives from analysts, secretaries and lower-level employees. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup, and individual. Organizational structure affects organizational action in two ways: it provides the foundation on which standard operating procedures and routines rest.