3.10 ORGANISATIONAL STRUCTURES Flashcards
(12 cards)
FUNCTIONAL STRUCTURE
‘Traditional business structure’
Where a business is organised into smaller groups based on functional areas; marketing, finance, operations, HR.
Distributes decision making and operational authority along functional lines with specialisation of skills according to the function.
Clear line of authority- chain of command.
Superior responsible for subordinates actions.
Strengths of a functional structure
+Promotes expertise & specialisation in each functional area.
+Increased job satisfaction, productivity & efficiency.
+Day-to-day management delegated giving senior management time to focus on strategic decisions and implementation.
Weaknesses of functional structure
- Risk of silo mentality where each department only sees from own perspective- no collaboration- own cultures.
- Decreased flexibility, less useful in changing industries.
- Narrow specialisation within areas may cause difficulties in coordination- may inhibit strategic implementation.
PRODUCT-BASED STRUCTURE
Based on product or production line where all functions related to that product are delegated.
May be the case when product/group of products in market are high demand.
Exclusive attention to product/production increasing coordination, fixing accountability & responsibility for profit making however can only be justified with high volume of sales.
Makes sense if consumer demands differ significantly e.g Banks.
Grouping of expertise better meets customer needs.
Senior managers centralise functions where possible.
Divides organisation according to product produced; product teams in charge of development, production, marketing etc…
Strengths of product-based structure
+Clear product focus- market segments better meet specific consumer needs.
+Positive competition is encouraged between each department, motivates them- incentives for the most successful products.
+Closer to customers ‘customer centered’ build good relationships & loyalty.
Weaknesses of product-based structure
- Lose overall focus- departments may compete rather than co-operate.
- Duplication of functions & efforts.
- Expensive & lacks efficiency- every function has every operation.
- Silo effect between product ranges themselves.
REGIONAL STRUCTURE
Where a business has separate structures dependent on diff regions/ geographical areas.
Likely when organisation has several factories dispersed geographically or when demand large enough to operate regionally.
Decentralise to local level, close to market where resources locally sourced.
Evolves as grows & expands.
Strengths of regional structure
+If demands vary in regions can better match what to offer through market knowledge, efficient decisions.
+Localised approach to meet customer needs effectively.
+Encourage positive competition between each region i.e incentives for team providing most successful (motivates)
+Faster local decision making.
Weaknesses of regional structure
- Can lead to communication difficulties
- Require high level of coordination
- Duplications of functions e.g diff sales force each region
- Lack of central control over each region
MATRIX STRUCTURE
Based around a major project or task, specialists from various functional areas being assigned to project.
For duration of project report to both project & functional manager. (Team leader of project * functional manager to which each team member can report to)
Bringing specialists together means creativity can be encouraged & greater understanding of organisation as a whole.
Used by larger corporations.
Work across teams and projects as well as within own dept or function.
Project/ task teams each include engineers & specialists as well as those with marketing, financial personnel & production skills.
Strengths of matrix structure
+Breaks down traditional department barriers, improves communication across whole organisation, improves flexibility in being able to adapt to changes quicker.
+Avoids needs for regular meetings between departments, reducing costs & improving co-ordination.
+Greater motivation-use of skills in variety of contexts increasing productivity.
+Share resources and ideas across departments- more cost effective
Weaknesses of matrix structures
- Dual accountability may cause confusion & communication problems
- Divided loyalty as they report to 2 line managers
- Lack of clear line of accountability for project teams (complex structure)
- Conflict between areas- unclear who to prioritise.
- Duplication of areas- many stakeholders slows down communication.
