Types of organizational structures
Small organizations, as a rule, carry out their activities by carrying out the activities of employees to whom duties and powers are delegated. Everyone acts as an agent or an extension of the head of the organization. Coordination depends entirely on the head who performs managerial functions.
As the volume of activities, size, and complexity of the organization increase, specialized departments are created.
Regarding the nature (specialization) of the activities carried out in these departments and the way in which powers are distributed and used, there are several "classic" types of structures, namely functional, commodity/territorial, customers and matrices, all with advantages and limits.
The functional structure, the oldest and most widespread, characterizes the specialization of departments / departments of the company in achieving well-known functions: production / operations, marketing, finance / accounting, research and development, personnel. The advantages that this type of structure has discovered relate to the efficient use of resources, communication and a simple decision-making network, measurable functional results, and simplification in the formation of "functional" specialists. The disadvantages are: difficulties and high cost of coordination between domains, functional, emphasizing the "parochial" spirit in setting goals, rivalry and interdepartmental conflicts, resistance to change.
The product structure organizes actions in separate compartments according to the product line. Each major product line is managed in separate, semi-autonomous units. Introduced and used in the 20s of the last century by the famous American company General Motors, the product structure has the following advantages: it allows you to evaluate departments as autonomous profit centers; facilitates the coordination of rapid response functions; flexibility, develops managers with extensive training. The disadvantages of the product-based structure are: increased problems of coordination between specialized areas on products; leads to reduced communication between specialists; promotes duplication of services of each department.
The territorial structure (geographical areas) is known in large companies with activities dispersed across national or international space. The boundaries between departments/departments are natural, remote, political, and cultural in nature. The main advantages are: faster adaptation to changes in local market requirements; Higher logistics efficiency (lower transportation and storage costs). Disadvantages: a larger number of general managers; duplication of services, difficulties in controlling local operations by the top management of the company.
Customer structure is another form of organizational structure that is widely used in situations where a company's customers have completely different needs that it seeks to meet. The structure is typical for industrial consumers and end-users (retailers). The bank and the university also have structures that serve different classes of clients.
The advantages resulting from meeting the needs of key market segments are accompanied by disadvantages due to the difficulty of establishing uniform procedures at the organizational level; pressure on special procedures provided to clients; and inadequate use of resources due to the different rhythms requested by clients.
The structures of the matrix reflect the method of organizing actions in which the functional structure intersects with the structure on the product. The goal is to capitalize on the advantages and reduce the disadvantages of these two types of designs. Also known as "project" structures, they have a characteristic double subordination of the members of the group (department), one to the head of the functional department to which they belong, the other to the head of the project in which he participates.
The advantages recorded by the functioning of matrix structures are: adaptation to fluctuations in staff workload, innovation, simultaneous servicing of several clients, maximum use of specialists and at the same time fair functional assistance distributed across all projects. In addition, these structures are an excellent way to prepare for work at a multidisciplinary enterprise.
The identified shortcomings relate to possible conflicts in the exercise of authority due to double subordination, a decrease in the speed of decision-making and the promotion of limited points of view.
It is worth mentioning that there are companies that know mixed structures, a combination of the types of organizational structures briefly described in this paragraph. 1Win platform offers a wide range of sports betting options, including pre-match and live betting, as well as live streaming sports and an online casino featuring a variety of games from top software providers. The 1win promo code rewards new players with a welcome bonus 500% up to $1025 on your first four deposits. 1win is licensed and regulated by the government of Curacao, which ensures that the platform operates fairly and transparently.
As the volume of activities, size, and complexity of the organization increase, specialized departments are created.
Regarding the nature (specialization) of the activities carried out in these departments and the way in which powers are distributed and used, there are several "classic" types of structures, namely functional, commodity/territorial, customers and matrices, all with advantages and limits.
The functional structure, the oldest and most widespread, characterizes the specialization of departments / departments of the company in achieving well-known functions: production / operations, marketing, finance / accounting, research and development, personnel. The advantages that this type of structure has discovered relate to the efficient use of resources, communication and a simple decision-making network, measurable functional results, and simplification in the formation of "functional" specialists. The disadvantages are: difficulties and high cost of coordination between domains, functional, emphasizing the "parochial" spirit in setting goals, rivalry and interdepartmental conflicts, resistance to change.
The product structure organizes actions in separate compartments according to the product line. Each major product line is managed in separate, semi-autonomous units. Introduced and used in the 20s of the last century by the famous American company General Motors, the product structure has the following advantages: it allows you to evaluate departments as autonomous profit centers; facilitates the coordination of rapid response functions; flexibility, develops managers with extensive training. The disadvantages of the product-based structure are: increased problems of coordination between specialized areas on products; leads to reduced communication between specialists; promotes duplication of services of each department.
The territorial structure (geographical areas) is known in large companies with activities dispersed across national or international space. The boundaries between departments/departments are natural, remote, political, and cultural in nature. The main advantages are: faster adaptation to changes in local market requirements; Higher logistics efficiency (lower transportation and storage costs). Disadvantages: a larger number of general managers; duplication of services, difficulties in controlling local operations by the top management of the company.
Customer structure is another form of organizational structure that is widely used in situations where a company's customers have completely different needs that it seeks to meet. The structure is typical for industrial consumers and end-users (retailers). The bank and the university also have structures that serve different classes of clients.
The advantages resulting from meeting the needs of key market segments are accompanied by disadvantages due to the difficulty of establishing uniform procedures at the organizational level; pressure on special procedures provided to clients; and inadequate use of resources due to the different rhythms requested by clients.
The structures of the matrix reflect the method of organizing actions in which the functional structure intersects with the structure on the product. The goal is to capitalize on the advantages and reduce the disadvantages of these two types of designs. Also known as "project" structures, they have a characteristic double subordination of the members of the group (department), one to the head of the functional department to which they belong, the other to the head of the project in which he participates.
The advantages recorded by the functioning of matrix structures are: adaptation to fluctuations in staff workload, innovation, simultaneous servicing of several clients, maximum use of specialists and at the same time fair functional assistance distributed across all projects. In addition, these structures are an excellent way to prepare for work at a multidisciplinary enterprise.
The identified shortcomings relate to possible conflicts in the exercise of authority due to double subordination, a decrease in the speed of decision-making and the promotion of limited points of view.
It is worth mentioning that there are companies that know mixed structures, a combination of the types of organizational structures briefly described in this paragraph. 1Win platform offers a wide range of sports betting options, including pre-match and live betting, as well as live streaming sports and an online casino featuring a variety of games from top software providers. The 1win promo code rewards new players with a welcome bonus 500% up to $1025 on your first four deposits. 1win is licensed and regulated by the government of Curacao, which ensures that the platform operates fairly and transparently.
