7 Organization Structure
Organizational structure is a visual diagram of a company describes: what employees do, whom they report to and how decisions are made.
In this section, I will introduce 7 organization structure.
Highlight Vocabulary
Functional Organizational Structure
Market-Based Divisional Structure
Circular Structure
Product-Based Divisional Structure
Matrix Structure
Geographical Organizational Structure
Process-Based Organization
Mechanistic vs Organic
Mechanistic:
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Bureaucratic
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Highly centralized
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Clear chain of command
Organic:
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Flat
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Decentralized
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Wide span of control
Functional Organizational Structure
A hierarchical organizational structure wherein people are grouped based on their area of specialization and it is one of the most common types of organizational structures.
Advantages:
•High degree of specialization& performance
•Fixed roles, easy accountability
•No duplication of work
•Employees feel secure & have a clear career growth path
Disadvantages:
•Barriers between departments
•Inefficient if having different products or target markets
•Rigid, adapting to changes slow
Market-Based Divisional Structure
The divisions of the organization are based around markets, industries, or customer types and each division operates like an independent company.
Advantages:
•Ideal for an organization that has products or services that are unique to specific market segments.
•Effective with advanced knowledge of those segments.
•Easy to know the demand change among its different audience segments.
Disadvantages:
•Each team may develop system that are incompatible with others.
•Departments might inadvertently duplicating activities that other departments are already handling.
Circular Structure
The leaders are at the center of the organization, spreading their vision outward. It’s still relies on hierarchy but it is also kind of organic.
Advantages:
•It promotes communication and the free flow of information between different parts.
•All divisions are part of the same whole, they are more united.
Disadvantages:
•It may be confusing, especially for new employees.
•it is difficult to fit into the organization.
•it is difficult for employees to figure out who they should report to.
Product-Based Divisional Structure
Each division is set for a particular product line, which means when you made a new product then it can own its market team, sale team and so on and each team only care about one single product.
Advantages:
•Fast
•Flexible
•Have more power
Disadvantages:
•The bigger the worse.Same division repeat serval times
•Not efficient
•Hard for CEO to control
Matrix Structure
Matrix Structure is designed to be partially impermanent
•A team is assembled from several departments in the functional structure
•Temporary project structures
•Co-exist with original permanent functional structures
There are two kinds of managers in Matrix Structure
•Functional managers
•Project managers
Advantages:
•Flexibility and more balanced decision-making.
•Train temporary product managers to become leaders.
•Develop team spirit and high morale.
Disadvantages:
•Increases organizational complexity.
•Decision-making authority can be unclear.
•Increase in management overhead costs
Geographical Organizational Structure
The organization establishes its divisions based on geography. Based on the different regions in which the users of the organization are located and each company includes all functional departments.
Advantages:
•Has greater flexibility to adapt to different regional environments
•Improve management efficiency
• Provide timely service
•Improve coordination among companies
Disadvantages:
•More managers are needed —— increase expenses
•Decentralized decision
•Focus on the interests of one company，not the overall goal
Process-Based Organization
Process-based management is a management approach that views a business as a collection of processes, managed to achieve a desired result.The processes are managed and improved by organization in purpose of achieving their vision, mission and core value. A clear correlation between processes and the vision supports the company to plan strategies, build a business structure and use sufficient resources that are required to achieve success in the long run.
Advantages:
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Adaptable & changing helps efficiency
Disadvantages:
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Barries of communication or working handle.