Organizational Structure Analysis

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1. Explain the various types of organizational structures mentioned below with an industry example of each. (15 marks) a) Matrix: A matrix organizational structure is a company structure in which the reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. In other words, employees have dual reporting relationships - generally to both a functional manager and a product manager. An organizational structure that facilitates the horizontal flow of skills and information. It is used mainly in the management of large projects or product development processes, drawing employees from different functional disciplines for assignment to a team without removing them from their respective positions. Employees…show more content…
The company gets the advantage of their expertise and company knowledge over time. Staffers work with others in their field, which allows for knowledge sharing and lateral job moves to learn new skills. Disadvantages The functional structure also has some disadvantages, including: Functional areas may have difficulties working with other functional areas. There is often a perception that they are competing with other functional areas for resources and a lack of understanding of what other areas do for the company. So, the accounting department may be upset that its request for an additional headcount is denied, but the company financial results point to a need for additional sales people rather than accountants. Example of the Functional Organization Structure ABC International has just passed $10 million in sales, and its president believes that this is a good time to restructure the business to improve efficiencies through job specialization. Accordingly, he clusters employees into the following functional areas: Accounting department Corporate department Engineering department Facilities department Human resources…show more content…
This approach tends to yield faster responses to local market conditions. Disadvantages of the Divisional Organization Structure Cost. When you set up a complete set of functions within each division, there are likely to be more employees in total than would be the case if the business had instead been organized under a purely functional structure. Also, there must still be a corporate organization, which adds more overhead cost to the business. Economies of scale. The company as a whole may not be able to take advantage of economies of scale, unless purchases are integrated across the entire organization. Inefficiencies. When there are a number of functional areas spread among many divisions, no one functional area will be as efficient as would have been the case if there had instead been one central organization for each function. Rivalries. The various divisions may have no incentive to work together, and may even work at cross-purposes, as some managers undercut the actions of other divisions in order to gain localized advantages. Silos. All skills are compartmentalized by division, so it can be difficult to transfer skills or best practices across the organization. It is also more difficult to cross-sell products and services between the

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