five organisational structures

Organizational Structure

LE 303

Organizational BehaviorLecture 6

Photo by Kevin Dooley. Available to http://www.flickr.com/photos/12836528@N00/2201791390

Definition

Definition

“The placement of power

and authority

in an organization.”

- Galbraith, J. R., 2002, Designing Organizations

Definition

“The manner in which

the parts of an organization are related to one another.”

- Richard Daft

Definition

A series of channels through which

information flows.

- Nadler & Tushman (1997)

Related Questions

• How does information flow throughout the organization?

• Who reports to whom?

• Who has authorization to make decisions and at what

levels?

• For each organizational function (or region or product line),

who is responsible for making sure objectives are achieved?

Principles

CoordinationC

on

tro

l

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Concerns of Organization

coordination

control autonomy

Keidel, Robert W. Seeing Organizational Patterns: A New Theory & Language of Organizational Design. San Francisco: Berrett-Koehler, 1995. ISBN: 1-881052-65-6

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Concerns of Organization

coordination

control autonomy

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Concerns of Organization

coordination

control autonomy

(the team)

(the individual)

(the organization)

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The Goal

Indirect Influence

coordination

control autonomy

13

Indirect Influence

coordination

control autonomy

The Goal

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Indirect Influence

coordination

control autonomy

The Goal

Structural Options

Five Organizational Structures

Functional

Products

MarketGeographical

Matrix

Functional Structure• People grouped by function (marketing,

sales, R&D, support, etc.)

• Small, single product line

• Undifferentiated market

• Expertise within the function

• Long product development and life cycles

CEO

Research & Development

SalesManufacturingAccounting & Finance

Functional Structure

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Product Structure

• People grouped by product• Product focus• Healthy team competition• Flexibility• Rapid decision-making• Common with retail

companies

Advantage: product focus, flexibility

Disadvantage: Duplication of effort

CEO

Bolts Division

NutsDivision

SalesManufacturingManufacturing Sales

Product Structure

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Market Structure• People grouped by market segments (E.g.

Teens, Adults, Elderly)• Each product or service is unique for one

segment• Customer focus• Rapid customer service and product cycles• minimum efficient scale in functions

CEO

IndividualCustomers

CorporateCustomers

CustomerService

SalesSalesCustomerService

Market Structure

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Geographical Structure

• People grouped by geographic location.• Low value items with high transport cost• Closeness to customer for delivery or support • Perception of the organization as local• Geographical market segments needed

CEO

EastWest

CustomerService

SalesSalesCustomerService

Geographic Structure

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Matrix Structure• An alternative to the functional structure• Organization organized by both Function and

Product• Heavy use of Autonomous Work Teams (ATWs)• Potential for new processes and radical change

to processes• Reduced working capital (lower inventory and

faster collection of invoices)• Can cause confusion when horizontal managers

are not aligned with vertical managers.

CEO

ManufacturingResearch

Matrix Structure

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Engineering

Product A

Product B

Product C

Images of Structure

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The Architecture Metaphor

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Organic Structure

The Human Body“A company is a living being. It is an entity or persona, in and of itself, separate from the individuals within it. As a living persona, the company is goal-oriented, conscious of its own identity and open to the outside world.”

-- Aire De Geus

Can you think of other images for how an organization might be structured?

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