1.

Common Organizational Designs

Exam Q: List various types of organizational structures and explain the
characteristics of virtual organization?( Three Times)
Following are the most used organizational designs
I.
II.
III.
IV.
V.
VI.

The Simple Structure

The Bureaucracy
The Matrix Structure
The Virtual Organization
The Boundary-less Organization
The Leaner Organization: Downsizing

I.

The Simple Structure

The first and most basic structure is the simple structure.

Simple structure has Low degree of departmentalization.
Simple Structure has wide spans of control
Simple Structure has centralized decision making
Simple Structure has low formalization in job design
Simple structure is best suited for small business

Advantages

Simple
Flexible
Inexpensive
Accountability is clear

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II.

The Bureaucracy
Bureaucracy is a system of organization.
Bureaucracy is an organization structure in which highly routine operating
tasks achieved through work specialization and Rules (Formalized).
Bureaucracy has narrow Span of control.
Bureaucracy has Centralized Authority and decision making is through chain
of command.
In bureaucracy, Tasks are grouped into Functional departments

Advantages:
i.
ii.
iii.
iv.
v.
vi.
vii.

Standardized activities are performed effectively.

Economy of Scale is achieved by putting specialist in department.
Minimum duplication of equipment and personnel.
Same language in each Department.
Less talent thus less costly Middle and Low management
Rules replace Discretion
Centralized Decision making due to Formalization

Disadvantages:
i.
ii.
iii.

Specialization creates subunit conflicts and functional goals may override

organization goals.
Concerned with following rules. There is no room for modification when a
case does not fit the rules.
It is efficient only in case of familiar problems with programmed decisions.

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The Matrix Structure

The Matrix Structure is a structure that creates dual lines of authority and
combines functional and product departmentalization.
Advantages:
It gains the advantages of functional and product departmentalization
while avoiding their weaknesses
It puts specialists together thus minimizes their number and allows sharing
of resources
It facilitates coordination for complex and interdepartmental activities.
Problems:
Project Delay due to difficulty in coordinating the tasks of specialists on
time and within budget.
It breaks the unity of command principle
It creates confusion and conflicts among managers

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III.

The Virtual Organization

Exam Q: What are the characteristics of virtual Organization? Explain
Virtual organizations are developing as acceptable organizational
structures.
This structure offers a small core organization that outsources many of its
major functions to competent suppliers.
Virtual organizations are highly centralized with virtually no
departmentalization to provide maximum flexibility, focusing on what the
organization does best.
This type of organization reduces control over some of the key parts of the
business.
It is also known as modular or network organization as shown in the
following figure.

Characteristics of Virtual Organizations

The virtual organizations have the following characteristics:
i. Flat organization
ii. Dynamic
iii. Informal communication
iv. Power flexibility
v. Multi-disciplinary (virtual) teams
vi. Vague organizational boundaries
vii. Goal orientation
viii. Customer orientation
ix. Home-work
x. Absence of apparent structure
xi. Sharing of information
xii. Staffed by knowledge workers
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Advantages:
Flexibility
Disadvantages:

IV.

V.

Constant state of flux & Reorganization

Roles , Goals & responsibilities are not very clear
Cultural alignment and shared goals can be lost
Information and knowledge sharing is difficult
Leadership presence is valuable
The Boundary-less Organization
It is an organization that seeks to eliminate the chain of command, has
limitless span of control and replaces departments with empowered teams.
Replace departments with cross-functional teams & organize activities
around process.
It organizes more in what is called T-form concepts in order to eliminate
vertical and horizontal boundaries.
It tries to break down external barriers to customers and suppliers through
their structure and style of communication.

The Leaner Organization: Downsizing

The goal of this organizational form is to improve agility by creating a lean,
focused, and flexible organization.
Downsizing is a systematic effort to make an organization leaner by closing
locations, reducing staff, or selling off business units that dont add value.

Advantages:
Cost reduction
Return to Core competencies after costly acquisitions
Disadvantages:
Employee commitment is low
Stress results in absence, Low creativity, Low concentration on job
High Turn over
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