Types of Organisation

structure

Functional organisation
This is one of the oldest form of
Organisation
Employees are grouped together
according to their similar tasks, skills or
activities.
Functional structures are suitable for
SMEs with high level of specialization.
The decision making is centralized at the
top of the organization.

CEO
Director
Finance

Director
Marketing

Director
Production

Benefits of functional
organizational structure

Efficient use of resources;

In-depth skill development;
Clear career paths;
Strategic decisions are made on the
top of the organization.

Disadvantages of
functional design

Slow decision making

Less innovative.
Performance responsibility is unclear;
Limited management training.
Poor coordination across functions.

Divisional organizational
structure
It is suitable for medium sized to big
companies, expanding geographically
or on customer base.
A Divisional design means that all
activities needed to produce a good
or service are grouped into an
anonymous unit.

Differences between
functional and divisional
design
Functional designs are
based on groupings by
input;

Divisional design
considers output such
as product, customer
or location.

Each department is
not an independent
profit center;

Each division is
independent profit
center;

Forms of divisional
responsible design
Product division. Each unit is for a single product
or a group of related products. Division by
products is created when there is specific in the
production process;
Customer division. Organization sells products to
diverse group of customers.
Geographic division. It is advantageous when is
necessary to locate facilities close to customers
who have differences in regional tastes or needs.

Strengths of divisional
design:

Adaptation to unstable environment;

High customer satisfaction;
High task coordination;
Clear performance responsibility;
General management training.

Divisional Organisation

Weaknesses of divisional
design
Inefficient use of resources;
Low-in depth training. Decrease of the
number of personnel reduces the
specialization;
Focus on divisions objectives.
Difficult coordination between
headquarter and the division.
Loss of control.

Hybrid design
Hybrid design is one that has
divisional units but also have
functional departments specialized
and centralized in the headquarter.

Strengths of hybrid
design
Simultaneous coordination;
Integration of goals with objectives;
it provides autonomy for the divisions
to modify their objectives based on
unique situations.
Adaptability and efficiency. Adapt to
the opportunities of the environment.

Matrix Organisation

Matrix design
It implements functional and divisional structures
simultaneously in each department.
The worker in each department is being supervised by two
bosses at the same time.

It is suitable for the following situations:

Environmental pressure exists for a dual focus;
Large amount of information needs to be processed;
Innovations are performed
Organization is working on several projects together.
Efficiency is needed in the use of resources.

Strengths of matrix
design

Provides flexibility;
Encourages resource efficiency;
Enhances skill development;
Increase motivation and commitment;
Helps top management in planning
process.

Weaknesses of matrix
design

Creates dual authority confusion;

Is time consuming;
Generates high implementation cost;
Requires interpersonal skill training;
Spawns power struggle.