Structural Considerations & Types of Structure
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Transcript of Structural Considerations & Types of Structure
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structural considerations& types of structure
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We usually conceive of organisationstructure as a chart consisting of boxes Inwhich the name of position or designation of
personnel is written in a hierarchical orderalong with the depiction of relationship thatexist between various positions.
To a strategist, an organisation structure isnot only a chart but much more.
INTRODUCTION
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WHAT IS ORGANISATIONSTRUCTURE
A organisation structure is the way howtasks and sub-tasks reuired to implement astrategy are arranged.
The diagrammatical representation ofstructure could be an organisation chart butchart shows only the !skeleton".
The !flesh and blood" that bring to life anorganisation are several mechanisms thatsupport the structure.
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All these cannot be depicted on a
chart, but a strategist has to grapplewith the complexities of creating thestructure, making it work, redesigning
when reuired, and implementingchanges that will keep the structurerelevant to the needs of the strategiesthat have to be implemented.
In short, we can say that the effectiveimplementation of strategy reuiresthe right #.$.
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STRUCTURA!"ECHANIS"S
%efining the ma&or tasks reuired toimplement a strategy.
'rouping tasks on the basis of common
skill reuirements.$ub-division of resposibility and
delegation of authority to perform
tasks.(oordination of divided responsibility.
%esign and administration of
information system.
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%esign and administration of the controlsystem.
%esign and administration of the
appraisal system%esign and administration of the
motivation system.
%esign and administration of thedevelopment system.
%esign and administration of the
planning system.
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DE#INITION
) #rgaisation structure is the formalsystem of task and authorityrelationships that control how peoplecoordinate their actions and useresources to achieve organisationalgoals*.
-'areth +. ones. #rgaisational Theory
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T$%ES O# ORGSTRUCTURE
There are various types of organisationalstructures which are as follows..
$imple organisational structure
unctional structure%ivisional structure
$/ structure
0atrix structure1etwork structure
other structures
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SI"%!E ORG STRUCTURE
The widely prevailing organisationalstructure found in respect of very smallenterprises is a simple one.
This structure is the most elementaryform of structure and it appropriatefor a organisation that is owned andmanaged by one person.
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"ERITS
2uick decision making.Ability to change with market signals.
3ower is centralised.
Informal and simple org. systems.(ontrol of all the b"ss activities.
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DE"ERITS
Ignore strategic decisions
Taking everything on one"s head has its
own risks and disadvantages.It does not encourage the developmentof future managers.
This structure becomes Inadeuate asthe b"ss expands.
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#UCTIONA! STRUCTURE
In this structure, the organisation isdesigned on the basis of the basicfunctions, namely, production, financeand accounting, marketing and personnel.
the need arises for specialised skills anddelegation of authority to managers who
can look after different functionalareas.
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The functional structure is commonlyfound in small companies and also inlarge companies with single product lineor narrow product ranges.
This structure seeks to distributesdecision making and operational
authority along functional lines.
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"ERITS
4fficient disribution of work throughspecialisation.
3rovides clear definition of functions
and responsibilities.%elegation of day-to-day operations.
Time for ocus on strategic decisions.
Improve development of functionalexpertise.
$implifies training.
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DE"ERITS
(rates difficulty in coordination amongdifferent functional areas.
5eads to functional, and line and staffconflicts .
3romotes narrow specialisation andpotential rivalry or conflict.
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DI'ISIONA! STRUCTURE
As organisation structure expands anddiversifies, divisional structure comesinto existence.
unctional structure is inadeuate whengrowth and complexity increasing in termsof geographic expansion, marketsegmentation and diversification.
These types of organisations divide thefunctional areas of the organisations todivision.
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This structure is diversify amongvarious divisions, where one division isresponsible for one product, and onemanager to get one product6or service7produced and marketed.
According to the product
characteristics, various divisions areestablished.
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"ERITS
4ach product line gets concentratedattention.
It places responsibilities for profits at
the divisional level.It facilitates measurement of unit
performance.
'ood training ground for strategicmanagers.
4ncourages general management
development.
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DE"ERISIf there are too many divisions, coordination
becomes complex and difficult.3roblem with the extent of authority given
to division managers.
3otential for policy inconsistencies betweendivisions.
Increase the problems of top management
control.It may give rise to conflicts between various
divisions.
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S(U STRUCTURE
A $/ has been defined by sharplin, as)any part of b"ss orgaisationn which istreated separately for strategic
management purposes*.When organisations face difficulties in
managing divisional structure, it
becomes difficult for the topmanagement to exercise strategiccontrol.
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$/ is the discrete element of the b"ssserving specific product market withreadily identifiable competitors and forwhich strategic planning can beconducted.
$/ commonly found among enterprises
having b"ss spread over a vastgeographical area.
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"ATRI) STRUCTURE
0atrix structure is a combination ofstructures, so it becomes popular.
It may take the form of combining
product and geographical divisions orfunctional and divisional structure.
$uch type of structure is created by
assigning functional specialists, whonormally work in a department in theirarea of specialisation.
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In matrix organisation structure, usuallyemployees have two bosses to whomthey may have to report.
This type of structure exists in largemulti-pro&ects organisations so thatthey can move employees to any teamwherever their services are needed.
This structure is widely used inconstruction, marketing, aerospace, andhighly technological industries.
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"ERITS
It promotes development to themanagers through increased involvementin decision making.
(ombination of advantages of differentalternative structures.
Allow individual specialists to beassigned where their talent is the mostneeded.
3rovides good exposure to specialists ingeneral management.
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DE"ERITS
%ual accountability creates confusionand difficulty.
+euires a high level of vertical and
hori8ontal coordination.$hared authority may create
communication problems.
$cope for conflicts.It may take more time for decision.
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NETWOR* STRUCTURE
A network design is a cluster ofdifferent organi8ations whose actionsare coordinated by contracts and
agreements rather than through aformal hierarchy of authority.
0ore often one organi8ation takes the
lead in creating the network as itsearches for a way to increaseeffectiveness.
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The network design typically consists ofseveral satellite organi8ations behavedaround a core firm.
1etwork design offers flexibility,innovation, uick to threats andopportunities and reduced costs and
risks. 1etwork designs accommodate
strategic alliances among competing
firms.
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ORGANISATIONA!
STRUCTURESThere are also some other types oforganisational structures which are asfollows..
3roduct-based structures
(ustomer-based structures
3rocess-based structures'eographic structure
intrepreneurial structure
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%RODUCT+(ASEDSTRUCTURE
The grouping of activities on the basisof the product or product lines isfollowed by organisation where there is
a need to delegate to a division allfunction related to that particularproduct or product line.
$uch a need arises when the strategyadopted reuires exclusive attention to aproduct or a group of product.
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4xpansion and diversification strategiesmay reuired a product based structureas it facilitates the addition or deletion
of product divisions.
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CUSTO"ER+(ASEDSTRUCTURE
In some organisatations division may becreated on the basis of the customer groupserved.
The rationale foe customer based structureis that grouping of activities on the basis ofcustomer would enable the organisatation
to provide exclusive attenntion to separateand distinict customer group.
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Thus , an organisation may haveindividual sales divisions andinstitutional sales divisions to serve
consumers and instititutionsrespectively.
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%ROCESS+(ASEDSTRUCTURE
In organisations where productionor service is
organised on the basis of processes 6or
euipments7, a process-based structureis feasible.
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ITRE%RENEURIA!
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ITRE%RENEURIA!STRUCTURE
The interpreneurial structure offers
the benefits of revitali8ingorganisations to act as intrepreneurs toapply inclusive attention to the
development of new ideas, products orservices.
The interpreneurial structure benefits
where it is possible to manage andcoordinate several small groups and theorganisation is in a position to risk timeand resources when pro&ects are not
f l