Different Types of Business Organization Structure
Different types of business organization structure is how a business structure creates responsibilities, authority levels, and roles in their company.3 min read
Different types of business organization structure is how a corporation or business structure creates responsibilities, authority levels, and roles in their company.
Common Types of Organizational Structures
1. Functional Organization Structure
This is a very typical type of organization structure. This working structure places varying job functions in different departments. An organization that has a functional structure places all marketers from the same department in groups, the salespeople are placed together in a different department, and the people in customer service are placed in another department.
This structure is favorable since everyone is divided by skills, but it becomes challenging when varying areas become depositories where the focus is only on their area of expertise and other departments are not supported. Varying functions might block each other through the way the structure is built. This can make the structure unproductive, especially if the organization has varying target markets and products.
2. Divisional: Product-Based Organizational Structure
An organizational structure that is divisional is made up of smaller structures. These divisions have a sales team, market team, and so on. Divisional structures that are product-based have a certain product line that they focus on. This structure works well with organizations that have many products and can speed up production cycles. These can also be hard to remove, with the organization trying to recreate resources as the varying divisions reach for independence.
3. Divisional: Market-Based Organizational Structure
Another type of organizational structure that is divisional is based around markets, where the organization's divisions are based off the industries, markets, or types of customers they have. A structure that is market-based is great with an organization that provides services or products for parts of the market that are specific. These can be very effective if the organization knows ahead of time about those segments.
If there is too much independence, then divisions in the company may end up not working well with each other. These divisions may also repeat activities that other parts of the company are managing.
4. Divisional: Geographical Organizational Structure
This organizational structure divides itself based on geography. The parts of a geographical arrangement are made up of regions, districts, or territories. This variation of an organization is best for companies that benefit from being close to customers and supplies (on-site support and deliveries).
The most negative aspect of a geographical organizational structure is how making decisions get further away from the main part of a company. This is due in part to the fact that many of these divisions are hundreds or thousands of miles away from the main headquarters, which gives them independence.
5. Process-Based Organizational Structure
Organizational structures that are based on processes that are planned out for the end-to-end flow of varying processes, like "Order Fulfillment," "Customer Acquisition," and "Research and Development." A structure that is based on processes looks at how varying pursuits work together and how well employees of the company perform with those pursuits.
This type of arrangement works well in achieving better efficiency and speed and is best applicable to business conditions that are quickly changing since it can simply adapt. A very negative aspect of this structure is the formation of blockages between varying process groups which can result in issues such as communication and who works on what.
6. Matrix Organizational Structure
A matrix bureaucratic organization is very different than the above structures. This structure stays away from long-established vertical type structures. The employees of this type of company have relationships that are two-fold when it comes to reporting. Reports that are based on products and reports that are based on functions are both used. There are two different lines used with an organizational chart in matrix structures.
These are solid lines and dotted lines. Lines that are solid stand for connections that are strong and direct. A dotted line means the connection is not a very strong one. In the below example, it is obvious that reports that are based on functionality are dominant to reports based on the product. What makes a matrix structure so appealing is that it can do two things: supply flexibility and make decisions that are balanced (there are two different power structures instead of only one).
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