O R G A N I Z AT I O N A L

STRUCTURE
 IN THIS
P R E S E N TAT I O N
THE FOLLOWING
WILL BE
IDENTIFIED
What is Organizational Structure
Classification of Organizational Structure
Principles
Advantages & Disadvantages
Geographical Market
W H AT I S
O R G A N I Z AT I O N
AL STRUCTURE
An organizational o The organizational structure also
structure is a system that determines how information flows
outlines how certain between levels within the company. For
activities are directed in example, in a centralized structure,
order to achieve the decisions flow from the top down,
goals of an organization. while in a decentralized structure,
These activities can decision-making power is distributed
include rules, roles, and among various levels of the
responsibilities. organization. Having an organizational
structure in place allows companies to
remain efficient and focused
 TYPES OF
O R G A N I Z AT I O N A
L STRUCTURE
Advantages & Disadvantages
Functional Structure
o This is also referred to as a bureaucratic
organizational structure and breaks up a company
based on the specialization of its workforce. Most
small-to-medium-sized businesses implement a
functional structure. Dividing the firm into
departments consisting of marketing, sales, and
operations is the act of using a bureaucratic
organizational structure.
Advantages

o Employees
grouped by skill
Disadvantages
o Greater sense of
teamwork
o Lack of
communication
with other
departments
o Harmful
competition
o Management
issues
Divisional structure

o In a divisional structure, various teams work alongside

each other toward a single, common goal. Each of
these divisions has an executive who manages how
that branch operates, controls its budgets and
allocates its resources. Large companies employ this
type of organizational structure. One example of the
divisional structure is a car company that separates its
company into SUV, electric or sedan vehicle branches.
While each branch has its own function, they all work
toward the same goal of making a sale. This is also
known as the multi-divisional structure.
Advantages

o Focus on a single
Disadvantages
good or service
o Poor integration
o More centralized with other
leadership divisions
o Competition
between divisions
o Lack of
communication
between divisions
o Potential tax
implications
Flatarchy

o In a flatarchy, there are little to no levels of management. A

company using this structure could have only one manager in
between its executive and all other employees. It is called a
flatarchy because it is a hybrid of a hierarchy and a flat
organization. This type of organizational structure is used
more by smaller companies since they have fewer employees,
though it can be used in companies of all sizes. While some
companies grow out of this organizational structure, others
continue to use it.
Advantages

o Cost-efficient

o Fosters good
communication Disadvantages

o Higher employee o Potential

morale employee conflict
o Leadership
confusion
o Faster decision
making
Matrix structure

o In the matrix style of organizational structure,

employees are divided into teams that report to two
managers—a project or product manager along with
a functional manager. In essence, a matrix structure is
a combination of various organizational structures.
Because these teams have two managers, a matrix
structure promotes duality and the sharing of
resources. Employees working for companies using
the matrix structure have the potential to widen their
skill set since they might be assigned to various
projects requiring different levels of expertise or skills.
Advantages

o Fosters open
dialogue Disadvantage
o Leadership confusion
o Flexible workplace
environment
o Conflicting leadership
loyalties

o Potentially more costly

o Roles may not be clearly

defined

o Potentially heavy
employee workload
 PRINCIPLES OF
O R G A N I Z AT I O N A
L STRUCTURE
STRATEGY-ORIENTED
o The ultimate goal of organization design
is to achieve the strategic objectives.
Therefore, the design should aim at
serving to reach the goals. It should be
designed with the optimal position
arrangement that makes the most
benefits for the final goals
 POSITION-
ORIENTED
o Make sure that you design the organizational structure
around positions, not people. The organizational structure
is composed of functional positions that contribute to the
business aims. These positions are basic units of the
organizational structure. Find suitable people to fill the
positions and make optimum effects. Although some
people play important roles in the business, you could not
organize your business around their needs, since it might
overemphasize the function of people and make the
company structure disorganized.
S TA B L E & F L E X I B L E
o First, the corporate structure must provide a solid
and stable working environment for everyone.
This is the prerequisite to run a company. Avoid
frequent changes because it will bring chaos.
Second, the corporate structure must also be
flexible enough to adapt to the internal and
external environment changes.
STRENGTHEN
A C C O U N TA B I L I T Y
o A good organization design will promote accountability. It
should make the supervisors assess their subordinates’
performance easily, so as to conduct adequate guide and
control. Every point person must be clearly identified per
unit of the organization, so that there is less confusion as to
whom should be responsible for which part, and on whom
should be coordinating the efforts. Make sure the hierarchy
is reasonable and smooth, and the information flows rapidly
and clearly from the executive committee to business units,
functions, and departments.
GEOGRAPHICAL
O R G A N I Z AT I O N A
L STRUCTURE
When to use Geographical Market?
 W H AT I S
GEOGRAPHICAL
O R G A N I Z AT I O N A L
STRUCTURE
o A geographical organizational structure organizes people
within an organization by geographic location. This
structure creates specific divisions for each location. Each
division acts as if it is its own company, combining
different types of personnel for various business
functions. For example, each division may have its own
marketing department, production department, sales
department, distribution department and more.
Geographic
organizational structures
often provide local
divisions with the
autonomy to operate as
they would like. Divisions
are able to understand
and respond to local
preferences and demand
but still follow the overall
business policy.
Businesses with these
structures are often
better able to develop
efficient regional, national
and international
operations.
WHEN TO USE A Large corporations may
choose a geographical
G E O G R A P H I C A L organizational structure
O R G A N I Z A T I O N A Lto allow them to better
STRUCTURE serve the specific needs
or desires of distinct
groups. They may create
geographic decisions
based on different :
o Cultures
o Sexually preferences
o Languages
o Rules
o Ethnicity
o Diversity