Types of Organizational Structures

Simple Structures

• authority is centralized in a single person with few rules and low work specialization
• small firms all over the country are organized in this way

Functional Structure

• people with similar occupational specialties are put together in formal groups

Divisional Structure

• people with diverse occupational specialties are put together in formal groups by similar products, customers, or geographic regions

Matrix Structure

• combines functional and divisional chains of command in a grid so that there are two command structures; horizontal and vertical

The Horizontal Design (“Team Based Design”)

• teams or workgroups, either temporary or permanent, are used to improve collaboration and work on shared tasks by breaking down internal boundaries

The Hollow or Network Structure

• the organization has a central core of key functions and outsources other functions to vendors who can do them cheaper or faster
• key characteristics:
  • the opposite of bureaucracy
  • fluid, highly adaptive
  • informal business relationships

The Modular Structure

• the firm assembles product chunks, or modules, provided by outside contractors
• oriented around outsourcing certain pieces of a product rather than outsourcing certain processes

The Virtual Structure

• virtual organization: organization whose members are geographically distant, usually working via email, collaborative computing, and other computer connections
  • generally appears to customers as a single, unified organization with a real physical location
• virtual structure: company outside a company that’s created specifically to respond to an exceptional market opportunity that is often temporary

Factors in Creating The Best Structure

• contingency design: the process of fitting the organization to its environment
  • 3 factors to consider:

     1. environment

        1. mechanistic vs organic 2. environment

        1. differentiation vs integration 3. link between strategy, culture, and structure