Organizational structure

Different business structures (functional, hierarchy, structure by product, matrix)

Delayering

Centralized vs decentralized

Functional structure

Best for: Stable market with no innovation or change

Split business into departments (HRM, operation)

Have boss and mini-boss

Let employee to become specialist in their field

Department led by experts

Lack connection between department => hard coordination

Employee doesn’t work with senior manager => alienation

Competition between departments for resources

Hierarchy structure

Best for: Large business, connect different management level with clear chain of command

Split business into authority and responsibility

Boss at top, employees at lower levels

Allow for delegation

Disrupt communication: Messages move through lots of layer, lose meaning and slow

Employees discourage to give feedback to top boss cause time taking

Structure by product / region

Best for: Wide range of product, work in various regions that have cultural differences

Split business by specific product

Each team will work on one product, with their own finance, marketing team.

Flexible: React to trend quickly

Focus on specific product

Duplication of roles (2 divisons may have 2 sales team)

Loss of overall control

Matrix structure

Best for: Innovation in a stable market like Function structure

Organise business department to work together on a project

Allow interaction between departments (crossover of ideas)

Easier communication

Task can be completed faster => more flexible

Less direct control for senior leader + require delegation (laissez faire leadership)

Delayering

Narrow structure usually have communication + motivation problem.

Delayer removes a whole layer

Save cost

Reduce chain of command + communication

Managers remain have higher workload

Fear of redundancies (low job security)

Centralisation

Keep power at top

Senior manager make decision for the whole business, not too focused on one asepct

Less people to make decision => faster decision making + consistency in decision

Centralised buying => economies of scale

Decentralisation

Delegate authority down

Local manager understand the market best

Motivation

Senior manager focus on other project