Organisation structures

There are 5 types of structure

1. Entrepreneurial

-someone who organise a business venture of it, assume the risk

-built around the owner manager

-small company in the early stage

-example: owner of business

Advantages

-fast decision making

-good control

-close bond to workforce

-more respomsive to marker

-good congruence

Disadvantages

-lack of career structure

-dependant on the capability of the manager

-cannot sope with the diversification

2. Functional

-organisation that have outgrown the entrepreneurial structure

-organise the business on a functional basis

-Appropriate to small companies

-example: business of one type of component

Advantages

-economies of scale( the more u buy, the cheaper u get)

-standardisation

-specialists more comfortable

-career opportunities

Disadvantages

-empire building

-slow

-conflicts between functions

-cannot cope with diversification

3. Product/ Division/ Department

- in accordance with product lines, divisions, departments

-profit centres

-strategic business

-example: ac/cs will be centrallised

Advantages
- enables growth
- clear responsibility for products
- training of general managers
- easily adapted for further diversification
- top management free to concentrate on strategic matters

Disadvantages
- potential loss of control
- lack of goal congruence
- duplication
- specialists may feel isolated
- allocation of central costs can be a problem

4. Geographically structured

-based on location

-operate over a wide geographic area

-example: Kaplan

Advantages
- enables geographic growth
- clear responsibility for areas
- training of general managers
- top management free to concentrate on strategic matters

Disadvantages

-the divisional structure

5. Matrix

-combine the benefits of decentralisation with co-ordinations

-employees from various departments

-dual reporting to managers

Advantages
- advantages of both functional and divisional structures
- flexibility
- customer orientation
- encourage teamwork and the exchange of opinions and expertise

Disadvantages
- dual command and conflict
- dilution of functional authority
- time-consuming meetings
- higher admin costs