3. She has a bachelor's degree in business and marketing from Towson University and is working on a master's degree in publications design at University of Baltimore. 4. Customers who come to businesses through referrals also generally are prequalified, which makes it easier to turn them from prospective customers to buyers. Most businesses leverage industry trends, innovative ideas and customer and business needs to create products and services customers are willing to purchase and refer to their friends and family. Line and staff have direct vertical relationship between different levels. The customer-based structure is ideal for an organization that has products or services unique to specific market segments, especially if that organization has advanced knowledge of those segments. Exhibit 10.5 illustrates the line and staff organisational chart. Privacy Policy 8. It is the simplest form of organization and very simple to understand and implement. The line functions are production and marketing whereas the staff functions include personnel, quality control, research and development, finance, accounting etc. While the focus is on international geographic structures, companies may also choose functional or process or product departmentation in addition to geographic pattern while at the head quarter’s the departmentation may be based on function. An organizational structure is a visual diagram of a company that describes what employees do, whom they report to, and how decisions are made across the business. Main advantages and disadvantages of the three generic project organizational structures Structure Advantages Disadvantages Functional There is no need to negotiate and compete with other areas for resources. Importance of Project Organisational Structure: Project organisational structure is most valuable when: (i) Work is defined by a specific goal and target date for completion. For example, the person heading the IT department will have the education and skill necessary to shoulder this responsibility and successfully run his team. (iii) Managers may have to become experts in too many fields. Below are some merits and advantages of line organization or vertical organization 1. 1. (vi) Provides emotional support for employees. An informal organisation is the set of evolving relationships and patterns of human interaction within an organisation which are not officially presented. Disadvantages: 1. Advantages And Disadvantages Of Customer Departmentation Advantages Of Departmentation By Customers. In this type of structure, the organisation can have different basis on which departments are formed. For example the accounting activities of different operations are grouped in on accounting department. In some projects (complex activity consisting of a number of interdependent and independent activities) work process may flow horizontally, diagonally, upwards and downwards. Advantages’. Such organisations have both line and staff departments. Line and Staff Organisational Structure. Adaptability and flexibility in divisions. Committees may delay decisions, consume more time and hence more expensive. Customer service becomes a part of your company's brand when you run a customer-focused business. Has only direct vertical relationships between different levels in the firm. Disadvantages: • Higher costs due to duplication of efforts within geographies and customer accounts • Coordination required when more sales reps have the same geography/accounts. While customers may know what they want, companies should use research and development to come up with ideas customers may not think of on their own when surveyed about their needs. 8. Based on an organization’s application of the common elements—common purpose, coordinated effort, division of labor, hierarchy of authority, as well as centralization/decentralization and formalization—the resulting structure will typically exhibit one of four broad departmental structures: functional, product, customer, and geographic. Responsibility is fixed.In this form of organization responsibilities are fixed and defined. Customer-focused businesses operate solely on customers' needs and wants, which can have a negative impact on a company's creativity. (iv) Work is critical in terms of possible gains or losses. 1. Divisional Organisational Structure: In this type of structure, the organisation can have different basis on which departments are formed. In a matrix organisation, the product or business group managers and functional managers have somewhat equal power. The advantage of the product division structure is that a division would get full expertise in handling a specific product. Let us now take a look at its limitations. Copyright 10. Temporary organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation. This is a more decentralized type of operation where each division functions much like its own separate company. 5. 5. There are only line departments-departments directly involved in accomplishing the primary goal of the organisation. It can be easily define and explain to all staff. (ii) Improved speed and flexibility may not offset the lack of specialized knowledge. Importance Content Guidelines 2. Demerits. Companies that have a vertical organizational structure have many layers of management. However, there are disadvantages to this structure, too. 3. The formal organisation in usually delineated by an organisational chart and job descriptions. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. Advantages of customer departmentalization. As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. The purpose of running a customer-focused business is to truly focus on creating products and services that are in your customers' best interest. 4. Personnel are assigned to a project from the existing permanent organisation and are under the direction and control of the project manager. While their are many factors and stakeholders to consider when running a small business, some owners lean towards operating customer-focused businesses, which operate based on customers’ needs and demands. (iv) There is a tendency to become overly dependent on the few key people who an perform numerous jobs. 3. (ii) A line structure promotes fast decision making and flexibility. It Is Cost Efficient As mentioned, in this organizational structure, there are fewer (or no) manager layers between the executive and the staff. Used in organisations that face considerable environmental uncertainty that can be met through a divisional structure and that also required functional expertise or efficiency. The span of control of line managers can be increased because they are relieved of many functions which the staff people perform to assist the line. These organisations have direct, vertical relationships between different levels and also specialists responsible for advising and assisting line managers. Disclaimer 9. If an organization gets larger, it will be difficult t… Encourages concentration on customer needs. It helps an organization decide how the authority passes on, how message communication happens. Exhibit 10.9 (b) illustrates a combination structure. 4. The jobs or positions in an organisation can be categorized as: a position in the direct chain of command that is responsible for the achievement of an organisation’s goals and. Meaning of Organisation Structure: Organisation structure is the pattern of organisational hierarchy based on authority responsibility relationship. According to Lounsbury Fish, “Organisation Structure is more than a chart. 2013 1. 7. Group action may lead to compromise and indecision. 3. This is also known as customer sales force structure, and it means that sales reps are grouped by customer or industry. (iii) Line and staff organisational structure. Advantages and disadvantages of a product division structure In this kind of structure, different divisions are made to handle different products. Alongside the formal organisation, an informal organisation structure exists which consists of informal relationships created not by officially designated managers but by organisational members at every level. 2. All managers must bear that there are two organisations they must deal with-one formal and the other informal. The organizational structure examples are usually a subject of study so that there can be a perfect structure for a particular company. 3. These flat organizational structure advantages and disadvantages show us that when it is implemented with a clear plan, it can be successful. (ii) Helps to remove weakness in the formal structure. A position intended to provide expertise, advice and support for the line positions. The very structure of the committee is a costly affair in terms of money and time. Functional manager are in charge of specialized resources such as production, quality control, inventories, scheduling and marketing. Advantages: easy to understand, Specializations develop, Economies of scale, Communication within functions, Career paths, Fewer people. Employees may get bored because they do the same repetitive type of work all the time. Subscribe to: Post Comments (Atom) Powered by … Cooperation and communication between departments and units may be poor. (iii) Work is complex having independent activities and specialized skills are necessary for accomplishment. However, there are some disadvantages also. (iii) Reduces the number of practical alternatives. Customers are more willing to purchase from companies that they feel consider their needs when they create products and services. Better interaction between committee members leads to better co-ordination of activities. What Are the Advantages & Disadvantages in Leadership in a Company or Business? Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. (iv) Compensation for violations of formal organisational principles. Top Three Characteristics of Innovative Companies, Managerial Skills: Benefits of Customer Orientation Marketing, Steph Hyken: Top 10 Benefits of a Strong Customer-Centric Mindset, Factors That Contribute to the Success of a Business, How to Restructure to Build Intimacy With Customers. Matrix organization for a small and large business: An outline, advantages, disadvantages, conclusion. This is also known as territorial sales force structure, and it means that the organization assigns each sales rep to a certain geographic area. It is a permanent organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation. 5 Advantages and Disadvantages of the Matrix Organizational Structure November 23, 2020 When a business initiates a project, it can be crucial to have an organizational structure in place to define all the aspects of the project. Some staff specialists may exert direct authority over the line personnel, rather than exert advice authority (for example, quality control inspector may direct the worker as well as advise in matters related to quality). Advantages & Disadvantages of Different Organizational Structure Types. 0 comments: Post a Comment. In a line organisation authority follows the chain of command. Advantages: easy to understand, Specializations develop, Economies of scale, Communication within functions, Career paths, Fewer people. for completion of the project. (v) It has a pecking order: certain people are assigned greater importance than others by the informal group. List Four Types of Focus Dimensions Used in Operations Management. The official reporting relationships are clearly known to every manager. Customer-focused businesses can become self-serving, causing businesses to indulge in their needs and wants, such as focusing solely on profit, with thoughts of the customer trailing far behind. 2. The following are some disadvantages of the functional organization structure: 1. The functional structure is an organizational structure that divides its operations into separate departments or units according to the role of each department. Organizational structure: types of organizational structures (line organizations, line-and-Stuff organizations, committee and matrix organization). The levels of responsibility and authority are likely to be precise and understandable. Table 2. The problem with this structure is the negative effects of dual authority similar to that of project organisation. Referrals are advantageous to businesses as they cut down on advertising expenses. These types of specialized staff are (a) Advisory, (b) Service, (c) Control e.g., Management information system, Operation Research and Quantitative Techniques, Industrial Engineering, Planning etc. The primary advantage is the use of expertise of staff specialists by the line personnel. Committee decisions are better than individual decisions, 2. Staff departments provide line people with advice and assistance in specialized areas (for example, quality control advising production department). Nature and Characteristics of Organisation Structure 3. 1. Advantages of a Divisional Structure. Some of the advantages of a pure line organisation are: (i) A line structure tends to simplify and clarify responsibility, authority and accountability relationships. The project team focuses all its energies, resources and results on the assigned project. Exhibit 10.7 illustrates a project organisational structure. 4. 1. The functional organizational structure groups people by typical broad business activities -- marketing, finance, human resources and production -- then further subdivides as necessary. Customer-focused businesses operate solely on customers' needs and wants, which can have a negative impact on a company's creativity. Content Filtrations 6. May be difficult to coordinate operations between competing customer demands Advantages and Disadvantages of Functional Organizational Structure In this type of organization, the emphasis is on managing some functions wherever the function may be performed in the enterprise. Three types of specialized staffs can be identified: Some staffs perform only one of these functions but some may perform two or all the three functions. Committee members can be motivated to participate in group decision making. 1. They are the kind of structures that follow the organization’s rules and procedures to the T. They are characterized by having precise authority lines for all levels in the management. This includes ensuring that you provide customer service that helps educate your customers and lead them to sales. 2. 5 Advantages and Disadvantages of the Matrix Organizational Structure November 23, 2020 When a business initiates a project, it can be crucial to have an organizational structure in place to define all the aspects of the project. (ii) Work is unique and unfamiliar to the organisation. 4. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. Advantages:• Low cost • Proper territory management leads to low geographic duplication of effort • Low duplication of effort with customers (unless buyers are organizations that cross territories)Disadvantages:• Sales reps have a hard time developing product or market sp… These organisational structures are briefly described in the following paragraphs: A line organisation has only direct, vertical relationships between different levels in the firm. The organizational structure examples are usually a subject of study so that there can be a perfect structure for a particular company. The authority over the project team members is shared by project manager and the respective functional managers in the permanent organisation. Quality control, Cost control, Auditing etc. Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure. (iv) It is affected by relationship outside the firm. (i) Use of expertise of staff specialists. 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