1 Type of Structure 9

2 Functional Structure Activities are grouped together by common function from the bottom to the top of the organization (Engineering, Marketing, R&D, etc.)

3 Functional Structure Strengths 1.Economies of scales within functional departments 2.Enables in-depth knowledge and skill development 3.Enables organization to accomplish functional goals 4.Is best with only one or a few products

4 Functional Structure Weaknesses Slow response to environmental changes Decisions can pile on top, hierarchy overload Poor horizontal coordination among departments Results in less innovation Restricted view of organizational goals Encourages empire building

5 Divisional Structure Also called Product structure or SBU With this structure, divisions can be organized according to individual products, services, product groups, businesses Distinctive feature of this structure is that grouping is based on organizational outputs

6 Divisional Structure Strengths 1.Suited to fast change in unstable environment 2.Involves high coordination across functions 3.Allows units to adapt to differences in products, regions, clients 4.Best in large organizations with several products 5.Decentralizes decision making

7 Divisional Structure Weaknesses Economies of scale eliminated Poor coordination across product lines Eliminates in-depth competence and technical specialization Makes integration and standardization across product lines difficult

8 Matrix Structure Sometimes an organization’s structure needs to be multifocused in that both product and function or product and geography are emphasized at the same time Both technical expertise and product innovation and change are catered through matrix

9 Matrix Structure Conditions for Matrix 1.Organization is typically medium sized, with pressure to share scarce resources across product line 2.Environmental pressures for two or more critical outputs, such as in-depth technical knowledge (functional structure) and frequent new products (divisional structure) 3.Environment is dynamic

10 Matrix Structure Strengths 1.Excellent when environment is unstable and when goals reflect a dual requirement, such as for both product and functional goals 2.Resources can be flexibly allocated across different products, and organization can adapt to changing environmental needs 3.Provides an opportunity for employees to acquire either functional or general management skills

11 Matrix Structure Weaknesses 1.Dual authority can be frustrating and confusing 2.Excellent interpersonal and coordination and conflict-management skills are required 3. Time wastage in meetings

12 To work in a matrix structure you need to have multiple skills and high energy.