Major Types of Organizational Structure

Major Types of Organizational Structure
On the basis of analysis of various design variables, organizational structure can be broadly
categorized into four major forms:
1. Functional Structure: In a functional structure, the tasks are differentiated,
on the basis of each, major function and each manager is responsible for one
of these. Thus, there is functional specialization such as marketing,
production, finance, personnel, R & D, etc. In such a structure, those with
authority can tell others what to do in that function. Such structures have a
high degree of centralized decision-making. Organizations with functional
structure can benefit from the economies of scale and also improve the quality
of output because the activities of a given function are centralized. One of the
major questions in such organizations is whether one functional manager has
staff or a functional authority in relation to other functions, e.g., can the head
of marketing tell the head of production what to produce (functional) or can he
play only an advisory role (staff). In such organizations, therefore, the top
management must plan and co-ordinate the activities of the various functions
and resolve conflicts between various functions. In such organizations, since
profits are the result of joint efforts, it is difficult to identify the responsibility
for profits to individual managers. Further, except for the chief executive,
others do not have an overall perspective of the enterprise, and managers tend
to have a functional bias.
2. Divisional Structure: In case of divisional structure, the divisional manager is
responsible for all or almost all the functions related to a product line or group
of product lines.
3. Matrix Structure: In matrix structure, task forces are created to solve a
problem. There is a basic permanent organization structure super imposed on
it is another structure in which the focus is a project.
4. Network/Coupling Structure: The network aimed at closer inter-institutional
co-ordination among a network of agencies involved in implementing a
programmed or a project. The network concept permits a high degree of
decentralization, which in turn is a response to the existence of extreme
environmental complexity. In the case of network structures, an important
aspect of control is how to achieve effective inter agency and interinstitutional co-ordination. This can be achieved by developing appropriate
mechanisms for reciprocal interdependence and seeking lateral influences. In
case of network organizations, the role of authority, as the primary source of
power decreases, while sources of lateral influence such as the use of funds,
joint planning, political support, mobilization of demand among beneficiaries,
and participation of beneficiaries in programme operations, assume greater
significance. The coupling structures are structures with inter-locking
interdependence is of a very high order, the viability of each subsystem is
dependent upon the performance of the next level. Further, assignment of
profit responsibility assumes greater significance in such organizations.
Coordination among various units is achieved through involvement of the
chief executives in the management of next level organization through
programming committees.
Credit: Management Control Systems-MGU