Designing Organizational
Communication Structures
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Major Functions in Satellite Production
Product Design
Process Design
Fabrication
Assembly
Testing
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Functional Design
General Manager
Engineering Director
Manufacuring Director
Product Design
Fabrication
Process Design
Assembly
Testing
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Strengths
Weaknesses
• Functional efficiency: economies • Communication inefficiency:
slow information sharing and
of scale within functions
decision-making across functions
• Depth: in-depth skill development
and up and down the hierarchy
• Focus: on functional goals
• Information overload:
communication moves vertically
• Careers: long career paths
up the hierarchy
• Intrafunctional coordination
• Functional myopia: poor interfunction coordination; conflict
across functions
• Inertia: low responsiveness and
adaptability to change
• Low innovation
Functional Structure works best for small- or medium-size organizations
facing stable environments and producing only a few products
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Horizontal communication
solutions, in order of capacity
Liaison roles
Task forces
Teams
Integrators
Integrating
Departments
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Integrated Functional Design
General Manager
Engineering Director
Manufacuring Director
Product Design
Fabrication
Process Design
Assembly
Engineering Services
Testing
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Divisional Design
General Manager
Director
Satellite Division
Director
Commercial Antenna Division
Director
Consumer Antenna Division
Product Design
Product Design
Product Design
Process Design
Process Design
Process Design
Fabrication
Fabrication
Fabrication
Assembly
Assembly
Assembly
Testing
Testing
Testing
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Bonanza International: Functional Structure
President
General Manager
Real Estate
Marketing
Stores
Operation
Franchise
Development
Finance
Legal
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Bonanza International: Divisional Structure
President
General
Manager
Bonanza
General
Manger
Peoples
General
Manager
B-80
Real Estate
Real Estate
Real Estate
Marketing
Marketing
Marketing
Stores
Operation
Stores
Operation
Stores
Operation
Franchise
Development
Franchise
Development
Franchise
Development
Finance
Finance
Finance
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Some Divisional Organization Types
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Product line (e.g. Chevrolet vs. Pontiac)
Product part (e.g. chassis vs. engine)
Geography (e.g., East vs. West)
Project (e.g., 8-bit vs. 16 bit computer design)
Client (e.g., Client A vs. Client B)
Market (e.g., government vs. consumer)
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Client: Ad Agency
Board of Directors
President
Executive Vice President
Account Supervisor
Account Supervisor
Account Supervisor
Account Executive
Client 1
Account Executive
Client 2
Account Executive
Client N
•Merchandising
•Media
•Research
•Copy
•Art
•Newspaper/Magazine
Production
•TV/Radio Production
•Merchandising
•Media
•Research
•Copy
•Art
•Newspaper/Magazine
Production
•TV/Radio Production
•Merchandising
•Media
•Research
•Copy
•Art
•Newspaper/Magazine
Production
•TV/Radio Production
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Geographic: Apple Computer
CEO
Apple Products
Apple USA
Regions
Apple Europe
Apple Pacific
West
Canada
North
Australia
France
Japan
South
Latin
America
Far East
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Strengths
Weaknesses
• Communication efficiency because
information must pass through
fewer layers
• Adaptability and responsiveness to
change
• Interfunctional coordination within
each division
• Client satisfaction because product
responsibility and contact points are
clear
• Customization in that units can
adapt to differences in products,
regions, clients, etc.
• Decentralizes decision-making
• Divisional myopia: poor
intrafunctional coordination across
divisions; conflict and competition
across product lines
• Functional inefficiency: no
economies of scale within functions
• Generalism: less in-depth
competence and technical
specialization and shorter functional
career paths
• Fragmentation: difficult to
integrate and standardize across
products
• Information islands: poor
knowledge transfer across functions
Divisional Structure works best for larger organizations facing dynamic
environments and producing several products
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Horizontal communication
solutions, in order of capacity
Liaison roles
Task forces
Teams
Integrators
Integrating
Departments
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Integrated Divisional Design
General Manager
Director
Satellite Division
Director
Commercial Antenna Division
Director
Consumer Antenna Division
Product Design
Product Design
Product Design
Process Design
Process Design
Process Design
Fabrication
Fabrication
Fabrication
Assembly
Assembly
Assembly
Testing
Testing
Testing
Director
Business Processes
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Simplified Matrix Design
General Manager
Engineering Director
Product Design
Director
Satellites
Director
Commercial Antennas
Manufacturing Director
Fabrication
Team 1 Leader
Team 1 Leader
Team 2 Leader
Team 2 Leader
Team 3 Leader
Team 3 Leader
Process Design
Assembly
Team 1 Leader
Team 1 Leader
Team 2 Leader
Team 2 Leader
Team 3 Leader
Team 3 Leader
Testing
Team 1 Leader
Team 2 Leader
Team 3 Leader
Function
Project/
Division
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Simplified Matrix Design
General Manager
Engineering Director
Product Design
Team 1 Leader
team members
Team 2 Leader
Team 3 Leader
Process Design
Team 1 Leader
Team 2 Leader
Team 3 Leader
Director
Satellites
Director
Commercial Antennas
Manufacturing Director
Fabrication
Team 1 Leader
Team 2 Leader
Team 3 Leader
Assembly
Team 1 Leader
Team 2 Leader
Team 3 Leader
Testing
Team 1 Leader
Team 2 Leader
Matrix Boss
Team 3 Leader
Two-Boss
Employee
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Strengths
• Coordination across both
functions and products
• Flexible use of human
resources across products
• Integration within functions
• Skill development within
functions
• Capacity to handle complex
decisions and frequent changes
Weaknesses
• Extremely high communication
costs: frequent and time-consuming
meetings and conflict resolution
demands
• Communication intensive: people
need good interpersonal
communication skills and training;
requires collegial rather than
hierarchical relationships
• Who’s the real boss? Difficulties with
dual reporting relationships
• Requires dual pressure from the
business environment to maintain the
power balance
• Very tricky to maintain effectively
Matrix Organization works best for medium size organizations
with multiple products in unstable environment
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