Models of Organisational Structure

• Organizational structure

  The framework to define authority, roles, and responsibilities within an organization, ensuring clarity, accountability, and efficiency
• Types of organizational structures

  • Functional
  • Product-based
  • Regional
  • Matrix
• Functional organizational structure

  • Organization divided into specialist departments like marketing, operations, finance, and HRM
  • Promotes specialization and expertise leading to job satisfaction, productivity, and efficiency
  • Risks of silo mentality and less flexibility, best for stable industries with clearly defined processes
• Product-based organizational structure

  • Organization divided according to the products it produces
  • Clear product focus, encourages innovation, faster decisions, customer-centric approach
  • Risks of duplication of efforts, higher average unit costs, and silos between product ranges, best for wide diverse product ranges with differentiation focus
• Regional organizational structure

  • Organization divided based on geographic regions
  • Each region responsible for marketing, operations, HRM, and finance
  • Allows for a localized approach, faster local decision-making
  • Risks of duplication, higher average unit costs, best for markets with regional variation
• Matrix organizational structure

  • Combination of functional and product-based structures
  • Dual reporting relationships exist
  • Benefits of specialization, expertise, innovation, faster decisions, and customer-centric approach
  • Risks of complexity, confusion, demotivation, and less productivity
  • Best for industries requiring innovation in a stable, established environment