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Understand the Organisational Purposes of Businesses - Essay Example

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For effective operation and performance, organizations must include an organizational structure and culture. Depending on the nature of work and the industry of operation, organizations adapt different types of structures. …
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There are three common types of organizational structures, including traditional, divisional, and matrix. However, other kinds of structures also exist, including pre-bureaucratic, bureaucratic, team, and network structures (Thomas and Coe, 2003:124). The commonality between all the different organizational structures is that they aim to improve the organizational efficiency, as well as provide a clear framework of operation and reporting. Nonetheless, they differ in a number of factors. The traditional (functional) structure divides the organization into groups or departments according to their purposes. For instance, an organization with a functional structure may have a production department, a sales department, and a marketing department. This type of structure suits small businesses because each department can rely on the knowledge and talent of its employees. Nonetheless, the main drawback of the structure is the limited communication and coordination between departments by the organizational boundaries. On the other hand, divisional structures are common in larger firms that operate separate smaller organizations under the main umbrella group or in a large geographical area, covering different types of market segments and products.For instance, a manufacturing company may have a compressor division, a small engine division, and a parts division in different geographic locations. Each division specializes in a particular type of need. The main advantage of this type of organizational structure is the rapid and effective resolution of needs. Similar to the functional structure, this form of structure also limits communication as employees work in different divisions. Additionally, this type of structure is expensive because of its scope and size (Salaman, 2002:167). Lastly, the matrix type is a hybrid of the functional and divisional structures. Often adapted in multinational companies, the structure enables an organization to enjoy the benefits of both the divisional and functional structures simultaneously. In most cases, this creates power struggles as most organizational areas are under dual management: a divisional and a functional manager, both working at the same level and occupying the same management territory. The other common organizational structure is product-based structure, common in companies with multiple product lines. Essentially, each part of eth structure focuses on an individual unit within the company (Walker et al., 2003:124). This structure allows flexibility in the organization, but suffers from lack of achieving company-wide goals and objectives. Structure Advantages Disadvantages Functional (Traditional) a. Division of labour b. Development of team spirit and cooperation c. Mass production a. Emphasis on specialization b. Leads to conflicts c. Weak disciplinary controls Product-Based a. Simple b. Unified control c. Better discipline a. Lacks specialization b. Overburdening of management c. Favouritism Divisional a. Dispersal of power b. Increased efficiency c. Delegation of duties a. Delayed decision b. Lack of accountability c. Minority tyranny Matrix a. Greater efficiency b. Coordination c. Non-autocracy a. Conflicts between functional and divisional managers b. Authority dependent on management c. Poor administration Decades of research show a link between organizational performance and organizational culture. Despite the lack of ...Download file to see next pagesRead More
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