Advantages and Disadvantages of Different Business Structures - Essay Example

? Advantages and disadvantages of different business structures ADVANTAGES AND DISADVANTAGES OF DIFFERENT BUSINESS STRUCTURES An organization’s structure is a key feature that determines the level of success of a business. Good organization structure helps an organization to utilize fully all the resources it has at its disposal. It is a requirement that helps an organization to deliver exactly what customers want. It is an essential tool, which helps a company to achieve high performances in its work. Good organizational structure will help an organization to have high speeds of change and decision-making. Good decision making in an organization is because of good communication between members of the organization a virtue that is determined by the organization’s structure. This essay tries to analyze the different types of organizational structures and gives the advantages and disadvantages of each of them. It also evaluates the different structures to come up with the most preferable structure in terms of ensuring a business’ success. The first type of organization’s structure is a vertical structure. It is a structure whereby the business leaders or managers feature at the top while the bottom features the other employers. This structure can be either centralized or decentralized. For a centralized system, the organization’s members at the center of the structure make most of the decisions while, for a decentralized structure, most of the decisions are made by the members at the ends of the chain of the organization (Mills, 2007: p 54). The main advantage of this structure is its easiness in designating duties to the lower level employees. It forms a chain structure that can be followed without difficulty. The other advantage is that it promotes efficiency in the organization. Equally important is that, it encourages the development of skills and expertise as employees find it easy to go for further learning activities. The disadvantage of this stated structure is that it requires extensive power and effort to maintain order, balance, and power. It also narrows a department’s aims and objectives not to reflect the overall company’s goals (Mills, 2007: p 58). The next type of organizational structure is horizontal structure. This one differs from the vertical structure such that there are few power levels. A single department can oversee a number of activities in the same level without necessarily going to the next level. It has the advantage of giving employers greater freedom hence good turnaround and employee satisfaction. It can help create competition in the different organizations hence innovation and creativity. There is also easy communication and cooperation between the departments. The disadvantage of this structure is its creation of loose management; the managers have little say over their employers due to tight schedules of meeting targets and finishing work. In addition, this is attributed to managers and workers maintaining a peer-to-peer relationship at the place of work hence no respect for leaders (Mills, 2007: p 89). Following on is the functional structure. In this type of structure, employees and departments are put into groups according to the function they play. The advantage of functional structure entails the help it has in growing specialists; people of the same skills are grouped in the same department. It also helps improve skills of employees, as the poor ones will learn from the better ones since they are grouped in the same department. Grouping skills of the same nature at one place also helps improve performance. This is mainly through combined efforts of doing a task by many employees. It also boosts employee’s morale, as an employee has to do his best since it is his area of specialization according to the grouping. The main disadvantage of functional structure involves its complicated decision-making and communication processes. Communication between the different departments to enable the completion of a task is difficult since departments tend to work independently. A group that is focused more during the production of a product can start to look down upon the other groups (Mills, 2007: p 63). A different form of structure is the divisional structure. In this structure, a business is divided into different business units, which are then grouped into different functions. Divisional structures can further be divided into three forms; product, geographic and market structures. The main advantage of using divisional structure is that, it allows a team to concentrate on one core product at a time, which can advance the quality. This structural division also increases the employee’s morale in doing the work. The disadvantage of this structural division is that it can also lead to rivalry, job politics, and lack of understanding between the groups. This can lead to some groups looking down upon other groups. It can also cause software incompatibility issues if the teams are working independently without proper consultations and communication (Mills, 2007: p 77). Matrix structure also forms part of organizational structure. Matrix structure groups people and resources by function and product. This makes one to be both part of a functional department and a product. Matrix as an organizational structure is advantageous in that it can lead to better exchange of information between the departments. This is because departments work closely and communicate with each other frequently to see that a task is done. It also gives a lot of motivation to the workers. The disadvantage of this structure is that sometimes it creates a lot of internal complexity in that some employees may find difficulty in tracing their supervisors (Mills, 2007: 50). Equally important is the alternative horizontal structure. In this structure, individuals work, on tasks and link with each other, to see that the task is done correctly. It is an interconnection of parties to ensure that a task is successful. The horizontal structure is advantageous in that it ensures that a product is completed as required since there is good communication in the system. The disadvantage of this structure is that if a party fails the whole system may fail (Mills, 2007: p 82). In conclusion, an organizational structure is the key to the success of any business. This is evident from the above discussion. From the research, it is seen that there are a number of structures. These are; vertical, horizontal, functional, divisional, matrix and alternative horizontal structures. From the gathered evidence, the matrix structure is convenient and effective. For instance, it requires that, at every step of processing of any product, groups of people need to act. This gives all the individuals in the organization the opportunity of ensuring that projects are conducted consistently and smoothly. In essence, it builds teamwork. References Mills, A., 2007. Organizational behaviour in a global context, Peterborough, Broadview Press. Read More