Organizational Structure for Companies With Examples and Benefits (2024)

FAQs

Organizational Structure for Companies With Examples and Benefits? ›

Because organizational structures divide companies into various teams or branches, they're helping to ensure that all tasks and responsibilities specific to those divisions are met more easily. When an employee knows what they should be working on, they're able to operate quickly and more efficiently.

Because organizational structures divide companies into various teams or branches, they're helping to ensure that all tasks and responsibilities specific to those divisions are met more easily. When an employee knows what they should be working on, they're able to operate quickly and more efficiently.

Types of organizational structures include functional, divisional, flatarchy, and matrix structures.

The importance of organizational structures

Organizational structures are important because they help businesses implement efficient decision-making processes. By assigning specialized roles to lower-level employees, businesses can make better decisions faster.

Definition of an Organizational Structure

The organizational structure also determines the flow of information between divisions within the corporation. A centralized structure, for example, makes choices from the top-down, whereas a decentralized structure distributes decision-making power throughout the organization.

Hierarchical structure

Its chain of command is the one that likely comes to mind when you think of any company: Power flows from the board of directors down to the CEO through the rest of the company from top to bottom. This makes the hierarchical structure a centralized organizational structure.

McDonald's has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets.

The three main organizational structures are Hierarchical, Sequential, and Matrix.

Five elements create an organizational structure: job design, departmentation, delegation, span of control and chain of command. These elements comprise an organizational chart and create the organizational structure itself. "Departmentation" refers to the way an organization structures its jobs to coordinate work.

What is the benefit structure? ›

A Benefit Structure Analysis study shows what types of product characteristics are seen by respondents as being most closely asso- ciated with any single benefit or any group ofrelated benefits.

Circular Organizational Structures

Pros: Provides strong, centralized leadership and vision. Supports communication and collaboration across divisions and encourages a spirit of shared purpose to improve resource sharing and decision making.

Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple overlapping chains of command and divisions.

A start-up is a typical example of an organization having a simple structure because apart from the founder there may be one or few employees who multi-task, and take care of all that has to be done to help attain organizational goals. Communication is informal and there is a high degree of collaboration.

Starbucks utilizes a matrix organizational structure that combines several functional and product-based divisions. This means there are multiple overlapping divisions and reporting structures within the overall organization, which makes sense considering its sheer size and global presence.

Organizational structure improves operational efficiency by providing clarity to employees at all levels of a company. By paying mind to the organizational structure, departments can work more like well-oiled machines, focusing time and energy on productive tasks.

Because a simple business structure hires a lower number of employees, there are fewer budget costs. With a lower number of employees, a company needs fewer computers, resources and payroll checks. With this increase in capital, a simple business structure has more opportunities for expansion, hiring and development.

While organization is necessary for success, the structure can influence the project management process. A company's organizational structure may dictate the level of project management, who makes ultimate project decisions, the communication of project goals and tasks and how the project manager works with his team.

Line organizational structure is one of the simplest types of organizational structures. Its authority flows from top to bottom. Unlike other structures, specialized and supportive services do not take place in these organizations. The chain of command and each department head has control over their departments.

How is Apple organizational structure? ›

Apple uses a company structure that is commonly known as “functional organization”. This means that the company has been organized around areas of expertise, rather than individual products. The products themselves are then worked on by individuals from across the different areas of expertise.

The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.

Disney utilizes a decentralized cooperative multidivisional (M-form) organizational structure. This focuses on different business types and is common in diversified companies that have a wide breadth of operations, especially where these operations are carried out globally.

In the early stages, most startups will adopt a flat org structure. This helps create faster expansion because it's less structured than competitors that may have complex management hierarchies. It also fosters faster decision-making. A flat org structure has few (or no) layers of management.

Tip. A functional structure is arguably the most common type of organizational structure. Divisional structures are used by smaller companies. Finally, small companies with diverse product lines may consider a product structure.

In a matrix structure, individuals work across teams and projects as well as within their own department or function. For example, a project or task team established to develop a new product might include engineers and design specialists as well as those with marketing, financial, personnel and production skills.

Amazon is an excellent example of a flat organization. Like Google, it has few managerial roles, and employees can move up or down within the company as needed. This structure allows for faster communication and decisions. Additionally, Amazon is known for its fast response time to changes in the market.

Examples of such organizations could be bigger insurance companies, health care companies, or even universities and governmental facilities. For employees, the responsibilities are clear as well as their career path.

There are four major types of employee benefits many employers offer: medical insurance, life insurance, disability insurance, and retirement plans.

Some examples of mutual benefit organizations include: Chambers of commerce. Labor unions. Business leagues.

What are the 4 types of benefits? ›

What are the four major types of employee benefits? These include medical, life, disability, and retirement. Here is a closer look at these employee benefits and why they are often offered by business owners.

Advantages of a functional structure

productivity - specialism means that staff are skilled in the tasks they do. accountability - there are clear lines of management. clarity - employees understand their own and others' roles.

Horizontal organizational structures typically allow companies to focus on employees and give more control to individual team members. It can also facilitate more direct lines of communication between managers and employees because there isn't an extensive hierarchical reporting structure.

In a functional business structure, employees report to a functional manager with the same work specialty. A key advantage of this organizational structure is that it increases productivity because it allows employees to focus on their skills.

Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. Walmart utilizes the hierarchical structure which means that current CEO Doug McMillon is the only employee without a direct superior.

Nike has a matrix organizational structure with a strong preference for geographic and regional divisions. At the top of the Nike hierarchy is global corporate leadership headquartered in Beaverton, Oregon.

Global groups based on functions

Each major business function has its own dedicated group that is headed by an executive-level manager, such as a CEO or SVP. By structuring the company in this way, Amazon can efficiently and successfully manage its e-commerce operations throughout the entire organization.

Amazon organizational structure can be classified as hierarchical. Senior management team include three CEOs and three senior vice presidents responsible for various vital aspects of the business reporting directly to CEO Andy Jassy.

Companies with a vertical structure may organize their organization by product or function. For example, an automobile manufacturer divides its organization by product line: trucks, electric cars, and passenger cars.

In a divisional structure, people are grouped together based on the product or service they provide, not the work they do. For example, a large corporation such as General Electric has divisions for electronics, transportation, and aviation, each with its own team of accountants, marketers, etc.

What type of organizational structure is PepsiCo? ›

Functional Corporate Groups/Offices.

This characteristic of PepsiCo's organizational structure refers to basic business functions.

This type of organizational structure that Dunkin' Brands has is divisional.

KFC's organizational structure consists of six levels. The management board, which includes the president and regional directors and the chief financial officer, is at the top (CFO). This is followed by general managers, assistant general managers, unit managers, team members, and workers.

What is an organizational structure? Organizational structure is the method by which work flows through an organization and allows groups to work together within their individual functions to manage tasks.

The purpose of an organisation structure is to help the organisation to achieve its aims and objectives and employees to complete their work effectively and efficiently. An organisation structure allocates employees designated work roles and responsibilities and helps management to coordinate and control activities.

Edgar Schein, a prominent organizational psychologist, identified four key elements of an organization's structure: common purpose, coordinated effort, division of labor, and hierarchy of authority.

The main purpose of such a structure is to help the organization work towards its goals. It brings members of the organization together and demarcates functions between them. Secondly, the structure also helps in ensuring smooth and efficient functioning.

Also known as the flat structure, the simple organizational structure doesn't have multiple layers of management or formal departments. Instead, a simple organizational structure usually has one owner that delegates tasks to employees directly.

There are six basic elements which form the basis of an organization structure: They include work specialization, departmentalization, chain of command, span of control, centralization/decentralization and formalization.

What are the 3 key guidelines to develop organizational structure? ›