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Organisational Structures
Lecturer:
Abdel Mahmoud B.M(SIU)
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Why Have a Structure?
All businesses have to organisewhat they do
A clear structure makes it easier to seewhich part of the business does what
There are many waysto structure a business
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Some Key Terms
Flat or tall structure
Span of control
Chain of command
Hierarchy
Delegation
Empowerment
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Ways to Structure a Business
By function: arranging the businessaccording to what each sectionor department does
By product or activity: organisingaccording to the different products
made
By area: geographical or regionalstructure
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Ways to Structure a Business
By customer: where different customergroups have different needs
By process: where products have to gothrough stages as they are made
What are theadvantages/disadvantages of differenttypes of business structure?
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Pros and Cons of Different
Structures
This depends on the business type,
size and structure used Lets look at a functional structure:
Production Marketing Accounts Personnel IT
Board of Directors
Chief Executive
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Functional Structure
Advantages
Specialisation eachdepartment focuses
on its own work
Accountability someone isresponsible for the
section Clarity know your
and others roles
Disadvantages
Closedcommunication
could lead to lackof focus
Departments canbecome resistantto change
Coordinationmay take too long
Gap between topand bottom
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An Example of Organisationby Product/Activity
Imaging andPrinting Group
PersonalSystems Group
EnterpriseSystems Group
HP ServicesHP Financial
Services
Hewlett Packard
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Organisation by
Product/ActivityAdvantages
Clear focus on
market segmenthelps meetcustomers needs
Positive competitionbetween divisions
Better control aseach division can actas separate profitcentre
Disadvantages
Duplication of
functions (e.g.different sales forcefor each division)
Negative effects of
competition Lack of central
control over eachseparate division
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Organisation by AreaHewlett-Packards
Headquarters Worldwide
AmericasHouston, Texas
Europe, Middle East, AfricaGeneva, Switzerland
Asia PacificHong Kong
Hewlett Packard
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Organisation by Area
Advantages
Serve local needsbetter
Positive competition
More effective
communicationbetween firm andlocal customers
Disadvantages
Conflict betweenlocal and centralmanagement
Duplication of
resources andfunctions
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Other OrganisationalStructures
By Customer:
Similar effects to structuringby product
By Process:
Similar to structuring by function
