It helps in concentrating on the special requirements of the customers of each region. For example, each division has its own manufacturing, engineering, marketing, etc. It is necessary for a company in this day and age to have a basic structure that determines the function of its operations, both internally in terms of the relations between the employees, managers and the objectives of the organization, and externally, as it will EduBirdie considers academic integrity to be the essential part of the learning process and does not support any violation of the academic standards. Mechanistic and Organic Structure. Multi-product organizations use this as basis for divisionalisation. C)wCYP.TwslMK?yir~?_9:yizMX#Vw}Y}v~e}!6?_=}h[+|q]*S5z~ix:?EVF ?$d It facilitates product expansion and diversification. For various projects, there may be several project managers or co-coordinators each getting required resources and personnel from organisation so as to complete the project in time. iii. Edubirdie. 7. Start your journey 4.8 on AppStore All the tools you need 1. 2. WebAdvantages of Organisation Structure: Merits of having a well-designed organisation structure are as follows: 1. For instance, two divisions may have their separate marketing research wings or public relations departments. Each unit has its own functional structure for various activities necessary for the product. An organisations growth makes structure complex. Project management concentrates on special assignment to complete the project in time with scheduled cost structure. Enhances ability to respond quickly to changes in external environment. Depends on destinations and methodologies. vi. i. iii. Further, in large organizations, the basic organization structure may be supported by other forms for performing various activities like team-based organization, virtual organization, and boundary less organization. i. SBU structure makes the task of planning and control by the corporate office more manageable. Advantages There becomes reduced personal responsibility for any business debts incurred Legal liability also becomes reduced since a company is a separate legal entity from you as an individual Company tax rates are lower compared to higher marginal tax rates It can be much easier to raise finance and capital to grow and expand v. Career patterns and professional development in specialised area. This form has been used by several U.S. multinational corporations whose manufacturing operations require low-cost labour that can best be utilized by contracting with foreign suppliers. For example, Century Textiles has separate divisions for textiles, cement, and shipping. Geographical or Territory Based Structure 11. The specialists often have different types of approaches and perspectives. There is no single organisation structure or design that is suitable for a given strategy. Fair Use Policy or become aware of any violations, please do not hesitate to contact us via support@edubirdie.com. Privacy Policy Each product division maintains its separate facilities and personnel. iv. However, it is not free from shortcomings. However, the functional structure does not work very efficiently once the firm takes up diversification as the new activity may be quite different from the old one and may require different perspective which may not be adequately provided by functional structure. ii. Utilization of approaches and the achievement of the targets gotten to be less complex. In multi-product or multi-geographical area companies, divisions are created in the form of various strategic business units (SBUs). The span of control becomes too large at top levels. disadvantages of data structure. iii. WebSee definition of simple on Dictionary.com adj. Territorial departmentation has the following advantages: (i) It leads to the benefits of local operations. Under this, customers are the guide for grouping the activities. childlike, innocent adj. The literal meaning of virtual is having the efficacy without the material part; unreal but capable of being considered as real for the purpose. All rights reserved As such, there is always a lack of proper coordination and control. (ii) It may be difficult for an enterprise to adapt itself to changes in technology, demand, etc. For instance, in an industrial enterprise, the major functions like production, finance, marketing and personnel may be grouped into different departments. A divisional structure encompasses a set of relatively autonomous units governed by a Corporate Office. Thus, the process of functional differentiation may continue through successive levels in the hierarchy. Since the product divisions are semi-autonomous, it permits growth and diversification of products and services. Like. (v) It helps in training of specialist managers rather than generalist managers. Web1 as in plain free from all additions or embellishment a simple design, and one that never goes out of fashion Synonyms & Similar Words Relevance plain unadorned bare clean naked unornamented stripped honest unvarnished unembellished undecorated spartan bald restrained quiet plain-vanilla homely unsophisticated modest unpretentious elemental Follow the below steps to create a v. The division can be made responsible for volume of business and profitability. Apple was located in Cupertino, California. (vi) It facilitates better coordination of activities within each department. The main disadvantages of the territorial structure are the following: i. WebDisadvantages: (i) Conflict between line and staff may still arise. Many of these studies have determined that there is, in fact, a relationship between structure and performance, but to better understand the link between organizational structure To create an effective organizational structure and behavior for Dunkin Brands, the companys structure has to reflect the brand recognition and value locally and internationally. Establishes relationship people, gatherings and divisions. What is Decentralization: Advantages & Disadvantages of Decentralisation. It shows the authority and responsibility relationships between various positions in the organisation. |?H *}gw~+t&/X]?>}"I$o Organization structure is the pattern in which various organizational activities are divided and assigned among positions, groups, departments, and divisions and the coordinating mechanism among these activities to achieve organizational objectives. It is a temporary structure designed under the following situations: (i) The assignment presents a unique, infrequent and unfamiliar challenge to the business firm. Divisional structure may not be suitable when increase in number, size, and diversity of divisions in an organisation, and it becomes difficult for strategists to control and evaluate divisional operations. It is significant to note that the organisation structure is directly related to the attainment of the organisational objectives. The managers in the central organisation spend most of their time coordinating and controlling external relations. Thus, the members cannot communicate across all levels of the organisation to obtain information. Well, we do. For this purpose, all the functions required for strategy implementation are classified into basic, secondary, and supporting functions according to their nature and importance. Step 1: Get your team together to identify the deliverables and sub-deliverables of the project. Since the project manager is wholly responsible for project results, he places more emphasis on efficient control, better customer relations, and uses his initiative and dynamism for the successful completion of project. This avoids the expenses of renting new offices for the venture and costly travel time between companies. It is one thing to make a compelling stream of data, and it is another thing to ensure that the data is being fittingly gotten and informational are being carried out. Divides work to be done in explicit occupations and dept. What are the advantages and disadvantages of Organisational structure? This problem gets magnified when there is a tendency for the functional departments to become jealous of their prerogatives and fight to promote and preserve their specialisation rather than work towards unified project objectives. e. They prepare their own budgets and coordinate their work with other departments. Offer assistance on an issue can come from anyplace inside the company. It enlivens graduation and inventive thinking. Often, clash of interest generates much sooner than expected. Each regional office has its own set of functional departments and operates under the strategic policies and guidelines established by corporate management. It places attention and efforts on product lines and fixes responsibility for profits at the division level. The top management can easily evaluate the performance of different product divisions and pay greater attention to the product line which is less profitable as compared to others. In this way, advantages of specialisation can be taken as managers work in a functional area and they become quite efficient in dealing with the problems of that area. It encourages general management development. Each zone has further been divided into appropriate number of divisions, for example, northern zone into four divisions located at Jalandhar, Chandigarh, New Delhi, and Ajmer. Privacy Policy 9. It Is Cost Efficient As mentioned, in this organizational structure, there are fewer (or no) manager layers Employees may lose sight of the organization as a whole. Similarly, a commercial organisation may be divided into wholesale, retail and export departments. (Ingram, 2019) A formal layout of a companys structure makes it simpler to add new positions within the company, as well, giving an adaptable and ready means for development. Determines the administrator and degree to which jobs, force and duties are designated. If the firm decides to add some new business, the basic question is how to add it because it may mean adding additional functional structure to the firm as the new business cannot easily be absorbed by the old structure. The local managers are more conversant with their needs and those of their customers. In the present era of globalisation, strategic alliances and organization-customer-supplier links have become significant sources for developing competitive advantage. Importance of Organization Culture. (v) The departments based on territories can function as autonomous units. Therefore, organizational members do not find these very comfortable in comparison to traditional hierarchical systems. Activities related to a function are grouped in a single unit with a view to give a well-defined direction to the whole group. Functional department people are expected to discharge their responsibility within budget. iv. iii. Functional design no doubt is the oldest and simplest form, but it is the most elementary type of design and often represents a base from which other types of design should evolve. For example a large company having business throughout India may departmentalise its business by the major geographical regions (Example Southern India, Northern India, Western India, Eastern India and Central India). 2023 EduBirdie.com. An owner might become swamped with work, if he has to approve every decision at a WebAdvantages. Uploader Agreement. Loyalty to the concern and obedience to superiors is highly insisted upon. iii. Divisional structure offers many advantages over functioned structure especially in terms of autonomy for efficient management, management development, increasing organizational size up to any limit, and taking into account of specific problems related with each product or territory contributing to the overall objectives of the firm. It may become uneconomical where full use cannot be made of the specialised skills and equipment of each department. May divert the owner from strategic decisions to day-to-day operating decisions. Also, a unitary government is very simple system, and as such less costly to run. Geographical structure is followed in case of service organisations which have offices in different regions or geographical areas. For instance, it creates the difficulty of co-ordination between the departments organised on this basis and those organised on other bases. Organisation involves establishing an appropriate structure for the goal-seeking activities. WebDefinitions of simple adjective having few parts; not complex or complicated or involved a simple problem simple mechanisms a simple design a simple substance Synonyms: easy posing no difficulty; requiring little effort plain not Retrieved from Chron: https://smallbusiness.chron.com/importance-good-organizational-structure-3792.html, Ingram, D. (2019, March 12). (iv) It is easier to evaluate and compare the performance of various product divisions. Divisional managers can concentrate on responsible area and can improve performance. It has a fairly simple warren type trusses design and therefore, it is not that complicated to deal with. It ensures quick delivery of products to customers in different areas, and intensive exploitation of local markets. Functionalisation may also go a step further. The following are the importance of organizational structure: According to a study done by (n, 2018) there are 4 types: It is based on dividing the company into smaller groups with niche tasks or role, its similar to bureaucratic. Advantages of Queue: A large amount of data can be managed efficiently with ease. Departmentation by territory is commonly found among enterprises having business spread over a vast geographical area. Some of the disadvantages of functional organizational structures include: Hindered decision-making: F ormal organizational structures ]ypically require employees to seek approval from management and other authority figures before making decisions. 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