Organizational Structures: Danyal Akhtar And Pankaj Baisoya

Forms of organizational structures and it’s determinants: Danyal Akhtar & Pankaj Baisoya,

22.09.2014

Principles of Service Operations & Organization, BUS110, Dr. Andreas E. Wagner

Introduction

Organisational structure is the framework within which managerial and operating tasks are performed. It specified the relationship between people, work and resources. Organisation structure allows correlation and coordination among human, physical and financial resource and this enables a business enterprise to accomplish desired goals. Organisational structure can be classified under three categories 1. Functional structure

2. Divisional structure

3. Matrix structure

1. Functional Structure

An organisation structure formed by grouping together all activities

Forms of organizational structures and it’s determinants: Danyal Akhtar & Pankaj Baisoya,

22.09.2014

Principles of Service Operations & Organization, BUS110, Dr. Andreas E. Wagner

4. Duplication of efforts

Functional structure minimises duplication of efforts which results in economies of scale and low costs.

5. Training

Functional structure makes training of employees easier as the focus is only on a limited range of skills.

6. Flexibility

Expansion and contraction is very easy under functional organisation as the functional can be added or removed according to the expansion plans of an enterprise. Disadvantages of functional structure

1. Neglected company’s objectives

In functional structure, the overall objectives of an enterprise get neglected as all the functions get separated from each other. Each functional head concentrates on the effective performance of the function allocated to it’s own unit only.

2. Lack of coordination

Functional structure may lead to problems in coordination as information has to be exchanged across functionally difrenciated departments.

3. Conflict of

However, when the scale of operations increase, it becomes difficult for the management to get involved in small matters, and it may decide on delegating powers and authority.

2. Size of Operations

The size and scale of operations is a major determinant of the organizational structure. A restaurant business can afford to centralize its authority and decision making, but a large computers manufacturing firm cannot. As the business expands, it becomes mandatory to decentralize authority and departmentalize all important strategic functions. A large organization has different departments for different functions like marketing, production, finance and human resources (HR).

Each department takes care of its function, and later all chores are collated to form organizational tasks.

3. Skills of Employees

The skills and educational qualifications of the employees also influence the choice of the type of the structure. A law firm would be constituted of attorneys.

These individuals would have vast professional and educational expertise and experience. It would get very difficult to maintain authority over them at all times.

They must be given a free hand to make their own decisions. Otherwise,