Business Organizational Structures

Introduction

• Purpose: Understand different organizational structures, their features, advantages, and disadvantages.
• Key elements: Span of control, chain of command, subordinates.

Key Terms

• Span of control: Number of employees a manager is responsible for.
• Chain of command: Route by which instructions flow from top to bottom.
• Subordinates: Employees who work for a manager.

Types of Organizational Structures

1. Hierarchical Structure

• Characteristics:
  • Many layers of management.
  • Long chain of command.
  • Narrow span of control.
• Advantages:
  • Clear promotions and accountability.
  • Motivates employees through promotion opportunities.
  • Clear targets and responsibilities.
• Disadvantages:
  • Slow communication due to many layers.
  • Higher costs due to numerous managers.
  • Difficult to manage in large, diverse organizations.

2. Flat Structure

• Characteristics:
  • Few or no intermediate levels between upper management and staff.
  • Wide span of control.
  • Short chain of command.
• Advantages:
  • Faster communication.
  • Increased employee engagement and autonomy.
  • Cost savings due to fewer management salaries.
• Disadvantages:
  • Limited opportunity for progression.
  • Potential for power struggles with unclear hierarchy.
  • Hard to implement in large organizations.

3. Matrix Structure

• Characteristics:
  • Combines traditional departments with project teams.
  • Teams consist of members from various departments.
• Advantages:
  • Effective utilization of skills across the organization.
  • Enhances rapid and effective communication within teams.
  • Can improve team spirit and morale.
• Disadvantages:
  • Dual management (project manager and functional manager) can cause conflicts.
  • Teams need time to gel, frequent reformation can hinder productivity.

Conclusion

• Apply the knowledge through the provided task sheet.
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