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Comparing Five Organizational Structures

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1. Compare and contrast the five organizational structures (simple, functional, divisional, matrix and product-team). Summarize the pros and cons that are associated with each type.

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Interesting question! Let's take a closer look.

1. Compare and contrast the five organizational structures (simple, functional, divisional, matrix and product-team). Summarize the pros and cons that are associated with each type.

(1) Simple Structure


A small organization, for example a shoe store, would have a simple structure. Here everyone, including the managers, is involved in selling. Some specialized functions, such as accounting and advertising, may be contracted out to a bookkeeper and an advertising agency. A small travel agency would also have a simple structure. It could consist of only two divisions, one with two sales agents working exclusively with corporate clients and the other with two agents selling personal holidays to the general public. The manager (who may also be the owner) would sell travel packages to corporate and holiday clients, hire and train staff, pay the bills, and try to build agency sales by finding new corporate and holiday clients. Another simple form of organization would be a restaurant whose manager has divided the staff into three groups: the bar, the food, and the service (http://www.business.ualberta.ca/rfield/Organizational%20Effectiveness,%20Structure,%20and%20Technology.htm)

· Very well suited for single small business
· The owner-manager can personally supervise all workers (http://road.uww.edu/road/parbotek/250-770/OD_CHAPTER3.ppt).

· However, when the organization grows, supervisions becomes more difficult
· More elaborate designs are needed (http://road.uww.edu/road/parbotek/250-770/OD_CHAPTER3.ppt).

(2) Functional Structure

The organization is structured according to functional areas instead of product lines. The functional structure groups specialize in similar skills in separate units. This structure is best used when creating specific, uniform products. A functional structure is well suited to organizations, which have a single or dominant core product because each subunit becomes extremely adept at performing its particular portion of the process. They are economically efficient, but lack flexibility. Communication between functional areas can be difficult (http://en.wikipedia.org/wiki/Organizational_structure).

Works well when,
· Strategy critical activities match functional specialties
· Minimal need for departmental coordination
· Top management can rein in departmental conflicts thorough teamwork (http://road.uww.edu/road/parbotek/250-770/OD_CHAPTER3.ppt).

· Small size, single-product line
· Undifferentiated market
· Scale or expertise within the function
· Long product development and life cycles
· Common standards
· Hybrids in large organizations may follow structure by division or business (unithttp://www.family-business-experts.com/organization-structures.html).

Strategic Advantages:
· Centralized control of strategic results
· Very well suited for structuring a single business
· Structure is linked tightly to strategy by designating key activities as functional departments
· Promotes in-depth ...

Solution Summary

This solution compares and contrasts five organizational structures (simple, functional, divisional, matrix and product-team) on several dimensions. It also provide a comprehensive summary of the pros and cons that are associated with each type and includes several real-world examples.

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