There is an urge to focus on short-term performance, because divisional performance is measured on ROI and revenue growth. The divisional structure can be organised in one of four ways by geographic area, by product or service, by customer, or by process. The operating divisions are relatively independent and consist of products and services that are different from those of the other divisions. A divisional structure encompasses a set of relatively autonomous units governed by a Corporate Office. The divisional structure is organised around products, projects, or markets. When organisation grows into unrelated products and services for different markets then it is difficult to manage. Divisional Structure :įunctional structure is helpful up to a certain limit of expansion and growth. 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. Staff experts many provide line officers with expert advice, such as dealing with certain technologies. The addition of specialized staff departments to a functional design may enable an organization to lead effectively with same degree of environment uncertainty and dynamism. Each department functions as a stand-alone unit.Ī functional design may be effective when an organization has a narrow product line, competes in a stable environment, pursues a low-cost or focused business strategy, and does not have to respond to the pressures of serving difficult types of customers. There is no accountability of each function for total results. It is highly informal and the coordination of tasks is accomplished by direct supervision. This type of structure is highly centralised. Generally, small scale units (SSUs) or small firms produce single or very narrow product line in which, owner makes almost all decisions. Almost all small scale industrial units or small organisations use simple structure. It is the oldest and most common organisation structure. Simple structure comprises owner (top level) and employees of lower level. Entrepreneurial Structure (Simple Structure): The different structures, usually followed are explained below: Type # 1. An organisations growth makes structure complex. For example, small firms tend to be functionally structured, big firms with multiple, products or services, use SBU structure or matrix structure. Thus, what is suitable for one business may not be suitable for a similar unit, but there are successful firms in a given industry tend to design structure in a similar way. There is no single organisation structure or design that is suitable for a given strategy. Types and Classification of Organisation Structure (with Advantages and Disadvantages) Types of Organisation Structure – With Merits and Demerits Additionally, learn about the advantages, disadvantages, merits and demerits of few types of organisation structure.