Organisational Structure

This Chapter discusses the challenges associated with organisational structure and how it determines the reporting requirements and clarifies the role each individual has within a company. Such issues form a central element of any business modelling efforts (the comprehensive, schematic presentation of an enterprise’s value and revenue creation activities) and will be shaped by factors such as business-to-business or business-to-customer trading models. In the modern era, the need to consider the organisational requirements of internet-based, more virtual enterprises is also noted. The Chapter also outlines how different commercial relationships (such as direct corporate ownership and the nature of franchise operations) can shape structural approaches.

The core concepts of organisational design are reviewed, outlining the range of factors to be considered. Work specialisation and departmentalisation are discussed, noting the different opportunities and potential weaknesses likely to emerge. This supports a subsequent examination of how geographic dispersal introduces a different organisational perspective, which can be further refined through organisational structures seeking to focus corporate activities on core customer groupings or distinct business processes.

Any review of organisational structure will impact both the chain of command and the span of control exercised by managers. The need to strike an appropriate balance between supervision, direction and autonomy in order to create a structure that meets both market/competitive demands and organisational requirements is outlined in the Chapter. This supports a subsequent examination of the structural and organisational issues associated with centralised and decentralised approaches, emphasising that it is impossible for a company to exclusively adopt either approach. Again, the Chapter notes the importance of balance as whilst decentralisation can help empower the workforce, supporting innovation and creativity, it can allow disparate/conflicting business processes to emerge. Similarly, whilst centralisation provides shared rules and policies, it can disempower staff and lead to a less agile organisation.

Get Help With Your Business Essay

If you need assistance with writing your essay, our professional business essay writing service is here to help!

Find out more

The importance and relevance of formalisation is outlined, demonstrating its importance in the development of job roles, policies, directives and work procedures. In considering the flexibility and agility needed by modern businesses, the challenges associated with taking a rigid, mechanistic approach to organisational development is noted, highlighting the potential opportunities presented by more organic, evolutionary approaches.

Having set the appropriate context, the Chapter then provides a summary of the key structural approaches adopted by most organisations - functional (work division is based on the expertise, training and qualification of staff members), divisional (organisational departments based on product/service elements or customer preferences), matrix (combining functional and divisional methodologies) and network (relying on collaboration and relationships rather than structure). The broad advantages and disadvantages presented by each approach are also provided.

Given their significant impact on organisational structures, the challenges presented by mergers and acquisitions are also addressed in this Chapter. Following such corporate actions, the business entity created will require a new/revised integrated structure to remove unnecessary duplication. It is also considered essential to integrate employees to provide reassurance and create a shared working culture. These challenges can be compounded if each business operated different corporate structures prior to the merger/acquisition.


To export a reference to this article please select a referencing style below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.