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5 Focuses of Organizational Structure – Strengths and Weaknesses
Description: A look at the basic ways to structure an organization with their respective strengths and weaknesses
5 Focuses of Organizational Structure – Strengths and Weaknesses
1. Functional Structure
Strengths
Weaknesses
Easier to manage work within a group
Coordination and communication between departments may be slower and less accurate

Contains people who “speak the same language” and nurtures technical expertise, attracts and develops experts

Individual department managers have limited decision making authority

Lower labor costs; workload can be balanced upon demand
Different departments have different priorities; resolving conflicts may be costly; customers’ interests could be overlooked

2. Product or Service-Based Structure
Strengths
Weaknesses
Responsibility for each product can be pinpointed at the division level

Less sharing of resources across divisions
Focus on one product can produce higher quality “state-of-the-art” output

More duplication of effort resulting in higher costs
Team spirit develops around each product line;
Competition among divisions can boost business
Customers who want more than one product/service will have to work with more than one division

Encourages independent decision making;
Quicker response to customer request
Company may be slow to recognize that a product should be changed, dropped or added

Could be stifled by one product focus 3. Customer or Geography-Based Structure
Strengths
Weaknesses
Unique needs of each type of customer are well served
May be less sharing of resources across division/departmental boundaries

Focus on customers’ needs and preferences
More duplication of effort and infrastructure resulting in higher costs

Unprofitable product lines more likely to be dropped
Internal systems may evolve in different ways to serve different customer segments

4. Business Process Team Structure
Strengths
Weaknesses
Focus on organization is outward to customer
Involves major transformation of the organization (difficult, timely and costly change; new systems required for virtually everything)

Reduces number of levels of management – “flatten organizations” (reduced management cost; less need for coordination)

Company may need to retain functional expertise if not sufficient within each process

Time and money saved due to reduced need to pass information up and down the hierarchy and between departments

May require major and costly training initiative
Promotes self-management by employees (greater job satisfaction because of more involvement)

Broadens individuals’ knowledge and skill bases Faster decision making, reduced cycle time and improved responsiveness to customers

5. Matrix (Hybrid) Structure (contains more than one focus; has two or more bosses)
Strengths
Weaknesses
Enables organization to use its resources efficiently (provides flexibility to assign staff to project requirements and reassign as needed)

Multiple bosses may result in confusion
Takes full advantage of the use of teams (maintaining in-depth technical expertise in critical functions)

Slows down decision making
Provides individuals an opportunity to work with different skills and expertise

Conflicting demands from bosses leads to personal stress and reduced work quality

Requires managers to cooperate with one another and moderates their power over subordinates

Power struggle between managers regarding resources Can disrupt the work and get in the way of customer service

Subordinates may play one boss against another

Read more: MBA Boost - 5 Focuses of Organizational Structure – Strengths and Weaknesses http://www.mbaboost.com/content/248/#ixzz2Q8cdx9yi

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