Corporate structure

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A typical corporate structure consists of various departments that contribute to the company's overall mission and goals. Common departments include Marketing, Finance, Operations management, Human Resource, and IT. These five divisions represent the major departments within a publicly traded company, though there are often smaller departments within autonomous firms. Many businesses have a CEO and a Board of Directors, usually composed of the directors of each department, potentially with the addition of one or more non-executive directors. There are also company presidents, vice presidents, and CFOs. However, there is a great diversity in corporate forms, as enterprises range from single company to multi-corporate conglomerate. [1] The four main corporate structures are Functional, Divisional, Geographic, and the Matrix.

Contents

Many corporations have a “hybrid” structure, which is a combination of different models with one dominant strategy. [2]

Importance

Important. [1] Choosing a structure for a company is an important decision and must be strategically thought out because it could either aid or harm the making of business. The structure must also be a good fit for the type of activities, goals, and vision of the company. [3] The organizational structure is a reflection of how conveniently business is conducted.

Models

Functional structure

This model is commonly used in single-program organizations. It is basically the standard structure mentioned earlier, which is organized around departments. This structure is most appropriate for all small organizations.

Divisional structure

Divisional structures are also called cstructures because they are based on a certain product or project. This structure is most common in multi-service organizations. Normally, it is based on the departments divided in the firm.

Geographic structure

Geographic structures are used in multi-site organizations and are frequently used by networks across different geographic areas.

Matrix structure

A matrix structure is probably the most complex of these models, as it is organised around multiple dimensions (e.g. geography and product), typically with more than one supervisor. This structure is commonly used in very large organisations because a greater volume requires greater co-ordination. However, this structure is very difficult to manage so it is usually better to reconsider its use and replace it with a different type of structure, then compensate for the tradeoffs.

Classifications

In addition to those models, there are other factors that make up the structure of an organization. Depending on the chain of command, a company's structure could be classified as either vertical or horizontal, as well as centralized or decentralized. A vertical structured organization or a "tall" company describes a chain of management, usually with a CEO at the top delegating authority to lower-level managers through mid-level managers. Horizontal or "flat" companies, however, have fewer middle-managers, which implies that high-level managers are more involved in daily tasks and interact with customers and front-line personnel. [4] A centralized organizational structure describes how a company's direction and decisions are set by one individual only. [5] Centralization complements companies with "tall" structures to create bureaucratic organizations. Decentralized organizational structures allow individuals some autonomy at each level of the business, because they join the decision-making process. Evidently, classifying organizations as centralized or decentralized is linked to them being "tall" or "flat".

Technology

There is an emerging trend in the way companies shape their organizational structures. More businesses are moving towards a much flatter, decentralized organizational structure. Technological developments accelerate these organizational changes as they improve the efficiency of business, causing it to restructure departments, modify position requirements, or add and remove jobs. [6]

Books / authors / theorists

See also

Related Research Articles

Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision-making, are distributed or delegated away from a central, authoritative location or group and given to smaller factions within it.

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<span class="mw-page-title-main">Centralisation</span> Process by which control becomes more concentrated

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<span class="mw-page-title-main">Information management</span> Organisational activity concerning information lifecycle

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<span class="mw-page-title-main">Matrix management</span> Organizational structure

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Organizing or organising is the establishment of effective authority-relationships among selected works, persons and workplaces in order for a group to work together efficiently, or the process of dividing work into sections and departments, which often improves efficiency.

Intrapreneurship is the act of behaving like an entrepreneur while working within a large organization. Intrapreneurship is known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques, that are more traditionally thought of as being the province of entrepreneurship. Corporate entrepreneurship is a more general term referring to entrepreneurial actions taking place within an existing organization whereas Intrapreneurship refers to individual activities and behaviors.

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Lateral communication is "the exchange, imparting or sharing of information, ideas or feelings between people within a community, peer groups, departments or units of an organization who are at or about the same hierarchical level as each other for the purpose of coordinating activities, efforts or fulfilling a common purpose or goal

Business economics is a field in applied economics which uses economic theory and quantitative methods to analyze business enterprises and the factors contributing to the diversity of organizational structures and the relationships of firms with labour, capital and product markets. A professional focus of the journal Business Economics has been expressed as providing "practical information for people who apply economics in their jobs."

An operating model is both an abstract and visual representation (model) of how an organization delivers value to its customers or beneficiaries as well as how an organization actually runs itself.

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Multi-divisional form refers to an organizational structure by which the firm is separated into several semi autonomous units which are guided and controlled by (financial) targets from the center.

<span class="mw-page-title-main">Director (business)</span> Title given to the senior management staff of a large organization

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DLMA analysis is a new business model devised to create insight into where time and energy is being spent within corporations. It consists in a quadrant based matrix which evaluate companies’ performance and is intended to do for organisational design what SWOT analysis does for strategy.

References

  1. 1 2 Roman Tomasic, Stephen Bottomley, Rob McQueen, Corporation Law in Australia , Federation Press, 2002, pp.167-173
  2. ↑ "Designing an Effective Organization Structure". Bain & Company organizational toolkit and Bridgespan analysis. Archived from the original on 23 April 2014. Retrieved 1 April 2014.
  3. ↑ "Organizational Structure: An Overview". Community Tool Box. Retrieved 1 April 2014.
  4. ↑ Huebsch, Russell. "The Vertical Structure Vs. the Horizontal Structure in an Organization". Demand Media. Retrieved 1 April 2014.
  5. ↑ Vitez, Osmond. "Organizational Structure". Demand Media. Retrieved 1 April 2014.
  6. ↑ Archer, Clare. "Technology's Impact on Organizational Changes". Demand Media. Retrieved 1 April 2014.
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