Types of Organization Structure

Organizational structure is a system used to define a hierarchy within an organization. It identifies each job, its function and where it reports to within the organization. This structure is developed to establish how an organization operates and assists an organization in obtaining its goals to allow for future growth. There are 6 Approaches of structure in the organization. They are:

  • Entrepreneurial Structure.
  • Functional Structure.
  • Product Organizational Structure.
  • Geographical Organizational Structure.
  • Decentralized Business Decision.
  • Team Organizational Structure.

1. Entrepreneurial Structure: Generally, the small business when they are stated consist of an Owner. Manager alone or also with few employees. These type of organizations do not require an organizational chart and formal assignment of responsibilities organization structure is fluid with each employee often knowing. How to perform more than one task and with owner. Manager involved in all aspects/ area of business.

organizational structure

2. Functional Organization Structure: It is most widely used structure. Each functional department consist of those jobs in which employees perform similar jobs at different levels. The commonly used functions are marketing,finance and accounting, HR,manufacturing, research and development and engineering.

functional structure

3. Product Organizational Structure: Companies producing more than one product structure their organizations, based on product structure.

Activities divided on the based of individual products, product line, service and are grouped into departments in product organization structure. All important functions Viz., marketing,production,finance and HR are contained with each department. This type of organization structure overcomes many of the major limitations of functional organizational structure.

product organizational structure

4. Geographical Organization Structure: Companies operating in various geographical regions of the country and/ or world, structure their organizations based on geographical structure. The activities or functions are grouped into departments based on the activities performed in the geographical area/regions. Each geographical unit includes all function required to produce and market the products in a particular geographical area. Multinational organizations, enterprises operating in different geographic markets or serving an expansive geographic area are organised based on the geographic structure.

5. Decentralized Business Unit Structure:  Grouping activities based on product lines has been a trend among diversified companies since 1920. In a decentralized firm, the basic organization building blocks are its business units, each business is operated as a stand alone profit centre figure presents decentralized line of business type of organizational structure.

6. Team Organization Structure: Strategies of business are not always static. They go on changing depending upon internal and external environmental factors. Hence, a single type of organizational structure is not suitable for all times and all situations. Blending the basic forms of organization to match the structure to strategy in the units concerned is essential. Another option is to supplement special situation devices to the basic organization structure. This option is team structure team structure takes three forms viz., Project team, task force team, venture team.