ORGANIZATION

AL
STRUCTURE

FUNCTIONAL
STRUCTURE
Works activities are grouped according to functions
This is the most common type of structure adopted by

organizations

ADVANTAGES
Specialization
When companies use a functional organizational structure, people with
similar knowledge and skills are grouped together. This makes it possible for
employees to become specialists in their field

Productivity
Specialization leads to operational efficiencies and enhances productivity
levels. Because of their expertise, workers with specialized skills can perform
tasks quickly, efficiently and with more confidence, thus reducing the
occurrence of work-related mistakes

DISADVANTAGES
Management Issues
Communication in organizations with functional organizational structures can
be rigid because of the standardized ways of operation and the high degree
of formalization. This can further make the decision-making process slow
and inflexible

Unit Coordination
Even though functional units often perform with a high level of efficiency,
their level of cooperation with each other is sometimes compromised. Such
groups may have difficulty working well with each other as they may be
territorial and unwilling to cooperate

PRODUCT
STRUCTURE
Activities and functions that are needed to produce and market a

particular product or service are grouped under one unit or

department.

ADVANTAGES
Specialize in one field of works
This structure allows managers to specialize in one product area and
become experts in the area. This is vital because different products need
different knowledge and expertise to be developed

DISADVANTAGES
Different goals between divisions
The disadvantage of this structure is that there can be a lot of redundant
effort and competition between divisions. This can cause the divisions to
focus on their divisions goals and forget their company goals

GEOGRAPHICAL
STRUCTURE
In a geographical structure, units are divided according to
locations or geographical area. This is suitable when a company
has operations or offices in many geographical locations.

ADVANTAGES
Communication and collaboration
Local managers
Geographical focus
Performance measurement and strategy

DISADVANTAGES
A duplication of which negatively affect a companys operational

performance.

Expatriation repatriation issues.

CUSTOMER
STRUCTURE
When a company has a different types of customers
with different needs, it may be grouped according to
the customer types.

ADVANTAGES
Team members get feeling of being part of the team.
Team members get to show off their talents.
Customers needs and problems can be met by specialist

DISADVANTAGES
Limited view of organizational goals
Duplication of functions

MATRIX
STRUCTURE
A matrix structure is two-dimensional reporting
structure that combines functional and project-based
approaches.

ADVANTAGES
To break business information silos
To deliver work across the business more effectively
To able to respond more flexibly
To develop broader people capabilities

DISADVANTAGES
Multiple supervisors can be confusing
Management can become frustrated
Management can become over-burden with diffusion of priorities