An Organization Structure is the arrangement of task and sub tasks required to implement a strategy.

An organization structure specifies 3 key components that are : It identifies the formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers. It specifies the grouping of individuals into departments and of departments into the total organization. It consists of design of system to ensure effective communication, coordination and integration of efforts across departments.

The first two components constitute the structural

framework, which is the VERTICAL structure created through the process of differentiation that involves division of labour and specialization.
The third component refers to the pattern of

interactions among members of the organization and is the HORIZONTAL structure, created though the process of integration that involves cross-functional information systems and teamwork.

Vertical structure have there characteristics: Specialized tasks Hierarchy of authority Rules and regulations Vertical communication and formal reporting system Centralized decision making Emphasis on efficiency

Horizontal structure have there characteristics: Shared task Flexible authority Few rules and regulations Horizontal communication and sharing of information Decentralized decision making Emphasis on learning

The entrepreneurial structure is the most elementary form of structure and is appropriate for an organization that is owned and managed by 1 person. A small-scale industrial unit, a small proprietary concern or a mini service outlet may exhibit the characteristics of organization which are based on the entrepreneurial structure. Typically these are singlebusiness, -product, or service firms that serve local markets. The owner-manager looks after all decisions, whether they are day-to-day operational matters or of a strategic nature.

Entrepreneurial structure

Advantages
Quick decision making, as

Disadvantages
Excessive reliance on owner-

manager and so proves to be demanding for the ownermanager; attention of Timely response to May divert to day-to-day owner-manger environmental changes; operational matters and ignores strategic decisions; Informal and simple Increasingly inadequate for organization systems. future requirements if volume of business expands.

power is centralized;

As the volume of business expands, the entrepreneurial structure may outlive its usefulness. The need arises for specialized skills and delegation of authority to managers who can look after the different functional areas and here comes the usefulness of functional structure. The functional structure seeks to distribute decision making and operational authority along functional lines.

Functional structure
Chief Executive Officer

Public Relation

Legal

Finance

Marketing

Human Resource Management

Production

Advantages
Effective

Disadvantages

distribution of Creates difficulty in work through specialization; coordination among different functional areas; Delegation of day-to-day Leads to functional, line and staff conflicts; operational functions; specialist which Providing time for top Creates results in narrow management to focus on specialization, often at the strategic decision. cost of overall benefit of the organization.

Made by: Praveen Sharma & Apoorva Saxena