Customers are more willing to purchase from companies that they feel consider their needs when they create products and services. 2. The line functions are production and marketing whereas the staff functions include personnel, quality control, research and development, finance, accounting etc. An informal organisation is the set of evolving relationships and patterns of human interaction within an organisation which are not officially presented. This kind of structure depends on factors such as degree of international orientation and commitment. (iii) Managers may have to become experts in too many fields. Demerits. Exhibit 10.3 illustrates a single line organisational structure. Alignment of corporate and divisional goals. Meaning of Organisation Structure 2. Salary-related expenses are reduced, enabling the company to save money as well as provide better pay for its workers.2. Team members are familiar … So, we have already pointed out the advantages of a flat organizational structure. 5. 1. Let us now take a look at its limitations. Advantages And Disadvantages Of Customer Departmentation ... Due to over focus on customers satisfaction, there is possibility of wastage of other resources of organization. If you want to learn more about organizational structure types in Project Management you should check out our 100% Online and Self-Paced Project Management Professional Certification Training . Advantages & Disadvantages of Different Organizational Structure Types. While their are many factors and stakeholders to consider when running a small business, some owners lean towards operating customer-focused businesses, which operate based on customers’ needs and demands. The span of control of line managers can be increased because they are relieved of many functions which the staff people perform to assist the line. Prohibited Content 3. Disadvantages: • Higher costs due to duplication of efforts within geographies and customer accounts • Coordination required when more sales reps have the same geography/accounts. The levels of responsibility and authority are likely to be precise and understandable. (iii) Some staff people have difficulty adjusting to the role, especially when line managers are reluctant to accept advice. While customers may know what they want, companies should use research and development to come up with ideas customers may not think of on their own when surveyed about their needs. She has a bachelor's degree in business and marketing from Towson University and is working on a master's degree in publications design at University of Baltimore. Main advantages and disadvantages of the three generic project organizational structures Structure Advantages Disadvantages Functional There is no need to negotiate and compete with other areas for resources. When companies are customer-focused, they may resist coming up with ideas to improve products or create new products, so they begin to lack innovation. Disadvantage: Lack of Innovation. Subscribe to: Post Comments (Atom) Powered by … The project manager gets the needed support from production, quality control, engineering etc. Advantages: easy to understand, Specializations develop, Economies of scale, Communication within functions, Career paths, Fewer people. Companies such as online retailer Zappos and Trader Joe's are celebrated for their dedication to being customer-focused businesses and providing superior customer service. 6. Customers who come to businesses through referrals also generally are prequalified, which makes it easier to turn them from prospective customers to buyers. The advantage of the product division structure is that a division would get full expertise in handling a specific product. This is also known as customer sales force structure, and it means that sales reps are grouped by customer or industry. Employees may get bored because they do the same repetitive type of work all the time. The line, line and staff and functional authority organisational structures facilitate establishment and distribution of authority for vertical coordination and control rather than horizontal relationships. Encourages concentration on customer needs. Advantages of Functional Organizational Structure The employees are made into groups according to their skills, and thus the overall effectiveness and efficiency of the tasks increase. Authority resides … In this type of organization shifting of responsibility is not possible because responsibilities are fixed. Advantages:• Low cost • Proper territory management leads to low geographic duplication of effort • Low duplication of effort with customers (unless buyers are organizations that cross territories)Disadvantages:• Sales reps have a hard time developing product or market sp… (iii) Co-ordination between line and staff may become difficult. The cope up with such situations, project organisations and matrix organisations have emerged. They are: (i) Function, One advantage of the matrix organizational structure is that people across different functional areas have a better understanding of their coworkers in other areas. Staff departments provide line people with advice and assistance in specialized areas (for example, quality control advising production department). Why Are Some Firms Able to Sustain Competitive Advantage Over Their Rivals. These flat organizational structure advantages and disadvantages show us that when it is implemented with a clear plan, it can be successful. The nature of the committee is such that every one has an equal chance to speak out and take part in discussions and this can be very time consuming. What Do Companies Gain From Listening to the Customer? The primary advantage is the use of expertise of staff specialists by the line personnel. Followings are the major benefits of customer departmentation: 1. 2. There are several types of corporate structures (organizational structures), and organizations choose the one most suitable for them. However, there are disadvantages to this structure, too. Disadvantages to a Vertical Organizational Structure. The organizational structures are based on functional division and departments. Large companies that serve a varied customer base or operate in a number of geographic regions may choose to operate with a divisional structure. Types of Organisational Structures: their Advantages and Disadvantages! 3. They are: (i) As the firm grows larger, line organisation becomes more ineffective. Before publishing your articles on this site, please read the following pages: 1. Advantages And Disadvantages Of Customer Departmentation Advantages Of Departmentation By Customers. Overemphasis on group decision making. The advantages of tall organizational structures are more opportunities for advancement and more specialized managers; the disadvantages are higher costs and reduced empowerment. 1. Alongside the formal organisation exists are informal organisation which is a set of evolving relationships and patterns of human interaction within an organisation that are not officially prescribed. While grid structures accompany a ton of adaptability and adjusted basic leadership, this model is likewise inclined to perplexity and complexities when representatives are requested to satisfy clashing duties. (ii) Improved speed and flexibility may not offset the lack of specialized knowledge. In a line organisation authority follows the chain of command. Every person is crystal clear to whom he is answerable and who are accountable to him. It Is Cost Efficient As mentioned, in this organizational structure, there are fewer (or no) manager layers between the executive and the staff. Slow response to exceptional situations. Advantages and disadvantages of a product division structure In this kind of structure, different divisions are made to handle different products. Committees may delay decisions, consume more time and hence more expensive. (iii) Reduces the number of practical alternatives. (iv) There is a tendency to become overly dependent on the few key people who an perform numerous jobs. 4. While the focus is on international geographic structures, companies may also choose functional or process or product departmentation in addition to geographic pattern while at the head quarter’s the departmentation may be based on function. Divisional Organisational Structure: In this type of structure, the organisation can have different basis on which departments are formed. Maintenance, Purchase, Stores, Finance, Marketing. Gives customers feeling that they have an understanding supplier (banker). In some projects (complex activity consisting of a number of interdependent and independent activities) work process may flow horizontally, diagonally, upwards and downwards. 5 Advantages and Disadvantages of the Matrix Organizational Structure November 23, 2020 When a business initiates a project, it can be crucial to have an organizational structure in place to define all the aspects of the project. Saves customers’ time. (i) Even through a line and staff structure allows higher flexibility and specialization it may create conflict between line and staff personnel. It is an organizational structure formed by grouping together all activities into functional departments and putting each department under one coordinating head. Committees may delay decisions, consume more time and hence more expensive. 2. In a matrix organisation, the product or business group managers and functional managers have somewhat equal power. For example, in a typical firm, line departments include production and marketing. In choosing a company's organizational structure, management is searching for the one that will bring the company's moving parts together into a well-coordinated, efficient and effective unit. As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. But in the functional authority organisation, staff personnel who are specialists in some fields are given functional authority (The right of staff specialists to issue orders in their own names in designated areas). 3. (iii) It involves members from various organisational levels. 3. (ii) A line structure promotes fast decision making and flexibility. Image Guidelines 5. Organizational structures play a key role in effective communication and decision-making. The following are some disadvantages of the functional organization structure: 1. It Promotes Faster Decision Making Another advantage about a flat organiza… There are several types of corporate structures (organizational structures), and organizations choose the one most suitable for them. The customer-based structure is ideal for an organization that has products or services unique to specific market segments, especially if that organization has advanced knowledge of those segments. 5. Every structure has certain challenges that must be met, but when these negatives are proactively approached, their impact to the business and each worker can be effectively minimized. Market-Based Structure. The functional structure is an organizational structure that divides its operations into separate departments or units according to the role of each department. 4. Disadvantages: Weak customer or product focus, Potentially weak communication among functions, Weak grasp of broader organizational issues, Hierarchical structure. Group action may lead to compromise and indecision. This is also known as territorial sales force structure, and it means that the organization assigns each sales rep to a certain geographic area. This includes ensuring that you provide customer service that helps educate your customers and lead them to sales. According to Lounsbury Fish, “Organisation Structure is more than a chart. (vi) Provides emotional support for employees. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. Responsibility is fixed.In this form of organization responsibilities are fixed and defined. Multinational corporations may have their corporate offices in the country of origin and their international divisions established in various countries reporting to the CEO or president at the headquarters. There are only line departments-departments directly involved in accomplishing the primary goal of the organisation. The jobs or positions in an organisation can be categorized as: a position in the direct chain of command that is responsible for the achievement of an organisation’s goals and. The staff officers or managers have staff authority (i.e., authority to advice the line) over the line. 2. Exhibit 10.5 illustrates the line and staff organisational chart. These types of specialized staff are (a) Advisory, (b) Service, (c) Control e.g., Management information system, Operation Research and Quantitative Techniques, Industrial Engineering, Planning etc. Group discussion may lead to creative thinking. Simplicity. A project organisation is a temporary organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation. Matrix organization for a small and large business: An outline, advantages, disadvantages, conclusion. Table 2. (iv) Staff people may resent their lack of authority and this may cause line and staff conflict. 3. Tends to simplify and clarify authority, responsibility and accountability relationships. Advantages of customer departmentalization. 4. Report a Violation, Formal and Informal Organization: Features, Advantages and Disadvantages, Functional Organization: Advantages and Disadvantages, Market Types: 4 Important Types of Market (A Study), 2. This type of organisation is often used when the firm has to be highly responsive to a rapidly changing external environment. Content Filtrations 6. Alongside the formal organisation, an informal organisation structure exists which consists of informal relationships created not by officially designated managers but by organisational members at every level. Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure. 3. Functional manager are in charge of specialized resources such as production, quality control, inventories, scheduling and marketing. Some of the examples of projects are: research and development projects, product development, construction of a new plant, housing complex, shopping complex, bridge etc. If there is too much autonomy across the divisions, incompatible systems may develop. They are the kind of structures that follow the organization’s rules and procedures to the T. They are characterized by having precise authority lines for all levels in the management. (v) Provides an additional channel of communication. Some staff specialists may exert direct authority over the line personnel, rather than exert advice authority (for example, quality control inspector may direct the worker as well as advise in matters related to quality). The organizational structure examples are usually a subject of study so that there can be a perfect structure for a particular company. However, there are some disadvantages also. For a public policy to be effective, first the organizational structure of the entity enacting the policy must be organized and effective. Staff specialists are responsible for advising and assisting line managers/officers in specialized areas. Committee decisions are better than individual decisions, 2. 2. This is a more decentralized type of operation where each division functions much like its own separate company. Organizational Design and Structure (Advantages and Disadvantages) Each person assumes a role within the organization, and the organizational structure determines the reporting relationship between the individuals. Customer service becomes a part of your company's brand when you run a customer-focused business. (i) Use of expertise of staff specialists. The 21st century was marked by the fact that in the management of organizations, experiments begin to optimize management and search for new forms that take into account the changed realities of doing business. Newer Post Older Post Home. Line and staff have direct vertical relationship between different levels. (iv) It is affected by relationship outside the firm. This is also known as functional authority. 7. and again each region may be subdivided into countries within each region. Importance 3. Advantages’. For example, the person heading the IT department will have the education and skill necessary to shoulder this responsibility and successfully run his team. Advantages 4. Top Three Characteristics of Innovative Companies, Managerial Skills: Benefits of Customer Orientation Marketing, Steph Hyken: Top 10 Benefits of a Strong Customer-Centric Mindset, Factors That Contribute to the Success of a Business, How to Restructure to Build Intimacy With Customers. Functional Organization : All of the companies define its organizational structure to determine the reporting relationships that will exist in the company. 2. Since managers cannot avoid these informal relationships, they must be trained to cope with it, The informal organisation has the following characteristics, (i) Its members are joined together to satisfy their personal needs (needs for affiliation, friendship etc.). Personnel are assigned to a project from the existing permanent organisation and are under the direction and control of the project manager. Disadvantages: Weak customer or product focus, Potentially weak communication among functions, Weak grasp of broader organizational issues, Hierarchical structure. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. Such organisations have both line and staff departments. for completion of the project. A disadvantage is that employees are responsible to their project team as well as to … Divisional structure offers many advantages over functioned structure especially in terms of autonomy for efficient management, management development, increasing organizational size up to any limit, and taking into account of specific problems related with each product or territory contributing to the overall objectives of the firm. Meaning of Organisation Structure: Organisation structure is the pattern of organisational hierarchy based on authority responsibility relationship. Most businesses leverage industry trends, innovative ideas and customer and business needs to create products and services customers are willing to purchase and refer to their friends and family. The functional managers may lose some of their authority because product managers are given the budgets to purchase internal resources. Customer-focused businesses can become self-serving, causing businesses to indulge in their needs and wants, such as focusing solely on profit, with thoughts of the customer trailing far behind.