5 Focuses of Organizational Structure – Strengths and Weaknesses
1. Functional Structure
Strengths
Easier to manage work within a group
Contains people who “speak the same language” and nurtures technical expertise, attracts and develops experts
Lower labor costs
Workload can be balanced upon demand
Weaknesses
Coordination and communication between departments may be slower and less accurate
Individual department managers have limited decision making authority
Different departments have different priorities; resolving conflicts may be costly; customers’ interests could be overlooked
2. Product or Service-Based Structure
Strengths
Responsibility for each product can be pinpointed at the division level
Focus on one product can produce higher quality “state-of-the-art” output
Team spirit develops around each product line
Competition among divisions can boost business
Encourages independent decision making
Quicker response to customer request
Weaknesses
Less sharing of resources across divisions
More duplication of effort resulting in higher costs
Customers who want more than one product/service will have to work with more than one division
Company may be slow to recognize that a product should be changed, dropped or added
Could be stifled by one product focus
3. Customer or Geography-Based Structure
Strengths
Unique needs of each type of customer are well served
Focus on customers’ needs and preferences
Unprofitable product lines more likely to be dropped
Weaknesses
May be less sharing of resources across division/departmental boundaries
More duplication of effort and infrastructure resulting in higher costs
Internal systems may evolve in different ways to serve different customer segments
4. Business Process Team Structure
Strengths
Focus on organization is outward to customer
Reduces number of levels of management – “flatten organizations” (reduced management cost; less need for coordination)
Time and money saved due to reduced need to pass information up and down the hierarchy and between departments
Promotes self-management by employees (greater job satisfaction because of more involvement)
Broadens individuals’ knowledge and skill bases
Faster decision making, reduced cycle time and improved responsiveness to customers
Weaknesses
Involves major transformation of the organization (difficult, timely and costly change; new systems required for virtually everything)
Company may need to retain functional expertise if not sufficient within each process
May require major and costly training initiative
5. Matrix (Hybrid) Structure (contains more than one focus; has two or more bosses)
Strengths
Enables organization to use its resources efficiently (provides flexibility to assign staff to project requirements and reassign as needed)
Takes full advantage of the use of teams (maintaining in-depth technical expertise in critical functions)
Provides individuals an opportunity to work with different skills and expertise
Requires managers to cooperate with one another and moderates their power over subordinates
Weaknesses
Multiple bosses may result in confusion
Slows down decision making
Conflicting demands from bosses leads to personal stress and reduced work quality
Power struggle between managers regarding resources
Can disrupt the work and get in the way of customer service
Subordinates may play one boss against anothe