Advantages And Disadvantages Of Four Types Of Organisation Structure

1325 words - 6 pages

Advantages and disadvantages of four types of organisation structure

In this essay, I shall analyze relevant examples of existing companies, present their organization design, organization chart, work specialization, chain of command, span of control, for the purpose of presenting the advantages and disadvantages of four types of organization structure. As Mintzberg defined it, "The structure of an organization [is] the sum total of ways in which it divides its labour into distinct tasks and then achieves co-ordination among them" (Boddy, 2008:319) and "makes possible the application of the process of management and creates a framework of order and command through which the activities ...view middle of the document...

This type of structure can be very efficient in an organisation this size, as it presents lower operating expenses than more complex structures by minimizing resource duplication. The relative simplicity of this structures' lines of control also enable the chief executive to maintain strategic awareness more easily, while permitting specialist managers to develop expertise. There are, however, certain limitations. Coordination between departments can be problematic, as separate functions develop different perceptions of organisational goals or as the organisation expands, diversifies its range of products, markets or geographically.
The second organization structure is the one of Nestlé Group, one of today's leading nutrition, health and wellness company, with factories or operations in almost every country in the world. As they state in their management policy "the Nestlé Group is managed by geographies (Zones Europe, Americas and Asia/Oceania/Africa) for most of the food business, with the exceptions of Nestlé Waters and Nestlé Nutrition which are managed on a global basis. This is also the case of Nespresso, the Joint Ventures (CPW, BPW), as well as for Pharmaceutical products" (Official Nestle site, 2010), the organization structure is divisional, with division created on both a product and a geographical basis. Typical to the decentralized nature of this structure, each unit has the authority to design, produce and deliver their product to a specific market, with profit responsibilities being spread between them. This autonomy enables adaptive change within the divisions, allowing the organisation to manage a number of disparate products and markets effectively. The limitations relate to operating a divisional structure, which can prove to be difficult, even from the early implementation stages, in addition to the high cost of duplicating efforts and resources.
The following organization structure is the matrix structure of Asea Brown Boveri Ltd., a fusion of the two previous ones, in an attempt to combine the benefits of decentralization with those of co-ordination. Dual reporting is required in this situation, to a mixture of functional or business area heads and geographical territory managers. As it can be seen in figure 3, along one side of the matrix there are around 65 relatively autonomous product and service business area, located worldwide. Along the other side of the matrix is the country structure, with over a hundred country managers responsible for the sales, marketing and distribution of the organizations' products within the their territorial area, regardless of the business area. This type of structure has given new meaning to the notion of "being local worldwide", enabling decisions to be taken locally, decentralized within a large corporation, which might otherwise be bureaucratic. This can help the company achieve worldwide economies of scale, without sacrificing flexibility and responsiveness, or the optimum use of...

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