Functional, Divisional, and Geographical Design Structure
Using a functional organization structure can group all marketers in a single department or group all salespersons in a different department, and group all the customer service individuals in another department (Kimberlee, 2018). According to Kimberlee (2018), a functional organization is focused on grouping people into organizational components base on the functions they execute. In large firms, there are subsections in each department to enable better management and coordination. Lavoy (2017) stated that functional organizations possess structure and fewer administration layers, as witnessed in the flat organization structure. In an available organizational structure, people are classified based on their expertise, where individuals with similar expertise will be assumed to perform a similar function.
According to the author, the challenge with this kind of organization structure is that some barriers regularly lead to communication and coordination amongst the organization divisions because of numerous divisions. Also, individuals belonging to some functional section cannot learn from the individuals operating in other functional divisions (Cummings et al., 2019). The strengths of organizations with functional organization structure are:
- Productivity – because of a specialized set of services, there is higher productivity in a functional organization structure. Since a task is performed by the group of people who are specialized in that area. The task is performed more professionally, and the effect is positive, the presentation gets improved, and superiority is ensured.
- Specialization – In this type of organization, individuals with a similar set of skills are grouped. Devaney (2020) revealed that the expert in a particular area work in the same responsibility. This kind of organizational structure is best for businesses that emphasize on one service or product. This helps to maximize performance by collaboration among the people in different units at several administration levels through coordination and supervision. The weaknesses arising include coordination and accountability issues among units
Divisional Organizational Structure
Based on Lavoy’s (2017) study, this organization divides the organization’s functional sections based on markets or divisions. Each market or division is furnished with its resources to function individually. The geographical structure creates its sectors based on geography. The geographical, organizational structure divisions include territories, districts, or regions (Cummings et al., 2019). There are numerous bases to define markets or divisions. Markets or divisions can be defined according to the geographical basis, service, or product basis or other measurements. In this organizational structure, each unit runs to achieve its goals, organizational objectives may not be accomplished, and unhealthy rivalry may happen among the business’s internal units. Achterbergh & Vriens (2019) expressed that the divisional organization structure stresses divisionalization and less focus on decentralization. Every organization division has a distinct controlling authority.
To reduce the interdependency among different divisions, functions duplication is often considered as a choice. This structure’s benefit is risk change since the structure runs by endorsing interdependence for every divisional section that helps to minimize risk at an international level. The divisions also act as a defense to protect the organization, making it safe from risks. The authors also found that an additional efficient division of resources happens in organizations with a divisional structure. There is robust responsiveness between the divisional organization persons leading to chances for development and increased satisfaction level. Mason (2017) study explored the limitations and challenges of the divisional organizational structure. The main problem is the division and fragmentation of information, where the distribution of knowledge severely remains within the divisions only. Whatever information required gets cleaned based on a certain need of a division. This regularly leads to the commotion in the organization. Mason (2017) argued that any divisional structure could be seen in the private sectors. This type of organization is also ideal for market diversity.
Geographic Organization Structure
Champoux (2020) described the geographic structure as one of the numerous organizational designs. This structure brings employees together in the geographic division. Other structures group workers basing on customer, product, or service. Each division runs independently as a firm itself comprises the personnel to perform various business tasks such as production, finance, and marketing. The divisions are established according to the geographical area served, creating international, regional, or national operations. Geographical structure brings together workers from other functional specialties, allowing divisions to respond efficiently and quickly to the division’s needs. This action may be potential if several operations have to be achieved from a distant, centralized site. Being together, expertise in the geographic structure also finds it easy to coordinate with others to achieve a geographical location (Lavoy, 2017). The geographical division focuses all employee efforts exclusively on the goals of their division, increasing outcomes.
Geographic structuring can be important if brand and taste responses vary across areas, as it is flexible in marketing strategies and product offerings. Geographic structuring can be necessary due to distribution strategies, availability and cost of resources, and rules in foreign nations. Company structures are geographically due to the cost of conveying production resources. This type of organization structure can fit firms that require being close to sources of customers or suppliers. The main challenge of this structure is its ease of decision-making process to be decentralized. Kimberlee (2018) stated that the geographic divisions could be much away from business headquarters, giving them freedom for a high degree of autonomy. Also, local individuals based on geographic location have different specializations that solve the organization’s difficulties in the geographical location. Thus employees exclusively concentrate on their area, and it increases the profitability of the organization. It can be easy for organizations to track incomes in regions and emphasize them since each area has specific sales practices, profit margins, and revenues (Cummings et al., 2019). The geographic organization has easy customer communication as regional, and local managers focus on consumers.
Matrix Organization Structure
Unlike the other organizational structures, a matrix structure does not follow the hierarchical, traditional model. Instead, every employee has a dual reporting relationship. According to Devaney (2020), the matrix type of management started in the early 1960s when businesses formed a horizontal group’s line. Due to established groups, the workers started operating under a specific project manager and specific department head. In this structure, the customary hierarchy is covered by communication and lateral influence. Matrix organization structures have a chain of command, and employees can work along their project lines, and the others work along their functional lines. According to Cummings et al. (2019), a matrix organization structure is mainly an amalgamation of divisional and functional structures that allows the organization to respond to a varying environment. According to the authors, the benefit of matrix organization structures is its flexibility in innovation and efficient management of information. The author mentioned that matrix organization structures have their own several challenges. The first one is too much freedom leading to ambiguity and inefficiency, and the second one is coordination and standardizing among the workers.
Kimberlee (2018) indicated that matrix organizational structures are confusing in operation. The authors also revealed that this type of organization divides the functional parts of the business based on markets or divisions where every division has its source, and it operates independently. Each division sets its own targets and tries to achieve them in time. Often, the organization’s goals may not be attained, and unhealthy rivalry among workers may occur. A matrix kind of organization contains structures that are considered a network that lets an organization address numerous organization dimensions using several commands (Kimberlee, 2018). Mainly, the different organization structures have dual features: bureaucratic characteristic, where the process of decision making is performed by the top authority and workers who lack a say, and semi-bureaucratic characteristic, where workers participate in the process of decision making (Lavoy, 2017).