In a matrix structure, the power is delegated on two primary basis, first is the functional are and the second is project to project. Importance The advantage of the division structure is that each division is performing their own set of functions, it is easy to manage and measure its performance. In this kind of structure, different divisions are made to handle different products. Hostile competition between departments can prevent the organization from achieving its strategic goal. 2. A disadvantage, because this could mean more communicating on division level but less communication on multinational level with headquarter and other subsidiaries. Under the functional structure, the … This means that there are less wages, fringe benefits, and so on, to pay for management. 4. Flexible use of resources. Pros or Advantages of product organizational structure: Have particular product lines that are substantially different. 3. Employees in the same geographic division tend to develop personal relations with each other, which might be termed as an advantage as well a disadvantage. 3. Advantages: 1. Improved environmental monitoring. Types Organisation Structure – With Advantages and Disadvantages 1. Some of these structures are centralized some are not. Necessary cookies are absolutely essential for the website to function properly. Disadvantages: Weak customer or product focus, Potentially weak communication among functions, Weak grasp of broader organizational issues, Hierarchical structure. Program areas may not have all of the specialists needed to work on the project. 2. In projectized . Creativity is developedthrough interaction with various specialists. Advantages and Disadvantages. Diverse interestsare consolidated to the above problems. 2. Advantages And Disadvantages And Types Of The Organizational Structure 1444 Words | 6 Pages. One advantage of the matrix organizational structure is that people across different functional areas have a better understanding of their coworkers in other areas. The advantage of the product division structure is that a division would get full expertise in handling a specific product. Cooperation and communication between departments and units may be poor. Disadvantages: 1. The management of such enterprises is in the hands of the government. Because the employee has expertise in that particular … 1. When a company uses this type of structure, it groups its people according to their knowledge and skills which help them become specialists on that field. Depending on the needs and the volume of the activities of a multinational company, a structure from these five may be utilized to run business activities in different countries. The advantages and disadvantages of a matrix organizational structure make it easier to move resources to the most important projects which need to be completed. We also use third-party cookies that help us analyze and understand how you use this website. Losing central control over each separate division. These cookies do not store any personal information. Jul 26, 2020. When a multinational corporation makes geographic divisions, they would delegate power downward to these geographic divisions which would enable timely decision making in accordance with the needs of the geographic area. Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. Generally, the functional manager has more authority than the … The projectized structure is the opposite of the functional structure. Functional Organizational Structure In a functional organization structure, the project manager and all the resources work in the same company division, such as the sales and marketing department. The managers of each division can be held responsible if something goes wrong. 6. Organizational structure is a comprehensive picture of how different positions and activities are laid down in order to achieve the organizational goals. Structure of Organization; Advantages of Functional Organizational Structure . In addition, it is flexible. The disadvantage of this organizational approach is that it can be difficult to measure, and the organization may end up with multiple resources as different divisions try to be autonomous. 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. However, it can prohibit companies from achieving company-wide goals since each unit … The widely prevailing organisational structure found in respect of very small... 2. 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 . Coordination of functional activities related to a product line is easy under the structure. 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. Simple Organisational Structure:. It places responsibility for profit at the divisional level. Another disadvantage of functional organization structure is that these functional groups may not be able to communicate more often which decreases flexibility and innovation. 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. But opting out of some of these cookies may have an effect on your browsing experience. Target a few major customers that make up most of your business. Decentralised decision making. Team members are familiar with each other since they work in the same area. It Promotes Faster Decision Making Another advantage about a flat organiza… This is also known as territorial sales force structure, and it means that the organization assigns each sales rep to a certain geographic area. Advantages & Disadvantages of Different Organizational Structure Types. The functional structure is an organizational structure that divides its operations into separate departments or units according to the role of each department. Overemphasizing divisional, rather than organizational goals. In a turbulent environment, such organization is preferable for planning, implementing and control of costs projects. As a single division does not produce enough to take great benefits out of the economies of scale. MGMT 440 International Organizational Development Strategies. READ MORE on smallbusiness.chron.com The Advantages of Divisional Structure in Organizations In an international context, a division structure is utilized to break down the organization into many divisions and each division is responsible for a combination of functions. It facilitates the measurement of unit performance. Individual creativity and originality may be stifled by the rather rigid determination of duties and responsibilities. It may give rise to conflicts between divisions. A car is traveling at 60 miles per hour. If an organization gets larger, it will be difficult t… For example, the total work activities of an enterprise may be divided into various functions like purchases, production, marketing , finance, quality control. Different departments are a force to coordinate across all the functions. Characteristics of Departmental Organisation 2. This structure is market-oriented. 3. The executive or the team leader has the knowledge and experience of that particular field. Since the employees are grouped by their knowledge and skills, competition may arise between them. Each product line or product group get concentrated attention. It Is Cost Efficient As mentioned, in this organizational structure, there are fewer (or no) manager layers between the executive and the staff. 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. 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