TOPIC 2

MANAGING WORK FLOWS

AND
ORGANISATION STRUCTURES

1
 WHAT IS AN
ORGANISATIONAL STRUCTURE?

The framework of task-and-authority relationships

in a company that coordinates and motivates
employees to work together toward a common goal.

2
 FUNCTIONAL STRUCTURE

A structure that groups people together

because of their expertise or the type of
activity they do (typically into departments).

3
 FUNCTIONAL STRUCTURE

Staff
Functional
Manager
staff

staff
CEO Functional
Manager
staff

Functional
staff
Manager 4
FUNCTIONAL STRUCTURE

5
 ADVANTAGES AND DISADVANTAGES
OF A FUNCTIONAL STRUCTURE
Advantages Disadvantages

1. Specialization 1. Lack of team work

2. Efficiency and productivity 2. Difficult Management Control
3. Healthy competition among 3. Multiple command system
experts 4. Lack of coordination
4. Relief to executives 5. High administrative cost
5. Mass production 6. Delay in decision making
6. Facilitates growth and 7. Spoils human relations
expansion 8. Narrow outlook of specialists
7. Suitable for present 9. Shifting responsibility
6
environment
ADVANTAGES OF A FUNCTIONAL STRUCTURE

1. Specialization

 offers a high level of specialization.

 each unit operates as a type of self-contained mini-company,
charged with carrying out its specific role.
 Employees typically start their careers in an entry-level position
within the function and develop specialized knowledge as they
move up within the hierarchy.
 They become experts within their functional area, and the unit and
company benefit from their expertise and experience over time.

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ADVANTAGES OF A FUNCTIONAL STRUCTURE

2. Efficiency and Productivity

 A worker who is an expert in his functional area can perform tasks

with a high level of speed and efficiency, which enhances
productivity.
 minimum amount of mistakes
 career paths within the functional unit are clear, the employees may
be highly motivated to advance their careers by reaching the next
rung on the ladder, which may also make them more productive.

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ADVANTAGES OF A FUNCTIONAL STRUCTURE

3. Healthy competition among experts

 the management makes the recruitment, selection, appointment

and placement of the managers on the basis of their specialization.
 thus it will encourage healthy competition among functional
experts.
 In the present day of competitive business environment, every
manager wants to demonstrate a better performance.
 the spirit of healthy competition brings out efficient executives

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ADVANTAGES OF A FUNCTIONAL STRUCTURE

4. Relief to executives

 work is divided on the basis of functional specialization.

 Under this structure, managers are not over burdened with maximum
workload as in the case of line organization.
 Here, every manager has to work in one line of activity where he has
functional specialization.
 This contributes to develop working efficiency of an enterprise.

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ADVANTAGES OF A FUNCTIONAL STRUCTURE

5. Mass production

 There is a provision of functional specialization and standardization

in work in functional organizations.
 This contributes to developing working efficiency of both the
executive and subordinate level members.
 The development of efficiency facilitates in maximizing productivity
of the enterprise.
 Thus, an enterprise can be involved in mass production and
distribution on the basis of requirement.

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ADVANTAGES OF A FUNCTIONAL STRUCTURE

6. Facilitates growth and expansion

 The functional organization structure provides preference for growth

and expansion of business activities.
 It creates scope for the existing volume of business to grow and
also for the expansion of various line of business.
 Each and every executive is an expert in his own sector. The
executives can handle their business in an effective manner in
accordance with requirements.

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ADVANTAGES OF A FUNCTIONAL STRUCTURE

7. Suitable for present environment

 The functional organisation structure is suitable for the management of

large scale business enterprises in present day environment.
 The development of production volume, expansion of markets,
customers, government regulation etc. create new and challenging
environment in business activities.
 The completion of business operation under such environment requires
the services of various areas.
 The functional organization fulfils such type of requirements for
successful operation of business.
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 DISADVANTAGES OF A
FUNCTIONAL STRUCTURE

1. Problems when the range of goods and

services a company makes increases
2. Problems as companies attract customers with
different needs
3. Problems when companies expand nationally
and globally

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DISADVANTAGES OF A FUNCTIONAL STRUCTURE

1. Lack of Teamwork

 difficulty working well with other units.

 If a project calls for several units to work together, units may become
territorial and unwilling to cooperate with each other.
 In essence, each unit may act in what it perceives to be its own best
interests instead of those of the organisation as a whole.
 Infighting may cause projects to fall behind schedule.

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DISADVANTAGES OF A FUNCTIONAL STRUCTURE

2. Difficult Management Control

 can pose a challenge for top management to maintain control as the

organization expands.
 As organisations get larger and top management needs to delegate
more decision-making responsibilities to each functional area, the
degree of autonomy may also increase, making coordination of
activities more difficult.
 If the company expands into new geographic areas, maintaining
control of and managing the separate functions can be even more of a
challenge.
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DISADVANTAGES OF A FUNCTIONAL STRUCTURE
3. Multiple command system

o The lack of unity of command is the major limitation of functional

organization structure.
o The subordinates are always in confusion to obey orders because
they receive more than one order at a time.
o There may be a possibility of division of loyalty of subordinates
among many functional managers.
o Besides, there is more difficulty in fixing the responsibility of jobs.
o Here, both functional specialists and subordinates do not want to
take full responsibility of works because of the violation of the principle
of unity of command.
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DISADVANTAGES OF A FUNCTIONAL STRUCTURE
4. Lack of coordination

o Every department of the enterprise is given to a

functional specialist.
o The department heads are independent to perform their
departmental works.
o There is no provision of formal relationship among the
departmental specialists. There is lack of mutual
understanding among them.
o The general manager may face serious problems in
coordinating departmental activities because the static and
narrow vision of departmental specialists.
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DISADVANTAGES OF A FUNCTIONAL STRUCTURE

5. High administrative cost

o The functional organization needs more administrative cost.

o In such case of an organization, many functional specialists are
appointed in various departments.
o The functional experts are to be paid more remuneration.
o So, it is impossible to minimize cost and maintain higher efficiency in
operation.
o Thus, this structure is not suitable for small and medium scale
enterprises having limited resources.

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DISADVANTAGES OF A FUNCTIONAL STRUCTURE

6. Delay in decision making

o Quick decision and prompt implementation are present day needs of

a business organization.
o However, in functional organization, there is no possibility of quick
decisions.
o It is essential to take suggestions and guidance from experts before
taking a decision.
o Thus, the management has to invest more time to come into a
concrete decision.
o The delay in decision making, in some situations, may become the
reason for business loss. 20
DISADVANTAGES OF A FUNCTIONAL STRUCTURE

7. Spoils human relations

o In functional structure, it is more difficult to maintain a mutual relation

among members of the organization.
o There is complexity in the relationship between the supervisors and
the subordinates which spoils human relationship in the enterprise.
o Due to lack of unity of command, a subordinate has to work under
many executives.
o In many situations he receives conflicting instructions from
executives which may divide his loyalty.
o Therefore, it is difficult to maintain a discipline in a functional
structure. by Ambigah d/o Sandran 21
 DISADVANTAGES OF A FUNCTIONAL STRUCTURE
8. Narrow outlook of specialists

o The narrow of departmental specialists creates problems in functional

organizations to achieve overall objectives of the enterprise.
o The departmental specialists are more concerned about efficient functioning
of their respective functional areas.
o They do not want to maintain mutual relations with co-workers of other
functional areas.
o In a similar manner, they do not cooperate with each other in solving
organizational problems.
o In such way, the chief executive has to face many problems while maintaining
coordination among all the functional area of the enterprise.
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DISADVANTAGES OF A FUNCTIONAL STRUCTURE

9. Shifting responsibility

o Fixing a definite responsibility for the functional specialist or a

subordinate is difficult in this type of organization.
o There is lack of unity of command everyone wants to shift
responsibility of unsatisfactory works to others.
o For instance, a functional specialist may shift his responsibility to
functional specialists.
o Such an environment creates problems in achieving defined
objectives.

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 Divisional
structures

1. Product 2. Geographic

Members of the organisation are grouped on the basis

of
common products,
geographic markets, or
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customers served
DIVISIONAL STRUCTURES:
PRODUCT

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DIVISIONAL STRUCTURES:
PRODUCT

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DIVISIONAL STRUCTURES:
GEOGRAPHIC

a structure in which divisions are created to

serve the needs of customers in a particular
region, country, or world area

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GEOGRAPHIC STRUCTURE

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 Divisional Structure

Merits Demerits

1. Suitable 1. Source of conflict

2. Facilitates specialization 2. Under utilization of capacity
3. Maintain direct attention 3. Problem for effective control
4. Effect monitor and evaluation 4. Maximize administrative cost
5. Accountable divisional 5. Difficulty in coordination
managers 6. More inter dependency
6. Optimum use of resources 7. Ignore common goals
7. Efficiency integration

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 Divisional Structure

Merits

Suitable

 It is suitable for the organisation having diversified business activities.

 Under it there are some big businesses houses involve in various line
of business which are inter related to each other.

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 Divisional Structure

Merits

Facilitates specialization

 It brings specialisation in a product or service which makes optimum

utilization of human and other physical resources.
 All the divisions have inter relation to each other to meet common
goals. They are experts in their own area of business.
 Corporate manger maintains coordination over their activities.

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 Divisional Structure

Merits

Maintain direct attention

 It directs attention toward specific product line and service.

 big business organisations involve in production of similar types of
products or service in different geographical locations.
 Because, they provide direct attention for improvement of quality of
products or service to gain competitive advantages in market.

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 Divisional Structure

Merits

Effect monitor and evaluation

 It facilitates to monitor and evaluate the performance of each

production or service department.
 Corporate head office maintains timely supervision over the
performance of divisional business units.
 It is supportive for evaluation of achievement of actual performance.
 If any deficiency is found in actual performance, corporate manager
takes necessary measures.

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 Divisional Structure

Merits

Accountable divisional managers

 In this organizational structure, divisional managers have given in

dependency in doing work.
 They are efficient and self responsible for accomplishment of
assigned work.
 They submit progress report of the performance to corporate office
within specified time.
 It makes accountable to divisional managers for the profitability of
each product/service.
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 Divisional Structure

Merits

Optimum use of resources

 This structure permits maximum use of specialized production or

service facilities.
 There is the opportunity of coordination and share resources among
the departments.
 Healthy competition for resources among divisions can enhance
effectiveness through mutual cooperation.
 It facilitates for effective performance of the organization.

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 Divisional Structure

Merits

Efficiency integration

 A separate division is formed for a product line or service.

 Each division is dependent and responsible to improve and expand
its business performance.
 The corporate head office is responsible for maintaining coordination
of the activities of all divisions.
 It helps to integrate efficiency of divisions for common benefits.

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DEMERITS OF A DIVISIONAL STRUCTURE

 Operating costs are much higher

 Having more managers can result in

communications problems, slower decision
making, and lower performance

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 Divisional Structure

Demerits

Source of conflict

 In this structure works are divided into different into departments on

the basis of nature.
 There may be the possibility of conflict between departments as the
responsibilities are inter dependent to each other.
 It may create obstruction in smooth functioning of the organization.
 Corporate executive needs to invest more time and effort to resolve
conflict.

by Ambigah d/o Sandran 39

 Divisional Structure

Demerits

Under utilization of capacity

 There may be the possibility of under utilization of plant capacity if the

demand of the product or service is not sufficient.
 The under utilization of capacity may be the reason of wastage of
resources.
 It maximizes cost of product or service.
 It minimizes competitive advantages of the organization and
becomes difficult to face competition in the market.

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 Divisional Structure

Demerits

Problem for effective control

 In organization various departments and branches are formed on the

basis of nature and size of business.
 The divisional managers are independent and responsible for all the
activities of the concerned department.
 It creates the problem to top level manager for effective control over
functions of divisions.

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 Divisional Structure

Demerits

Maximize administrative cost

 In divisional organization, there is the provision of functional

specialists.
 Divisional managers are expert in their own area of performance.
 Management needs to bear additional expenses to pay more
remuneration and other facilities to experts.
 Therefore, it is not suitable for small organizations having limited
resources.
 It maximizes administrative cost.
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 Divisional Structure

Demerits

Difficulty in coordination

 Works are divided in different division on the basis of nature and size
of business.
 Each work is assigned to the terms by considering their efficiency.
 Divisional managers are independent and self responsible for doing
jobs.
 If there is lack of mutual relation among the departmental managers
then executive needs to devote more time to maintain coordination
over their performance.

by Ambigah d/o Sandran 43

 Divisional Structure

Demerits

More inter dependency

 This design develops for maintaining strategic relation among related

diversify business activities.
 There is inter relation over the performance of all the departments.
 The lack effective performance in one department creates problems
in the performance of all the business units of the organization.
 In such situation for smooth functioning of the organization corporate
head office needs to play major role.

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 Divisional Structure

Demerits

Ignore common goals

 The divisional managers may ignore overall objective of the

organization.
 Corporate head office divides job to each division on the basis of
nature, size and location of business.
 There is inter relation of the performance of all the division.
 If divisional managers do not maintain mutual relation to each other it
becomes difficult to meet common goals.

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 MATRIX STRUCTURE

a structure that groups

people and resources in two ways

simultaneously by

function and by product

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MATRIX STRUCTURE

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MATRIX STRUCTURE

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 MATRIX
MATRIX STRUCTURESTRUCTURE

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 MATRIX COORDINATION ADVANTAGES

1. The company can develop new products more

rapidly

2. It can maximize communication and

cooperation between team members

3. Maximizes innovation and creativity.

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 DISADVANTAGES OF A MATRIX STRUCTURE

1. Dual reporting relationships

2. Bosses come into conflict over precisely who is

in charge of which team members and for how
long.

3. Employees feel the lack of a stable “home

base”.

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TALL AND FLAT STRUCTURES

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 TALL VS FLAT ORGANISATION STRUCTURE

 The difference between tall and flat organizational structures is the layers
of management.
 In a flat organizational structure. There may be just one top manager
who is an owner or CEO of the company, overseeing a handful of other
employees, all with equal levels of authority.
 In a tall organizational structure, by contrast, there are multiple layers
of authority between the CEO and low-level employees.
 For example, an entry-level employee may report to a supervisor, who
reports to a manager, who reports to a director, who reports to a vice
president, who, finally, reports to top management.
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 PROBLEMS IN COMPANIES WITH
TOO MANY LEVELS IN THE HIERARCHY

by Ambigah d/o Sandran 54