2. Hybrid Organisational Structure: Exhibit 10.9 (a) illustrates the hybrid organisational structure. Let's take a look at the advantages and disadvantages of each so you know what you're up against when you join a new structure. Divisional Structure. Employees in entry-level positions would receive their daily assignments from their direct supervisor. Employees do not report to multiple managers. This note introduces basic principles of organizational design and the advantages of several common organizational structures. 7. One advantage of this sort of flatter hierarchy is that it is easier for employees to communicate with each other and it facilitates learning. Functional organization in one form or the other exists in all business concerns, particularly at the top. Each group of specialists can therefore operate independently with management acting as the point of cross-communication between functional areas. A functional organizational structure is the most common of the three organizational structures adopted by most companies. The term organizational structure refers to how the people in an organization are grouped and to whom they report. The advantages of functional organization structure Lauren Nelson - Updated April 17, 2017 Every business or organisation is structured differently, depending on its needs and goals. When a company is growing rapidly and is therefore continually modifying its operations to meet changing conditions, the functional structure can reduce the speed with which changes are made. Within a hierarchical organizational structure, clear lines of communication are established for everyone. Exhibit 10.9 (b) illustrates a combination structure. The functional structure is commonly found in small companies and also in large companies with single product line or narrow product ranges. Advantages: 1. The functional structure is based on an organization being divided up into smaller groups with specific tasks or roles. The advantages of a functional organizational structure. While it has its advantages, it also has a few disadvantages. Advantages of a Functional Structure. It creates a defined structure for communication. Alignment of corporate and divisional goals. The following are a few benefits of the functional organizational structure: Employees are grouped by their knowledge and skills, allowing them to achieve high performance. A functional organizational structure is a structure that consists of activities such as coordination, supervision and task allocation. Everyone is going to be better off with the organizational structure that fits the project team and parent organization best. 1. Functional division also makes it difficult for departments to understand larger company concerns. Functional organisational structure refers to the structure in which different departments are created on the basis of major functions performed in the organisation. Employees are possible to become experts. An organizational structure, so designed that it is bifurcated into semi-autonomous divisions on the basis of product, service, market etc, is known as divisional structure. Functional Organizational Structure has developed from increasing complexity of business operations, particularly in production department, and the need to have specialists to aid line personnel. The organizational structure could group those who work in a specific department together, or the grouping could be based on those who work in a functional area such as finance or marketing. Different organizational structures that combine to form Starbuck’s matrix structure are divisional structure, functional structure, and team-based structure. Functional Structure The functional structure in the firm’s organizational structure divides different functions into different groups such as the marketing department, finance department and human resources department. Functional expertise and efficiency. This is the simplest & the most prevalent form of organizational structure. These "tall" organizations are the most traditional organizational structure. A Functional organizational structure has several advantages and disadvantages when it comes to managing projects: Advantages. 1. Appropriateness This is the capacity to move from centralized bureaucratic structures to interrelated but … Every organization functions on some basic principles and a particular structure. Advantages of the hierarchical organizational structure are many, the most impelling of which is that your employees will have clearly defined roles and responsibilities, and a sense purpose in accomplishing those roles. Adaptability and flexibility in divisions. Complexity: Matrix structure is complex in nature due to the combination of two organizational structures: Functional structure is simple and convenient to manage. The main difference between functional and divisional structure is that in functional organization is described as an organizational structure wherein, the employees are classified on the basis of their area of specialization. If you’ve had a job, you likely worked in a functional organizational structure. This will reduce communication channels. 3. Functional organization structure 2. The layers give bureaucracies a vertical thrust when laid out in an organizational chart. Functional organization structure is optimal for small businesses or companies producing standardized goods or services.. Functional Organization Structure Main Advantages: Offers a high level of specialization. Merits of functional organization: The following are the merits of functional organization. ” Projectized Organization “ Nowadays, many organizations operate in an effective environment that they tend to focus on the outcomes of the project by using different management approaches. The following are the advantages of functional organisation structure: (1) Benefits of Specialisation: The whole company is divided into many departments on the basis of major activities to be performed. Advantages & Disadvantages of Bureaucratic Organizational Structure. Each employee will report to his direct functional manager. Functional structure divides the organization based on specialized functional areas such as production, marketing, and sales for the purpose of management. The hierarchy is clear. Functional Structure. A project team needs to have structure and one of the most important parts is ensuring everyone knows their roles and responsibilities. Types of Organizational Structures Functional. Despite the advantages of the functional organizational structure, it can also twist the fundamental process and decision flow within a business, with the following results: Fast growth. Advantages of the Functional Organizational Structure. Functional organization structure is suitable for small as well as those entities that offer one type of services or products regularly; for example, medical clinics, car-repairing shops, hotels, and restaurants. Disadvantages: 1. 2. There are three common organizational structures, and project managers work in all of them: functional, project, and matrix. Communication between them suffers, and with it goes easy coordination and cooperation. section 3, advantages of functional structure will be discussed, in section 4, challenges of functional structure and operational issues. Their roles and responsibilities are fixed, facilitating easy accountability for the work. This system provides ample opportunities for minute specialization to its maximum extent. In the functional structure, such as shown in the following Facebook organizational chart, functions are separated into different groups, resulting in some defects.Here are the major disadvantages you must consider: Create Your Own Org Charts! 2. This results in more and better work being accomplished in much lesser time. Functional departments arguably permit greater operational efficiency because employees with shared skills and knowledge are grouped together by functions performed. Let’s start with the advantages: No change. Answer (1 of 5): The main advantage of a functionally-structured organisation is that the workforce will be divided into specialised groups and employees will have no difficulties in understanding what is expected of them. Though the functional organizational structure gives employees a sense of belonging within each departmental area, the structure creates space between departments. This approach involves a considerable amount of process standardization within a business, with the real decision making authority centered at the top of the organization . Benefit of Specialization. A functional organizational structure is one of the most effective setup based on which organization functions. II. Advantages of the Functional Organizational Structure. The following are some advantages of the functional organization structure: Functional Structure: Under the functional structure, the organisation is designed on the basis of the basic functions, namely, production, finance and accounting, marketing and personnel. Remedies of functional and operational issues will make up section 5 while the paper ends in section 6 conclusion. Management layers characterize bureaucratic organizations. Advantages: Each department is headed by an expert manager. List of the Advantages of a Hierarchical Organizational Structure 1. Functional Structure: . The organizational structure determines how the organization performs or operates. Expertise Knowledge. A functional organizational structure has a vertical and disconnected structure in which communication flows through the functional managers to the top management. The matrix organizational structure is a combination of two or more different kinds of organizational structures, such as project management or functional management. When an organization is structured in a functional way, it is important to know what are the advantages and disadvantages of this choice. Hierarchical structure of an organization usually has vertical levels leading up to the top head – the CEO or Managing director. 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