Large Firms Typically Use a Variety of Structures to Manage Their Organisations

In this essay I will analyse four types of organisation structure regarding large firms as examples in order to highlight the main advantages and disadvantages that this structures have among the firms. I will also show which structure is best suited for each firm while analysing the main characteristics of each of the corporations. The idea of an organisational structure involves all the ways in which an organisation splits into different tasks its labour and finally achieves coordination among them. (Mintzberg, 1979, cited in Boddy, 2005, p. 07) Whereas the structure in an organisation is very important, so is the size. Within larger organisations there is a ‘greater need for a carefully designed and purposeful form of organisation’ (Mullins, 2008, p. 385). According to Child (2005, p. 6), ‘a basic structure distributes responsibilities among the members of a company. Its purpose is to contribute to the successful implementation of objectives by allocating people and resources to necessary tasks and designing responsibility and authority for their control and coordination’. The organisation’s structure is strongly related to its culture, as Watson (2006, p. 52-262) argues, ‘many of the processes and practices we observe in an organisation could as readily be said to be part of the structure of the organisation as part of its culture’ (cited in Mullins, 2008, p. 385). Denison (1990) defines organisational culture as ‘The underlying values, beliefs, and principles that serve as a foundation for an organization’s management system as well as the set of management practices and behaviours that both exemplify and reinforce those basic principles’ (cited in Martin, 2002). Within an organisation there are several structures, each of which has its strengths and weaknesses.

A functional structure (see diagram below) is represented by the managers and subordinates that have ‘closely related skills and responsibilities’ and that work in the same department. (Johnson & Saks, 1946, p. 485) So the ones that work very good in sales and advertising are designated to the marketing department and also the ones that have abilities for mathematics, accounting and credit are designated to the finance department. (Johnson & Saks, 1946, p. 485 ) An advantage of the functional structure is the effective means of organising the smaller epartments of large firms, for example, Revlon Inc. , which is organized around the functions of operations, finance, human resources, and product research and development. One of the strengths of this organisation is also the control of each of the functional group that it has over its department, standardizing in this way the projects that they have. A disadvantage of this structure that affects the company is the reduced coordination of interdepartmental tasks and also the approval of limited views in functional groups, the ‘alienation and demotivation’ (Bratton, 2007, p. 02). Functional Structure: Source: Public Procurement Best Practice Guide (2010, 15 March) ‘Project Management-Organizational Structure’ updated 1 January 2008 from http://www. publicprocurementguides. treasury. gov. cy/OHS-EN/ HTML/ index. html? 7_2_3_organizational_structure. htm Another structure that is used by large firms is the organic structure which is summarised by Burns and Stalker (1961) as being suitable for the ‘non-routine tasks and technologies’.

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They also argue that it ‘is appropriate to changing conditions which give rise constantly to fresh problems and unforeseen requirements for action which cannot be broken down or distributed automatically (to) the functional roles defined within a hierarchic structure’ (cited in Litterer, 1973, p. 337). The global company, Phillips has an organic structure, regarding the low complexity of the firm, reducing ‘many separate divisions to just five’ and also communication is horizontal due to a broke down of ‘long-established internal divisional barriers to communication’ (The Economist, 12 June 2004, cited in Boddy, 2002, p. 70). A competitive advantage of an organic structure is the organization’s competitive plan that is established on maximum flexibility and adaptability. (Bratton, 2007, p. 398) One of the disadvantages is low specialization and also there aren’t many different jobs and ‘no hard boundaries’ within the organisation. (Litterer, 1973, p. 339) The global company, The Body Shop, has a complex structure, a mixed form of the matrix and divisional structure, so the organisation’s work is divided into products, functions and geographic areas. (Boddy, 2002, p. 20) The divisional structure is used by the managers to arrange the organisation, to group the employees around products, clients or geographic regions. The Body Shop takes account of the divisional structure established on ‘its major operating regions around the world’ as the marketing skin and hair in Asian region or England is different from the one in Canada, the company’s products being sold in different parts of the globe (Bratton, 2007, p. 402). Strengths of this structure are the attention of the functional staff on the product and clients’ needs.

The ‘dedicated facilities’ are also an advantage, accomplishing the customer needs quickly (Boddy, 2002, p. 319). The fact that divisions develop rules without taking into account the organisational interests is a weakness for the company’s structure and also the division’s performance achievements become a barrier to accomplish the overall corporate goals. (Bratton, 2007, p. 404; Boddy, 2002, p. 319) The matrix structure (see diagram below) consists of two types of departmentalization, functional and product, so the specialists from the functional department are designated in working in teams, conducted by project leaders. Robbins, 2000, p. 253) The Body Shop has a complex matrix structure, an advantage of this being that facilitates the adequate resource distribution to different projects. (Public Procurement Best Practice Guide, 2008) Other benefits that underpin the organisation are the opportunities for staff development, gaining diversity of work experience, the authority and responsibility are distributed and the stress is divided among the team. (Public Procurement Best Practice Guide, 2008) One of the disadvantages is the ‘task and personality conflicts’, but also the way that people are distributed to projects. Robbins & Coulter, 2005, p. 245; Boddy, 2002, p. 320) The Project Manager cooperates with the functional manager to organize the resource demands, so a disadvantage can be the potential conflict between them regarding allocation of resource. (Public Procurement Best Practice Guide, 2008) Typical matrix organization: Source: Visitask, (2008, 12 March) ‘Matrix Organisation and Project Management’ from http://www. visitask. com/matrix-organization. sp In conclusion, I think that each firm uses the structure that is most suitable for them in order to achieve their own goals and also to have a productive organisation, each structure having its own strengths and weaknesses. Among large firms the most effective and broadly used structure is matrix, because of the complex form that uses advantages of both functions and project work and the functional structure is the least adequate for supervising and executing projects regarding the lack of responsibility and coordination among departments.

The divisional and organic structures are the best suited in the given examples regarding the companies characteristics. Bibliography Books: •Boddy, D. , 2002. Management An Introduction, 3rd ed. , London, Financial Times Prentice Hall. •Bratton, J. , 2007. Work and Organisational Behaviour, New York, Palgrave Macmillan. •Burns, T. & Stalker, G. M. , 1961. The Management of Innovation, London, Tavistock. •Child, J. , 2005. Organisation: Contemporary Principles and Practice, Blackwell Publishing. •Denison, D. , 1990. Corporate culture and organisational effectiveness, New York, John Wiley. •Johnson, G. & Saks, A.

M. , 1946. Organizational Behaviour: Understanding and Managing life at work, 7th ed. , Toronto, Pearson Prentice Hall. •Litterer, J. A. , 1973. The Analysis of Organizations, 2nd ed. , New York, John Wiley & Sons, Inc. •Martin, J. , 2002. Organisational Culture: Mapping the Terrain, California, Sage Publications. •Mintzberg, H. , 1979. The Structuring of Organizations, Englewood Cliffs, NJ, Prentice Hall. •Mullins, L. J. , 2005. Essentials of Organisational Behaviour, 2nd ed. , London, Financial Times Prentice Hall. •Robbins, S. P. , 2000. Managing Today! , 2nd ed. , New Jersey, Prentice-Hall, Inc. •Robbins, P. Coulter, M. K. , 2005. Management, Soft cover, Pearson plc. •Watson, T. , 2006. Organising and Managing Work, 2nd ed. , Financial Times Prentice Hall. Websites: •Public Procurement Best Practice Guide, 2008. Project Management-Organizational Structure [Online] (Updated at 1 January 2008) Available at: http://www. publicprocurementguides. treasury. gov. cy/OHS-EN /HTML /index. html? 7_2_3_organizational_structure. htm [Accessed at 15 March 2010] •Visitask, 2004. Matrix Organisation and Project Management [Online] Available at: http://www. visitask. com/matrix-organization. asp [Accessed at 12 March 2010]


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