Selecting an Organizational Design

Most modern organizations follow one of five organizational structures.

These structures are simple, functional, divisional, matrix and network. A

corporation may also use any combination of the five structures to support

short to long term strategy.

According to Wheelen and Hunger, simple structure has no

functional or product categories and is appropriate for a small company,

such as a sole proprietorship. Functional structure is appropriate for a

medium-sized firm with several related product lines in one industry.

Divisional structure is appropriate for a large corporation with many

product lines in several related industries. In matrix structures, functional

and product forms are combined at the same level of the organization. A

network structure is characterized by its virtual elimination of in-house

business functions.

Classic design theory represents an approach that is still used in

manufacturing, This design emphasizes on division of labor,

standardization of tasks, hierarchy of authority, equal authority and

responsibility, unity of command, limited span of control, separation of

line and staff, and decentralization.

Chandler Farmers Market

Chandler.

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However, in recent years, changes

have been made to this structure in order for manufacturing firms to be

competitive in a global economy.

Alfred Chandler concluded that structure follows strategy - changes

in corporate strategy lead to changes in organizational structure. Chandler

conducted research using several large U.S. corporations. Changes in the

environment tend to be reflected in changes to corporate strategy and lead

to changes in corporate structure. Experts agree that organizational

structure will vary within different industries and that there is no optimal

organizational design.

After reading Bolman and Deal along with the Strategic

Management text, I have concluded that no one organizational design is

any better than any of the rest . A company must use a design that

supports the growth and profitability of its organization. Research has

shown that...