Classification of Organization Structure.pdf

The classification of an organization typically refers to categorizing it based on factors such as its structure, purpose, industry, or legal status. It helps define the nature and characteristics of the organization. Sure, organizations can be classified in various ways:

1. **Legal Structure:**
- Sole Proprietorship
- Partnership
- Corporation
- Limited Liability Company (LLC)
- Nonprofit Organization

2. **Purpose:**
- For-profit organizations
- Nonprofit organizations
- Government organizations

3. **Industry:**
- Manufacturing
- Services
- Healthcare
- Technology
- Education

4. **Size:**
- Small and Medium-sized Enterprises (SMEs)
- Large Corporations

5. **Structure:**
- Hierarchical
- Flat/Organic
- Matrix

6. **Geographic Scope:**
- Local
- National
- International

7. **Ownership:**
- Publicly traded
- Privately held

Each classification provides insights into different aspects of an organization's identity and operations. Certainly, let's delve a bit deeper into some of these classifications:

1. **Legal Structure:**
- **Sole Proprietorship:** Owned by a single individual. Simple structure, but the owner is personally liable.
- **Partnership:** Owned by two or more individuals who share profits and liabilities.
- **Corporation:** A separate legal entity from its owners, providing limited liability to shareholders.
- **Limited Liability Company (LLC):** Blends aspects of a corporation and a partnership, offering liability protection and flexibility.

2. **Purpose:**
- **For-profit organizations:** Aim to generate profits for owners/shareholders.
- **Nonprofit organizations:** Exist for a mission or cause, with any surplus reinvested in the organization.

3. **Industry:**
- **Manufacturing:** Produce physical goods.
- **Services:** Provide intangible products.
- **Healthcare, Technology, Education:** Specific sectors with unique characteristics.

4. **Size:**
- **SMEs:** Smaller in scale, often more locally focused.
- **Large Corporations:** Global entities with complex structures and diverse operations.

5. **Structure:**
- **Hierarchical:** Traditional with clear lines of authority.
- **Flat/Organic:** Fewer layers of management, fostering collaboration.
- **Matrix:** Employees report to multiple managers based on projects or functions.

6. **Geographic Scope:**
- **Local, National, International:** Reflects the extent of operations.

7. **Ownership:**
- **Publicly traded:** Shares available to the public, often listed on stock exchanges.
- **Privately held:** Ownership is private, not publicly traded.

These classifications are tools for understanding and analyzing the diverse landscape of organizations, each with its unique characteristics and implications.

1. Classification of
Organization Structure
Cape Management of Business Unit 1
Ms. Wynter

2. An ‘organization’ can be defined as a ‘group of
people working together to achieve a common
or collective goal.
It is a well-coordinated social unit of two or more
people with a desire to achieve a common goal
or collective goals.
What is an organization ?
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3. Organizational structure is a framework that
outlines the lines of authority and communication
in the organization.
Organizational Structure
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4. An organization can be classified in different ways, with each
classification being dependent on various factors such as
functions, product and location.
Classification of Organizations
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5. This is where the organizational structure is designed in
terms of the functional areas of the business – for
example, marketing, purchasing, accounting, etc.
It also encourages expertise in specific areas.
Functional Organizational Structure
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6. Functional Organizational Structure,
Cont’d.
Disadvantages
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Advantages
➢Specialization and expertise
➢Clear hierarchy within
departments
➢Operational functions can be
delegated to lower-level
management.
➢Limits communication across
departments.
➢Potential for lack of
coordination.
➢Decision-making process may
be very slow.

7. This organizes the company around its different product lines or
services.
In situations where businesses have different products,
management may decide to separate the activities for each
product.
Each product would have its own management structure which
is answerable to top management. The management structure
of the product may be extended to include the major functional
areas of production, sales, finance, etc.
Product Organizational Structure
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8. Product Organizational Structure,
Cont’d.
Disadvantages
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Advantages
➢Focus on specific product strategies
➢Efficient management of diverse
products.
➢Promotes positive competition among
divisions
➢Duplication of functions for similar
products
➢Potentials for lack of coordination
between product lines.
➢The success of the product is highly
dependent on the people with
direct contact with the product

9. Example:
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10. The geographical organizational structure organizes
the enterprise in terms of regions or countries. However,
each region or country can then be organized in terms
of function or product.
This type of structure is frequently used by multinational
corporations which have different firms in various
countries.
Geographical Organizational
Structure
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11. Example:
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12. Geographical Organizational Structure,
Cont’d.
Disadvantages
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Advantages
➢The firm can respond quickly to local
environmental change.
➢Promotes delegation of responsibilities
➢Each region has responsibility for profit
generation
➢There is duplication of resources
across regions
➢Poor coordination across regions
can hurt the entire organization
➢Competition for corporate resources
may lead to conflict

13. This structure combines elements of the functional,
product and possibly geographical organizational
structures.
It is usually used where the environment is rapidly
changing and there is a need for effective coordination
to combat the situation.
Matrix organizational structure
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14. Matrix Organizational Structure, Cont’d.
Disadvantages
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Advantages
➢Often leads to better use of resources
➢Flexible and adaptable to the changing
environment
➢Employees are more involved in the
operation of the firm
➢Workers may become confused
from answering to so many authority
figures
➢Slow decision-making process
➢May lead to a power struggle
among managers

15. Example:
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16. The structure seeks to remove departmental boundaries by
establishing teams which work to complete an overall
business objective.
These teams are usually cross-functional and are
composed of employees from different functional
departments, including production, sales and finance.
Team members are answerable to both their functional
managers and the team leader.
Team organizational structure
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17. Team Organizational Structure, Cont’d.
Disadvantages
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Advantages
➢Improves employees’ motivation
➢Removes departmental barrier while
facilitating intradepartmental
relationships
➢Speeds up the decision-making process
➢Allows authority to be delegated as the
hierarchy is lessened.
➢This structure may lead to conflicts
among departments as they
compete for scarce resources
➢There is always a possibility of the
problem of dual loyalties
➢A lot of time is spent in meetings

18. Example:
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19. This organizational structure links a number of separated
organizations with a desire to achieve a common goal
through their interactions.
The network can be in the form of a joint venture agreement or where
some of the major functions of the firm are subcontracted to other firms.
These firms are linked by and to a company which serves
as the headquarters or hub.
Network Organizational Structure
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20. Team Organizational Structure, Cont’d.
Disadvantages
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Advantages
➢Minimizes administrative costs
➢Faster decision-making process since
there is a reduction in hierarchical
structure.
➢Less control over what is done, since
most workers are contracted
➢Can be time consuming, especially
where there are regular meetings.

21. Example:
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22. This uses networks to create linkages among people, assets and
ideas. These linkages enable the company to manufacture and
distribute products without the hindrances of organizational
boundaries or location.
This gives companies the ability to draw on the capabilities of others
without having to be there physically.
The virtual organization relies on a centralized database which uses
technology such as videoconferencing and e-mail via the computer
to communicate.
Virtual Organizational Structure
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23. Team Organizational Structure, Cont’d.
Disadvantages
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Advantages
➢Access to worldwide expertise in order to
provide high quality goods and services
➢The firm can adapt quickly to changes in
the external environment because of its
flexibility.
➢Minimal overhead costs, as products are
often outsourced
➢Communication in the virtual office
may be difficult as people are
working within different time zones.
➢It can be difficult to build a
corporate culture, as employees
and employers may be from
different cultures across the world.
➢Heavy reliance on external
organizations to provide high-quality
goods in large quantities

24. Example:
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