3. Functional Organization Structure
Functional organization has been
divided to put the specialists in the top position throughout the organization.
This is an organization in which we can define as a system in which functional
department are created to deal with the problem of business at various levels.
Functional authority remains confided to functional guidance to different
departments. This helps in maintaining quality and uniformity of performance of
different functions through the enterprise.
Organization by function brings
together in one department everyone engaged in one activity or several related
activities that are called functions. Example, an organization divided by
function might have separate manufacturing, marketing, account and finance,
production, human resource etc. A sales/marketing manager in such organization
would be responsible for the sale of all manufactured product by the firm same
as other manager eg. Manufacturing, accounting/finance, production, HR are
performed their related activities.
GM/CEO >
>Manufacturing
specialist (manager)
-Raw materials collection officers
--workers
-Raw material store officers
--workers
-Manufacturing process officers
--workers
-Engineers
--workers
>Marketing/sales
specialists (manager)
-Promotion officers
--workers
-Distribution officers
--workers
-sales officers
--workers
>Accounting/Finance
specialists (manager)
-A/c officers
--workers
-Record keeping officers
--workers
>Human
resources specialist (manager)
-Recruiment officers
--workers
-Training officers
--workers
-Employee record officers
--workers
>Research
and development specialist (manager)
-Data keeping officers
--workers
-Data collecting officers
--workers
-Data tabulation officers
--workers
-Data analysis officers
--workers
Features
-
Organizational activities are divided into functional
department such as MFG, MKT, ACC, HR, R&D.
-
It is complex than the line and line - staff
organization
-
Three authority is exist; Line, Staff and Function
-
Each functional area lead by each specialists
-
Work specialization
-
Economy than the Matrix organizational structure
Merits of functional organization structure
-
Specialization in work
-
Effective control by specialist
-
Efficiency in work
-
Economy (specialized person can work fast &
qualitative)
-
Expansion (Knowledge expansions, facilities
expansions, etc.)
Demerits
-
Confusion to the lower level workers
-
Lack of coordination
-
Difficulties in fixing responsibility
-
Conflict
-
Costly than Line & Line - staff organization
4. Matrix organization structure
The matrix organization structure, sometime referred
to as “multiple commands” system, is hybrid that attempt to combine benefits of
both type (functional and pure project org. structure) of design while avoiding
their drawbacks. An organization with matrix structure has two types of
structures (functional and pure project org. structure) existing simultaneously.
Employees have in effect two bosses i.e. they work in two chains of commands.
Features
-
A hybrid forms that combines some characteristics of
functional and pure-project org.
-
Project manager and functional shares responsibilities
-
Project manager decides what task will be done, when
they will be done, how that will be done, etc. and project manager is called
task manager.
-
Functional manager decides what types of resources
should be allocate to the particular work or functional manager is called
resource manager.
-
Decision making right remains in both (resource
decision and task decision).
Merits
-
High level of integration among key people.
-
Improve communication
-
Suitable to complex decision
-
Provides opportunity for functional and project skill
development
-
Best in highly uncertain environment
Demerits
-
Dual boss/authority
-
Confusion
-
Duplication of efforts
-
Power struggle
-
High cost
GM/CEO >
>Manufacturing
specialist (manager)
>Marketing/sales
specialists (manager)
>Accounting/Finance
specialists (manager)
>Human
resources specialist (manager)
>Research
and development specialist (manager)
Centralization and Decentralization
Centralization:
Centralization
is said to be a process where the concentration of decision making and resource
control is in few hands. All the important decision and actions at lower level,
all subjects and action at the lower level are subject to the approval of the
top level management.
According to
Allen: “Centralization is systematic and consistent reservation of authority at
central points in the organization. ”
The
implication of centralization:-
-
Reservation
of decision making power at top level
-
Reservation
of operating authority with middle level manager
-
Reservation
of operation at lower level at the direction the top level
Under the centralization, the important and key decisions are
taken by the top level management and the other levels are into implementation
as per the direction of top level. eg. In a business house, the father and son
being the owners decide above the important matters by fathers and all the rest
of the functions like production, finance, marketing and etc. by the son is
centralization.
Advantages of
centralization
-
Greater
the centralization, higher the job specialization
-
Able
to manage specialization or narrow span of complex job
-
Suitable
for environmentally stable situation
-
Improve
capacity of lower level
-
Able
to handle crises management
-
Cost
effective/economy
Disadvantages of centralization
-
Poor
environmental adaptation
-
Poor
diversification according to the geographical region
-
Unsuitable
for programmed decision
-
Poor
management development
-
Delay
in decision
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