However, virtual organisations may suffer from two problems. The design enhances coordination and control within each of the functional area. iv. "name":"Certification Courses", However, it is not free from shortcomings. That improves employee morale. The divisional structure is not without limitations. One advantage of the matrix organizational structure is that people across different functional areas have a better understanding of their coworkers in other areas. (vi) Functional organisation may prove unsatisfactory in handling diversified product lines and specialized projects. An organizational structure will benefit your company no matter what size it is. A large manufacturing firm with multiple factories is likely to have a different organizational structure than a financial services firm with only one office. There is a high degree of differentiation of functional tasks. It does not encourage development of future managers. Businesses working on a specific project could also have a matrix organizational structure that sets up the relationship among the people working on the project. A horizontal structure is a flatter organizational structure that groups together people based on their skills or functions. Similarly, matrix superior has to share the facilities with others. Thus, what is suitable for one business may not be suitable for a similar unit, but there are successful firms in a given industry tend to design structure in a similar way. More than one boss for project teams. In this form, each major product or product line is organized as a separate unit. Uploader Agreement. v. It tends to encourage overspecialisation, narrowing viewpoints of key personnel and limit the development of general managers. This structure serves the needs of the situation faced and is flexible in nature. Benefits and Disadvantages of the Project Organizational Structure One of the key benefits of the project organizational structure is that it makes it easy for the team to communicate and stay up to date on day-to-day tasks since they are in the same organizational group and have the same manager. The concept of virtual organization/corporation, also known as networked organization or modular organization along with virtual team and office has entered management field very recently. They enable a more sustainable and healthier corporate environment. Even if he has enough time to do additional work, he is fully dedicated to the project and this unutilized time of the resource cannot be used. Because all resources of the project are dedicated to project tasks and assignments. It establishes the reporting relationships between people and their span of control. The specialisation increases operational efficiency, economic flexibility, and greater motivation to the people having attached with their area of speciality. Even the earliest adopter of this concept, GE, has not yet achieved this boundary less status. iv. Improved customer service can help companies answer consumer inquiries or questions regarding goods or services. Organizational structure also allows employees to clearly understand the divisions between lower, middle and senior management. Functional structure is based on specialisation of functions. Another disadvantage of the projectized organizations is the duplication of facilities and job functions. For various projects, there may be several project managers or co-coordinators each getting required resources and personnel from organisation so as to complete the project in time. There is integration of activities relating to a particular line of product. Taking everything on one’s head has its own risks and disadvantages. The owner manager gets invested with a complete knowledge of his organisation and its business. In Matrix organizations, the team members report to their project manager and also to their functional managers. It may become uneconomical where full use cannot be made of the specialised skills and equipment of each department. f. They usually order materials, keep inventories, and deal with suppliers. iii. For instance, the marketing department may be divided into four sections; namely, advertising, sales, customer service and marketing research. The main reason of this is, there will be lots of projects needing resources from a single functional department. According to Burns and Stalker, “Organic structure is one that is characterised by high degree of decentralisation and flexibility and under which individuals are more likely to work in a group setting rather than alone.” In an organic structure, the organisational members communicate across all levels of the organisation to obtain information. 5. It also involves a chance to pursue their passions and this business structure can make that happen. b. It is very useful where proximity to the local market can result in cost reduction. However, the boundary less organizations should not be treated as panacea for all structural ills because they have their own drawbacks which are follows: i. As such, there is always a lack of proper coordination and control. Everything you need to know about the types and classification of organisation structure. It help managers to effectively manage their teams, and also, it increases visibility for the entire company.