SuperFresh Case Study

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Types of Organizational Structures

There are three traditional organization structures:

1. Functional
2. Divisional
3. Hybrid/Matrix

Functional Organization Structure

The boardroom problem you analyzed might be the result of a functional chimney organizational issue. This is a common and typical disadvantage of a functional type of organizational structure. More details regarding functional chimney problems will be discussed in the video that follows.

A functional organizational structure is one where an organization is split up into departments. Each department has its own specific function, just like what you observed in the boardroom earlier. For example a logical functional structure might consist of the following departments: marketing, finance, production, human resources, research and development, etc. A potential disadvantage to this type of structure is that employees tend to only focus on their individual function and their day-to-day tasks and responsibilities within that function instead of the organization as a whole.  

A functional structure or organization is one where there are clear patterns of hierarchy. As mentioned earlier, employees with similar skill sets and day-to-day functions are grouped together into formal working units. All employees are arranged within one of these groups, and spend the large majority of their time just working inside that group.

Watch this video to see what a typical functional organization looks like:

Divisional Organization Structure

A divisional structure is a little different than the function structure. In this model, employees are often grouped together based on a similar process, or by product, or perhaps serve similar groups of customers. Divisional structures are also often organized by geographic regions.

Watch this video to see what a typical divisional organization looks like:

Hybrid/Matrix Organization Structure

A hybrid or matrix organizational structure is one that combines elements of the functional and divisional structures into one. It is often called a hybrid model because it combines these two structures together. It is often also called a matrix structure because it forms a matrix, or a grid-like appearance. The goal of the hybrid/matrix structure is to benefit from the advantages of the functional and divisional structures, while minimizing the disadvantages of each. This type of organization is often used in manufacturing, service industries, not-for-profit sectors, and by multinational corporations.

Watch this video to see what a typical hybrid/matrix organization looks like:

Other Organizational Structures

All organizational structures have their own unique advantages and disadvantages.  Some, like the hybrid/matrix structure attempt to reduce levels of vertical hierarchy in an attempt to increase flexibility and communication within the organization.

Other organizational structures also attempt to make organizations flatter, or more horizontal, with less levels of hierarchy.  These include:

1. Team Organizational Structures
2. Network Organizational Structures
3. Boundaryless Organizational Structures

Trends in Organization Structures

As you can see by the potential advantages of other organizational structures, there is a continuing trend to reduce levels of management in organizations and create shorter chains of command. This has the potential to make organizations more efficient by improving communication, increasing flexibility, and allowing organizations to react to the marketplace and competition much quicker. This is often referred to as an organization becoming more horizontal, or as the flattening of an organization.

Review your learning from this activity by completing the following drag and drop activity. Drag each statement to the appropriate location by matching it with the correct term.

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