Chapter 7: Culture and Corporate Structures
Organizational structure describes the way an institution is organized to carry out its objectives
and pursue its projects.
o Allows relations within the organization to be formalized by describing tasks, jobs, positions
of personnel, as well as limits and responsibilities of work units.
o Indicates the kind of hierarchy within the organization
Levels of authority and power
Formal lines of communication
Influences on organizational structure:
Small companies are flexible and can engage the whole staff in a rage of activities.
o Business environment
Structure of a large-scale organization will need to be more decentralized if it sells its
products in many markets.
o Internal and external influences
Internal requirements such as technology, types of activities, and strategy
External forces such as economic conditions, host governments, product-market
Multinational corporations must take into account:
o Physical distance between headquarters and subsidiaries
o Mutual relations
o Legislation of countries where subsidiaries operate
o Need for co-ordination and integration is greater than in domestic organizations
Forms of Organizational Structure
3 basic types of structures:
1. Traditional hierarchal
i. Staff is divided according to function, product, service, or location
2. Several lines of reporting
i. Structure takes form of a project team
ii. Matrix structure
3. Network structure
i. Facilitates partnerships between organizations
5 organizational structures::
1. Geographic structures
Employees are grouped according to region
At the head of each division, there is a senior-level executive who shares responsibility
for the area with the HR manager.
Headquarters maintains control of 'strategic planning' and operations.
2. Functional structure
Responsibilities are arranges according to functional areas: marketing, finance, R&D,
A the head of each division, a senior manager reports directly to CEO. 3. Product structure
Staff are organized according to product lines, which are then grouped according to
Allows for new products to be launched by creating a new division
These autonomous units can pose problems relating to control and co-ordination.
4. Mixed structure
Preferred by organizations who wish to expand they international business activities
Ie: area knowledge with product & functional skills, functional divisions with product
divisions, geographic areas with product lines, etc.
5. Matrix structure
Does not follow traditional hierarchy since it does not respect the principle that each
employee has just one superior.
Management has a lateral authority (functional and project share responsibility)
Facilitates co-ordination and integration of projects
Relies on more managers (increases costs), and increases internal competition
o Increased globalization has made appear two new structures: