Different types of Organisational Structures

An organisational structure is a system used to define a hierarchy within an organisation. It identifies each job within the business, its function and where it reports to within the organisation. The structure is developed to establish how an organisation operates and assists an organisation in obtaining its goals for future growth.
1) Function
2) Product groups
3) Types of Customer
4) Geographical area

A functional structure is set up so that each portion of the business/organisation is grouped according to its purpose. For example, in this type of organisation there may be a marketing department, a sales department and a production department. The functional structure works very well for small businesses in which each department can rely on their skills and knowledge of its workers and support itself. However, there are some drawbacks to this structure is that the coordination and the communication between departments can be restricted, leading to various departments working separately and not communicating with each other.

A product group organisational structure is a framework in which companies’ outline the different responsibilities to their company. A product-based organisational structure separates the company by its products, activities, projects or geography. This allows a company to have a particular focus on specific items in its business operations. Some advantages of this structure are it gives you a clear focus on market segment and it helps meets customers needs which will lead to satisfied customers and potentially higher profit margins. It also gives you better control as each division can act as separate profit centre. However, there are some negatives. For example, it can lead to negative effects of competition and lack of central control over each separate division.

Certain companies will organise their structures by Types of customer. This is done in an effort to ensure specific customer expectation is met, as well as their needs and wants. An