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Types of Organisational Structure You Can Use in Your Business.

Types of Organisational Structure You Can Use in Your Business.

Selecting the best organisational structure for your business, team or department is like selecting a new car.  Just like you look for something worthy for the road, something that can help you to take from one place to another without any problem and there are a lot more to that.

The same way, in the world of organisational structure there are many options for you. For example, do you want a short or long chain of command, you require a wide or narrow span of control or you want centralized or decentralized decision-making structure and many more.

What is an Organisational Structure?

An organisational structure is a visual representation of a business that shows what employees has to do, to whom they have to report and it also affect the decision making across the company. It can use markets, geographies, functions, products or processes as their guide and handle business of any size and industry.

To make it easier to understand, it is a chart like a map that explains how the company is going to work and how roles are organised. Well, there are two kinds of organisational structure:

  • Mechanistic Structure
  • Organic Structure

 Now, let’s uncover more specific types of organizational structures that every business can use in their company:

  • Functional Organisational structure

 This is the most common type of structure. In this business structure, there is a separate department for every group like salespeople have their department so does the people who are handling customer services and so on.

In this institutional framework, there is a need for highly specialized persons and it is easily scalable as well. As his structure is mechanistic in nature, it has the potential to hold back the growth of an employee but by putting a person in a particular skill department can help that individual to be the master in that field.

  • Product-Based Divisional Structure

This type of divisional structure consists of many smaller functional structures, for example, every division within the structure may have their own sales team, designing team and so on. In a product-based divisional structure, there is a dedicated department for each product.

Company having multiple products or services can get benefits from this organisational structure as it helps to shorten the product development cycle and allows small businesses to offer new products faster to the market.

  • Market-Based Divisional Structure

Market-based structure is one of the variations of divisional organisational structure where departments are formed around the various market, industries or types of customers.

The market-based organisational structure is best for a company having products or services that work differently in different markets, and if that segment has advanced knowledge of that field then it can be very effective.  This institutional structure also helps a business to stay aware of the changing demands of the customers.

  • Geographical Divisional Structure

This organisational structure is based on geography; the division of geo structure involves territories, districts, regions, state and even country. This structure is best suited for companies who require being close to sources of supply or customers. It also allows the divisions to take decisions from more diverse point of view.

  • Process-Based Structure

This business structure is designed keeping in mind the end-to-end flow of different processes like customer acquisition, R&D and Order fulfilment. This process is very different from functional structure as it considers the performance of employees and the way they are interacting with one another as well. Process-based organizational structure is best for enhancing the speed and efficiency of the company and those who are working in a rapidly changing industry can also adopt this structure.

  • Matrix Structure

This organisational structure is unique as it does not follow the traditional model. In this, all employees have dual reporting relations like their functional reporting line and product-based reporting line.

The main aim of a matrix organisational structure is to allow the company to make more balance as well as flexible decision making. When a single project is given to two different companies then it creates opportunities to share their resources and communicate more often which they might not do regularly.

Navigating Organisational Structure

These are the different types of organisational structures that can be used in any company. Well, all of the structure that is mentioned above are just archetypes but in the real world companies usually uses hybrid structures which are formed by taking a few features of multiple structure types.

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