List of business entities Forms of business ownership vary by jurisdictionbut several common entities exist:
None of these divisions are wrong; they're really just different ways of classifying. You could as easily divide organizational structures into two — hierarchical structures and associative structures — and think of all others as either specific instances, variants or combinations of these. Hierarchical Structures Perhaps the most extreme example of hierarchical organization comes from the military.
There is a commander-in-chief at the top and enlisted personnel at the bottom. Advancement often begins at the bottom of the enlisted hierarchy, which has nine ranks, the officer hierarchy, which has 10, or an intermediate hierarchy of warrant officers, which has five ranks.
This makes 24 separate ranks, each responsible for carrying out orders from above and with authority to give orders to those below. Commands flow downward in an unbroken chain through these 24 ranks, the military "chain of command.
The structure is free from ambiguity, which makes giving and carrying out orders routine and rapid — a distinct virtue in combat. But the structure also stifles innovation. Innovative leaders like General Joseph Stilwell, who knew China better than anyone else high up in World War II's Pacific Command and who recognized early on that Chiang Kai-shek was a weak and corrupt leader Stilwell much preferred Maoare often treated as insurrectionist and rebellious and leave the organization voluntarily or are fired, depriving the organizations of its most talented potential leaders.
Eventually, General MacArthur fired Stilwell, driving him into retirement. Lower down the chain of command, trying to argue with a superior about a better approach to an issue can become a court-martial offense.
Associative Structures Associative structures, at their purest, are completely "flat. Big decisions, the strategies that drive the group forward, are either arrived at by common agreement or evolve out of decisions made by smaller groups.
Differences within and between groups are well-tolerated.
Because no one reports to anyone else, whenever an issue arises, it's handled quickly by those who first become aware of it. But completely flat associative structures are also breeding grounds for in-groups and fiefdoms and, as the history of '60s political activism shows, what begins as a tolerance of differences can become a series of wars.
The sense of common purpose among young activists held them together for awhile, but a few decades later that purpose had been overcome by disputes between different political identity groups.
Remedies for Limitations of Hierarchical and Associative Structures All the various other organizational structure can be seen as variants designed to address the weaknesses of purely hierarchical or flat structures.
Matrix management, for instance, is a hierarchical structure modified by the addition of one or more additional structural relationships within smaller groups. Employees of organizations with matrix structures retain the up-and-down-the food-chain relationships of hierarchical structures, but also have relationships with one or more groups they must work with.
This allows significant decision making by groups of peers, while retaining the groups' responsibility to carry out the kind of strategic decisions made by C-suite executives or higher-level management groups.
Matrix management is better suited than a hierarchical structure to a fast-moving business environment where multiple issues can crop up independently in various parts of the company. It shares, however, to a lesser degree, the tendency toward fiefdoms and mini-hierarchies of purely associative structures.
Holocracy, an organizational structure first described by Brian Robertson and discussed in a multipart Forbes article comparing organizational structures, is another compromise that attempts to meld the best features of hierarchical and associative structures.
According to Jacob Morgan, the writer of the Forbes articles, it allows for "distributed decision making" based on circles of affinity. The old-fashioned name for these circles might be "departments. Various departments, such a marketing, sales and services, each have their own internal structures which may be largely hierarchical or some combination of hierarchy and association and they exist within an overall hierarchical structure, with the managers of each functional unit operating with some independence.
Another related hierarchical structure, divisional organization, was much favored during the s and '80s heyday of General Electric and other industrial behemoths. It had a C-suite command at the top, often with a very visible CEO making the most strategic decisions.
Under his command were separate divisions manufacturing different products, each with its own sales, marketing and other departments — essentially a collection of separate businesses under the control of a single command.
Holocracies, functional and divisional organizations may be more alike in reality than they appear on paper. Ironically, how they differ from one another may depend primarily on the vision of the CEO at the top.Centralized, decentralized, linear, horizontal, traditional, matrix there are several organizational structure examples, and each one is better suited to a particular business type and process model..
In this post, we’ll analyze and exemplify 5 of them, so you can understand their advantages and disadvantages, and choose which one to employ in your organization. Functional Organization.
This type of industrial organizational structure divides a staff into departments by duties. A director or vice president in charge of each function reports directly to. Business organizational structures have evolved with the adoption of Internet technologies and the increase in collaborative teamwork.
In place of hierarchical vertical structures many organizations have introduced horizontal structures where cross-functional teamwork replaces departmental specialization.
Use these organizational structure examples to choose the one that works best for your business. Line Organizational Structure This is the most traditional of the organizational structures that businesses use. Draw Organizational Structure for Your Business. It is not an easy to task to visualize an organizational structure of any company or institution.
Strictly speaking, matrix management, which was "introduced in the s in the context of competition" is the practice of managing individuals with more than one reporting line (in a matrix organization structure), but it is also commonly used to describe managing cross functional, cross business group and other forms of working that cross the traditional vertical business units – often.