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What Are the Different Models of Organizational Structure?

An organizational chart.
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  • Written By: K.C. Bruning
  • Edited By: John Allen
  • Last Modified Date: 18 July 2014
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Three of the most common models of organizational structure are functional, matrix, and divisional or product. Each of these hierarchical systems helps a company to organize its resources and responsibilities. The ultimate purpose of each structure is to provide a framework for consistently working towards achieving the company’s goals.

Functional structure is one of the most traditional models of organizational structure. It divides responsibility by job title. A typical chart outlining this system would have the president or chief executive officer (CEO) of the company on top and all other positions listed below. The number of levels for this structure depends upon the size of the company and how supervisory roles are organized. A small business may only have one level below the company head, while larger organizations can have several branches both vertically and horizontally.

Divisional or product structure is the most task-based of the models of organizational structure. Below the company head, there is a category for each major product or service offering. There are identical categories below each for marketing, sales, purchasing, and inventory. Individual product lines function as their own self-sufficient units. The president or CEO then oversees each line.

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Matrix structure is essentially a combination of the previous two models of organizational structure. The top part of the hierarchical tree is similar to functional structure, with the president or CEO on top and then several other job titles directly below. The bottom left branch of the tree lists all product lines or service offerings vertically, as opposed to the horizontal orientation of the divisional structure.

To the right of each offering on the product list the steps required for the production of each offering are arranged horizontally, with a section falling under each job title. The titles are arranged by order of function in the process of creating or offering the service and managing all other elements of the product cycle. This can include steps such as development, manufacturing, and marketing. Each of these regional units is self-sufficient and reports to the head of the company, or perhaps a regional manager, who then communicates with the corporate office.

While many organizations use one of these three models, they can also be altered to meet the specific needs of a company. A structure can be altered to fit company needs at its inception or as the organization changes. For example, a small or mid-size company may find it more practical to use simple functional structure, but will use a few of the elements of divisional structure as it grows.

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