Business Organization Models & Planning Essentials

Organizational Structures

Organizational structures define the set of relationships between the elements that constitute a company, pursuing a common plan or purpose. The structure represents how the company has decided to divide tasks and coordinate activities.

Structure can be formal or informal. The formal structure, which is represented in an organizational chart, is the easiest to analyze. To optimize staff efforts, companies tend to group jobs into various units, often called departments or divisions. Depending on how these groups are formed, we can identify different models. Traditionally, the following types of structures are recognized:

Line Structure

This is the classic structure representing a company's hierarchy. It clearly outlines reporting relationships and maintains the principle of *unity of command*, where every person receives orders from a single superior located higher in the hierarchy. The corresponding chart consists only of vertical lines, with no horizontal lines.

Line and Staff Structure

This structure retains the hierarchical core model but adds support units composed of specialists who advise various hierarchical levels. Its advantage lies in making specialists (technostructure) available to advise line managers without being subject to their direct orders, granting them significant autonomy. The principle of *unity of command* is still maintained. It is crucial to clearly establish the roles of line and staff, as well as the relationships between them.

Committee Structure

The main feature of this approach lies in how authority and responsibilities are divided, establishing participatory decision-making. The great advantage of the committee structure is its motivating and rewarding nature, drawing on the experience of many people. Additionally, committees can be used to resolve specific situations. However, a notable disadvantage is that decision-making can be extremely slow due to considering many viewpoints. Furthermore, this structure deviates from the principle of *unity of command*.

Matrix Structure

This is often the most complex structure. It combines the advantages of functional grouping (specialization) and product/project grouping (autonomy). To achieve this, a double line of authority is established: one manager for each function and another for each project undertaken by the company. This brings together specialists from different parts of the organization to work on specific projects.

Its main advantage is flexibility, as it can be customized to the company's needs. It allows leveraging the experience of workers in different areas, joining forces to advance a specific project. The most immediate challenge derives from the double authority, which clearly violates the principle of *unity of command*. If appropriate measures are not taken, staff may receive contradictory orders, causing significant confusion. Moreover, the interests of a project manager often differ from those of a functional head.

The Planning Process: Concept and Stages

Planning is the first of the four functions within the administration or management process of a company. It involves setting an organization's objectives and establishing the paths to achieve them. This function is fundamentally important as it serves as a guide for the company's activities.

The main stages of planning typically include:

1. Setting objectives.
2. Designing strategies.
3. Formulating policies.
4. Establishing procedures.
5. Implementing control rules.