Organizational Structures and Departmentalization in Business

The Organization

The organization is a graphical representation of the formal structure of a company. Classes of organization are divided according to:

• Information: Intended to provide an overview of the company.
• Structure-analytical charts: Designed to understand the total structure, including organizational units, reflecting the integrated relationships.

Extension

• General organization: Reflects the overall organizational structure of the company.
• Organization: Concerns a specific business department.

Content

• Organizational Structure: Represents the various units of the company and its relationships.
• Organizational Functionals: Represents the functions of each organizational entity.
• Personal: Indicates the units represented, their rank, and the name of the person who directs them.

Presentation

• Vertical Organizations: The most authoritative units are located in the higher positions, and those that are subordinate are placed below them.
• Horizontal Organizations: Units with greater authority are placed on the left, and subordinate units are placed on the right.

Structures

• Hierarchical Linear Structure: This is the simplest structure. The chain of command is very clear and is based on the principle of unity of command. Orders are given by senior management and descend to lower levels.
• Line or Staff Structure: Departments that are in line are directly involved in decisions affecting the operations of the organization. Staff members do technical work, advice, and support.
• Committee Structure: To make a decision, the group meets, exchanges views, discusses, and reaches a final decision.
• Matrix Structure: This structure develops around specific projects or problems in which experts from different areas gather to focus on major problems or specific technical issues.
• Functional Structure: It is a hierarchical structure where top management is responsible for planning, organizing, etc., at the highest level. Each function is addressed by a specialist. Each person should not receive orders from more than one boss.
• Divisional Structure: Companies grow to the point where it becomes very difficult to control all operations from top management. In this situation, business decentralization of all its operational activities is carried out by developing the divisional structure.

Departmentalization

Departments are groups of working positions that have a certain similarity and are under the same hierarchical superior. The creation of departments within the organization aims to make coordination easier.

Main Types of Departmentalization

• Functional Departmentalization: Based on the functions each person develops in the company.
• Geographical Departmentalization: Geographical division is frequent in marketing departments.
• Product or Service Departmentalization: Firms that produce very different products are divided, creating a department for each type of product.
• Customer or Distribution Channel Departmentalization: This type of departmentalization is frequently used based on the various types of intermediaries that customers use.
• Process or Machinery Departmentalization: Machinery or labor of similar characteristics working under the same direction.